Decline in arrivals eased to 6.1% in Apr’09. The 780,000 arrivals registered in Apr’09, while still a decline yoy, showed signs of easing when compared to the double-digit declines of 13-15% seen in the first 3 months of the year. This brings YTD arrivals to 3m, which is treading in line to meet STB’s target of 9.0- 9.5m for 2009, with the traditional peak season in May- Jul and year end holidays yet to come.

Hotel occupancies remain above 70% for mid and luxury segments. Revenue Per Available Room (RevPar) for Apr’09 was estimated to be S$138 (-37%yoy, -12% mom), brought about by the easing of room rates to S$182 (-27% yoy, -9% mom) and occupancies of 71%. We note that the better performing segments are the mid and upscale segments, which saw occupancies stabilizing at 74% and 72% respectively.

Pro-active measures by Ministry of Health (MOH) in combating H1N1 should help limit spread, if any. Singapore reported its first H1N1 flu victim yesterday. While the potential impact on the tourism industry remains uncertain, we view that the authorities have been pro-active in its preventive measures and we remain confident that the measures put in place should be able to contain any spread of H1N1 flu in Singapore.

Top pick: CDL HT as proxy to recovery of Singapore tourism sector. We retain our BUY call on CDL HT (TP S$0.88), with its portfolio of mid-tier to upscale hotel mix more likely to benefit from business travel downgrades. The reit currently trades at 0.5 x P/BV and offers a prospectively FY09-10 yield 8.5%. We retain our FULLY VALUED call on Hotel Properties Limited (TP S$1.10), with its slate of local luxury hotels and regional resorts likely to be impacted by the global economic downturn.