CDL Hospitality Trusts - 30-day state of emergency in the Maldives

This photograph released by Maldives President office shows Maldives President Yameen Abdul Gayoom addressing the nation. (Picture Credits : bbc.com)
Maldives declared a 30-day state of emergency across the country. However, the tourism ministry has stated that tourism businesses will continue operating, with the international airport, all domestic airports, resorts, hotels, guest houses, accommodating vessels and marinas in full operation.

We believe the impact on CDL HT will be limited as the Maldives only accounts for about 10% of CDLHT's portfolio NPI. A 10% drop in average annual RevPAR in the Maldives resorts would only lower our estimates by about 2.2%.

Additionally, the peak season for tourism in Maldives is from December to April, which will mitigate the impact. RevPARs at CDLHT's Maldives resorts are already 12-18% lower during 9M15, mainly due to slower Russian and Chinese tourists.

Maintain NEUTRAL; the newsflow on the Maldives is a mild negative for now and we believe there is no rush to buy into CDLHT at this juncture with supply headwinds and competition in Singapore (65% of NPI), which will keep RevPARs under pressure.

30-day state of emergency in Maldives
The President of the Maldives, Abdulla Yameen, imposed a 30-day state of emergency across the country following the arrest of the country's vice president on allegations of an assassination plot against the president and ahead of an opposition rally. The government has reportedly said that the state of emergency is limited to 30 days and a curfew would not be imposed.

Tourism industries will continue operating
Maldives' ministry of tourism has stated that the Ibrahim Nasir International Airport and all domestic airports, resorts, hotels, guest houses, accommodating vessels (safari boats) and marinas will be in full operation.

Limited impact, only 10% of CDLHT NPI from Maldives
CDLHT owns two resorts in the Maldives, which account for 10% for portfolio NPI – Angsana Velaveru (master lease) and the Jumeirah Dhevanafushi (management contract). We estimate that a 10% drop in average annual RevPAR in the Maldives resorts would lower our estimates by 2.2%.

Peak season in Maldives is from December to April
The peak season for tourism is from December to April, and as such the impact of the state of emergency will be mitigated if it does not extend past the 30-day period and transport/tourist businesses continue to remain in operation.

RevPARs are already 12-18% lower YoY
So far in 2015, CDLHT's RevPARs in Maldives are already 12-18% lower YoY, mainly due to the slowdown in Russian and Chinese tourists and a strong USD reducing affordability (room rates are priced in USD).

Technical Analysis
Daily Chart
Maintain NEUTRAL
The newsflow on the Maldives is a mild negative for now, and we believe there is no rush to buy into CDLHT at this juncture, given supply headwinds and competition in Singapore (65% of NPI), which will keep RevPARs under pressure. (Read Report)

Source : Credit Suisse Asia Pacific Equity Research

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