Singapore&rsquo s performance softens on rising competitive pressures

 

FRASERS Hospitality Trust (FHT) had mixed performance in revenue per available room (RevPAR) across its markets for the nine months ended June, indicated its business update on Thursday (Aug 1).

 

The trust had a 7.2 per cent year-on-year drop in 9M RevPAR in Singapore, with occupancy down six percentage points.

 

&ldquo This was largely due to the easing of pent-up travel demand, cost inflation and a relatively strong Singapore dollar affecting inbound travel. Notably, inbound travel from China has yet to fully recover to pre-pandemic levels,&rdquo the trust said.

 

Fraser Suites Singapore&rsquo s extended stay segment was also affected by a growing supply of private residential units, which &ldquo compressed rental yields and created a more competitive environment for the relocation segment&rdquo , it added.

 

9M RevPAR was also down in the UK, declining by 2.4 per cent as demand for corporate and transient travel recovered gradually under challenging market conditions. Demand in the extended stay segment also fell across most properties.

 

But FHT&rsquo s remaining markets &ndash Australia, Japan, Malaysia and Germany &ndash were more upbeat.

In Australia, 9M RevPAR was up 5.8 per cent, thanks to major city-wide events and stronger demand across the corporate, group and leisure segments.

 

However, average daily rates decreased by 1 per cent, due to new supply in the Melbourne market still being absorbed.

 

In Japan, the 9M RevPAR of ANA Crowne Plaza Kobe rose 13.5 per cent, driven by growth in occupancy and average daily rates, due to the favourable Japanese yen and supported by the return of the meetings, incentives, conferences and exhibitions (Mice) business and leisure segment.

 

In Malaysia, The Westin Kuala Lumpur&rsquo s 9M RevPAR increased by 21.5 per cent with recovery of the transient and corporate segment demand and the favourable ringgit.

 

In Germany, the Maritim Hotel Dresden was supported by the recovery in domestic travel and the return of Mice business.

 

Looking ahead, FHT expects international tourism to &ldquo recover completely in 2024, backed by strong demand, enhanced air connectivity and the continued recovery of China and other major Asian markets&rdquo .

The company is also launching its first Yotel property in Japan in early 2025

 

FRASERS Hospitality is aiming to add 20 properties to its portfolio over the next four years as it continues to ride on the post-pandemic recovery trajectory.

 

On Thursday (Jul 4), the strategic business unit of Frasers Property : TQ5 +0.64% said this includes nine properties scheduled to open in the next two years across China and Vietnam.

 

Under its partnership with UK-based hotel chain Yotel, the company is also launching the brand&rsquo s first Yotel property in Japan in early 2025. The site was acquired and developed by Frasers Hospitality, and is located within walking distance of the Tokyo Station.

 

Frasers Hospitality chief executive Eu Chin Fen said: &ldquo Our recent partnership with Yotel in Japan and joint ventures formed in China and Japan exemplify our ability to forge strong alliances with industry leaders.&rdquo

 

She added: &ldquo Concurrently, we continue to deepen our presence in existing cities with more properties slated to open in the next few years, including Fraser Residence Taipei that we announced last month.&rdquo  

 

Over the first half of 2024, the company has opened three new properties in Bahrain, Chengdu and Shanghai.

This comes after Frasers Hospitality in May 2023 made its maiden acquisition of premium apartment rental assets in China and Japan, which have a combined asset value of about S$170 million.

 

Looking ahead, the group said it intends to collaborate with capital partners and third-party hotel operators that complement its operations within the extended-stay segment.

Target Price*S$ 0.58

Recomendation*BUY

Market Cap*S$ 925m

Bloomberg CodeFHT_SP_Equity

Publication Date2023-05-02
Source: DBS Group Research 

FRASERS Hospitality Trust : ACV 0% (FHT) posted a distribution per stapled security (DPS) of S$0.009316 for the half year ended Sep 30, rising 15.9 per cent from S$0.008041 the previous year.

 

In its results statement on Friday (Nov 4), the stapled group&rsquo s managers said this was due to better gross revenue and net property income (NPI) amid the continued, gradual recovery in the hospitality industry as FHT&rsquo s portfolio saw improved performance across all regions.

 

The H2 FY2022 distribution payment date will be Dec 29.

 

Gross revenue for the half year rose 13.5 per cent to S$51.8 million from S$45.6 million a year earlier, while NPI increased 22.7 per cent year on year to S$37.9 million from S$30.9 million previously.

 

This came as Singapore and Australia recorded a spike in international visitor arrivals over the first nine months of 2022, leading to significant RevPAR (revenue per available room) growth for the stapled group&rsquo s portfolios in both countries.

 

As the UK implemented its &ldquo Living with Covid&rdquo plan from March 2022 following its retreat from the Omicron peak, portfolio occupancy rose by 39.4 percentage points to 78.8 per cent, with RevPAR doubling year on year in H2.

 

While Japan&rsquo s international borders remained largely closed, the managers noted higher gross operating revenue and gross operating profit at ANA Crowne Plaza Kobe, driven by the end of the quasi-state of emergency in March 2022.

 

Upon the reopening of Malaysia&rsquo s borders with lifted travel restrictions since October 2021, FHT&rsquo s managers said Westin Kuala Lumpur saw year-on-year RevPAR growth of over six times in H2, leading to the asset booking a gross operating profit as opposed to a gross operating loss in the same period last year. 

 

As a result of the above, distributable income grew 60.2 per cent to S$19.9 million from S$12.4 million. Distribution to stapled security holders rose 15.9 per cent to S$17.9 million, from S$15.5 million in H2 FY2021.

 

The latest set of results brings FHT&rsquo s DPS for FY2022 to S$0.016355, up 66.4 per cent from its FY2021 DPS of S$0.009831.

 

Gross revenue for the full year was up 12.1 per cent on year to S$95.9 million from S$85.5 million previously, while NPI grew 20.7 per cent to S$69.6 million from S$57.6 million.

 

&ldquo Encouraged&rdquo by the recovery in FHT&rsquo s portfolio performance, the managers&rsquo chief executive Eu Chin Fen intends to remain focused to &ldquo ride on the recovery trajectory and navigate through the uncertainties ahead&rdquo .

 

Challenges arising from recessionary risks, elevated inflation, a persistent labour crunch, increased energy costs and rising interest rates continue to weigh on FHT&rsquo s outlook, she said &ndash and in turn, the recovery of the stapled group&rsquo s top and bottom line.