Oct 2008 Tourism Data:

- In October 2008, visitor arrivals to Singapore reached 843,000, a 8.1%yoy decline.
- The Average Room Rate (ARR) in October 2008 was estimated at S$241,anincrease of 8.4% yoy.
- The Average Occupancy Rate (AOR) for gazetted hotels was estimated toreach 82% in October 2008, posting a 6.8% decline yoy.
- Revenue Per Available Room (Revpar) grew by 0.1% yoy to reach S$199 forOctober 2008.

Sector Impact:

Since June 2008, Singapore has seen a decline in visitor arrivals. Thisreflects the impact of the current global economic slowdown on consumersentiments anddiscretionary spending. The Singpaore Tourism Board (STB) reiterated thatvisitor arrivals and tourism receipts are expected to fall short of the2008 targets of 10.8 million and S$15.5 billion respectively. STB willcontinue its efforts to increase visitor spending during the year-endfestive period.

Valuation/Recommendation:

Although we see near term headwinds for the tourism and hotel industry inSingapore, we are positive on the impact of the opening of Singapore'sintegrated resorts on visitor arrivals and hotels in the mid- to long term.CDL Hospitality Trusts (Buy/Target Price: S$1.43), has the purest exposureto Singapore tourism segment, with its five hotels located strategically atprime areas in Singapore. CDREIT provides a guaranteed yield of 5.4% basedon its favourable lease structure. We continue to see value in CDREIT asthe market has priced in a 60-70% fall from current RevPAR levels, implyingRevPAR levels seen during SARS, based on yesterday's closing price of S$0.61.