The hospitality industry in Singapore has been among the hardest hit industries due to travel curbs imposed in view of COVID-19. Singapore hospitality REITs have seen their share prices crash by 40-50% between the start of year and April, and their share price recovery since then has also been tepid. However, in a post-pandemic world where normalcy eventually returns, we can possibly expect hospitality REITs to recover as pent-up demand for travel and leisure return. But how do we go about analyzing the hospitality REIT sector? In this article, I will share four areas you need to analyse before you invest in Singapore hospitality REITs.

1. Operational performance

The performance of hotels can be measured with the following three key indicators:

ADR

Total paid room revenue ÷ Number of paid rooms

An increasing ADR (average daily rate) means that the demand for hotel rooms is outstripping the supply of hotel rooms. This shows that a hotel is increasing the money it’s earning from renting out rooms....