Hospitality S-Reits, integrated resorts most exposed to fall in earnings from outbreak: Moody's

THE revenue-generating capacities of Singapore's gaming sector and hospitality real estate investment trusts (Reits) will be the hardest hit by the novel coronavirus outbreak, according to Moody's Investors Service.

This is because the two industries generate the majority of their revenue from foreign visitors, Moody's said in a report on Wednesday.

Tourist arrivals to Singapore are set to fall "significantly" in the coming months, given that travel restrictions have already led to cancellations of tour and hotel bookings, Moody's noted.

The Republic's two integrated resorts - Marina Bay Sands and Resorts World Sentosa - will be susceptible to large falls in gaming revenues, although both have sufficient cash to meet committed capital spending in 2020 and have minimal debt maturities this year, according to Jacintha Poh, a Moody's vice-president and senior credit officer.

Elsewhere in Asia, Macau - the world's gambling mecca - on Tuesday told casino operators in the territory to close for two weeks in an attempt to curb the coronavirus spread.

Meanwhile, in Singapore's hospitality industry, occupancy rates across some properties will likely weaken amid the drop in tourist arrivals.

Moody's rates two Singapore-listed hospitality Reits: Frasers Hospitality Trust and Ascott Residence Trust. Although both Reits generate less than 25 per cent of their revenues from Singapore, regional travel will also weaken amid fear of contagion, Ms Poh said. 

Nonetheless, Frasers Hospitality Trust and Ascott Residence Trust are expected to have sufficient liquidity in the next 12 months to buffer against the fall in travel numbers, she added.

As at 1.26pm on Wednesday, Frasers Hospitality Trust units were up 0.5 Singapore cent or 0.7 per cent to S$0.695, while Ascott Residence Trust stapled securities were trading flat at S$1.24.

Analysts have also downgraded their calls on two other Singapore hospitality Reits - Far East Hospitality Trust (FEHT) and CDL Hospitality Trusts (CDLHT) to "hold" on Monday, citing the virus outbreak. DBS Group Research lowered its price target on FEHT to S$0.69 from S$0.80 previously, while OCBC Investment Research reduced its fair value estimate on CDLHT to S$1.62 from S$1.69.

Travel restrictions and virus-related concerns have also resulted in the cancellation or postponement of events in Singapore's meetings, incentive travel, conferences and exhibitions scene.

The National Association of Travel Agents Singapore postponed its annual travel fair to May 1 to 3, after exhibitors expressed concerns that turnout could be low if the event went ahead on Feb 21 to 23.

Meanwhile, Experia Events confirmed a Reuters report that the Singapore Airshow Aviation Leadership Summit scheduled for Feb 9 and 10 will not take place this year. Experia Events is also the organiser of the biennial Singapore Airshow - which will proceed as planned from Feb 11 to 16, although 15 exhibitors have confirmed their withdrawal from that event.