Marina Bay Sands
Famous artists such as Taylor Swift and Coldplay held sold-out concerts in Singapore in January and February.
The visits of these superstars have led to a surge in tourist numbers.
Known as the “Taylor Swift effect,” Taylor Swift’s concerts have significantly increased attendance, with attendance in March 2024 reaching 1.48 million, the highest since the pandemic began.
Singapore’s hotel industry reported its highest-ever operating statistics in March, according to data from leading commercial real estate information provider CoStar (NASDAQ: CSGP).
Average Daily Rate (ADR), which measures the average rental revenue generated from occupied rooms per day, and Revenue Per Available Room (RevPAR) both hit record highs for the month.
Although tourist inflows have slowed somewhat since March, Singapore’s strategic intent to re-establish itself as a major tourist hub in Southeast Asia remains clear.
This goal was further demonstrated by the Government’s investment of S$300 million in the Tourism Development Fund to boost the tourism industry.
With exciting upcoming events including Formula 1 in September and Grammy Award winner Olivia Rodrigo’s tour in October, the second half of the year is sure to be a vibrant time for tourism again.
Looking ahead, significant developments such as Resorts World Sentosa and the expansion of Universal Studios Singapore will provide visitors with greater attractions, hotels and entertainment options.
The construction of the Porsche Experience Centre and Founder’s Memorial is scheduled for completion in 2027 and 2028 respectively, which will further enhance the Lion City’s appeal as a premier travel destination.
As tourism picks up, several businesses will look to take advantage of the opportunity.
Here are three companies poised for big growth in the burgeoning tourism industry.
1. Las Vegas Sands (NYSE: LVS)
It may come as a surprise to many Singaporeans, but the iconic Marina Bay Sands (MBS) is actually owned by an American company, Las Vegas Sands.
The story continues
The resort developer acquired the development rights for the property from the Singapore government in 2006.
MBS has become a tourism mainstay since it opened in 2010, attracting 40 million visitors a year before the pandemic.
Additionally, it has been hailed as one of the top 25 luxury hotels in Singapore for 2023 and ranked 25th best value hotel in the world for savings in 2021, according to leading travel advice platform TripAdvisor (NASDAQ: TRIP).
For 2023, MBS net revenues will be US$3.8 billion, up 52% from US$2.5 billion the previous year.
Casino operations accounted for the majority of net revenue, accounting for 70%.
MBS accounted for 37% of Las Vegas Sands’ total 2023 revenues.
Looking at Las Vegas Sands’ first quarter 2024 (1Q 2024) financial results, the company is reporting impressive growth.
Revenue increased 39.6% year-on-year to US$3 billion, while net profit increased more than 230% year-on-year, from US$147 million to US$494 million.
MBS continues to be a standout performer for Las Vegas Sands, accounting for the majority (39.1%) of the company’s total revenue.
Las Vegas Sands has budgeted $750 million in capital expenditures for MBS, including plans to renovate Tower 3, the hotel lobby and the Sands SkyPark.
Furthermore, MBS is set to play a pivotal role in strengthening Singapore’s reputation as a business hub as it is the recipient of Singapore’s Meetings, Incentives, Conferences and Exhibitions (MICE) Awards for 2023.
2. Far East Hospitality Trust (SGX: Q5T)
Far East Hospitality Trust (FEHT) is a hospitality focused REIT with a portfolio of nine hotels and three serviced residences.
Hotels under the trust include Rendezvous Hotel Singapore, Oasia Hotel Downturn and Quincy Hotel Singapore.
As of June 2024, the REIT’s assets under management (AUM) stood at approximately S$2.5 billion.
In the first quarter of 2024, FEHT saw improvements in both revenue and net property income (NPI).
Total revenue increased 7.5% year-on-year to S$27.1 million.
Similarly, NPI increased 6.0% year-on-year to S$25.1 million.
The hotel division experienced solid growth, with revenues up 8.4% year-on-year and accounting for around 74% of the trust’s total revenues.
The hotel sector’s ADR increased 8.8% year-on-year to S$179 from S$165.
Similarly, RevPAR increased by 6.7% year-on-year to S$144 from S$135.
FEHT is perfectly located to attract middle-class tourists, with four-star hotels priced at affordable rates between S$150 and S$200 per night.
Visitors from North Asia, including China and Russia, accounted for the majority at 33.7%, followed by visitors from Southeast Asia (SEA) in second place at 22.6%.
The improving economic situation has made Chinese people more willing to travel this year, leading to a surge in travel demand in the fourth quarter of this year.
Combined with rising incomes in Southeast Asia, FEHT will likely become a popular option for many.
Moreover, the recently introduced 30-day visa waiver between Singapore and China will further boost Singapore’s popularity among Chinese tourists.
FEHT’s total distribution per distributed stapled security (DPSS) for FY2023 was S$0.0409 per unit, an increase of 25% compared to 2022 DPSS.
3. CDL Hospitality Trust (SGX: J85)
CDL Hospitality Trusts (CDLHT) is a hospitality focused REIT with a portfolio that includes six hotels and one shopping mall in Singapore.
Unlike FEHT, CDLHT boasts a more diverse portfolio across multiple countries, including several luxury five-star hotels.
Key properties within CDLHT’s portfolio include Orchard Hotel, Grand Copthorne Waterfront and W Singapore.
CDLHT also manages Claymore Connect, a shopping mall on Orchard Road.
As of Q1 2024, CDLHT’s asset value was approximately S$3.3 billion.
The hospitality REIT reported strong results, with total revenue increasing 7.3% year-on-year to S$65.3 million.
NPI increased 6.8% year-on-year to S$34.9 million, with Singapore hotels’ NPI increasing significantly by 12.8%.
Overall, Singapore real estate accounted for over 60% of NPI in 1Q24.
Singapore hotels’ ADR decreased slightly from S$259 to S$250 year-on-year, while RevPAR improved from S$176 to S$205 year-on-year.
Similar to FEHT, Chinese tourists accounted for the largest proportion of overall visitors to CDLHT’s Singapore facilities.
With the tourism industry developing vigorously, CDLHT is well positioned to benefit from favorable conditions going forward.
CDLHT’s DPSS for 2023 was S$0.057 per unit, 1.2% higher than its 2022 DPSS.
Other companies to consider
We’ve only highlighted three companies here, but there are many more that stand to benefit from the tourism sector’s long-term growth potential.
Other notable names to watch include Singapore Airlines (SGX: C6L), Genting Singapore (SGX: G13) and SATS Ltd (SGX: S58).
Readers who would like to learn more about these companies can check out our articles on Singapore Airlines, Genting Singapore and SATS.
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Disclosure: Aw Kai Rui does not hold any of the stocks mentioned in this article.
This article was first published in Singapore’s tourism boost: Which businesses can benefit?
