Frasers Hospitality Trust fiscal 3Q net property income falls 2.8 percent

Singapore 50 dollar bill

Frasers Hospitality Trust reported on Thursday that its fiscal third-quarter net property income fell 2.8 percent on-year to S$28.5 million, mainly on a weaker performance from its Australia and Malaysia properties.

The distribution per stapled security, or DPS, for the quarter ended 30 June fell 9.3 percent on-year to 1.1226 Singapore cents, down from 1.2374 Singapore cents in the year-ago quarter, the trust manager said in a filing to SGX after the market close on Thursday.

Gross revenue for the quarter fell 1.8 percent on-year to S$38.2 million, it said.

“The soft performance of the Australia portfolio was attributed to the more competitive trading environment in Sydney. However, Novotel Sydney Darling Square performed better year-on-year with the return of its full room inventory compared to last year when the number of available rooms was affected by renovation,” the filing said.

“The Westin Kuala Lumpur reported lower room and food and beverage revenue due to significant reduction in business and government activities leading up to and after the general election in Malaysia. Softer demand from the Middle East also contributed to the hotel’s lower revenue,” it added.

However, the Singapore portfolio was stable amid better operating efficiencies at its two properties as well as stronger food and beverage revenue at the InterContinental Singapore, it said. In the U.K., properties performed better than in the year-earlier quarter amid higher room rates and occupancy amid improved leisure demand, it said.

Frasers Hospitality Trust owns 15 hotel and serviced-residence properties across nine cities in Asia, Australia and Europe, the filing said.

In its outlook statement, the manager noted that Tourism Australia posted a 6.1 percent in international arrivals for the first five months of 2018.

In Sydney, it said it expected a “relatively large” number of new rooms in the market over the next three years, but that the additional capacity would meet with continued strong demand, with stable occupancy and anticipated increases in average daily rates (ADR). But in Melbourne, the hotel market was expected to remain “muted,” it said; “Room rate growth has been hard to come by and with a glut of new supply in 2018 and 2019, this is anticipated to remain the case for some time,” it added.

In Kuala Lumpur, hotel room raters were expected to stay “stagnant” as new room supply deters existing hotels from raising rates, it said.

For the U.K., the trust manager said it expected weaker economic growth to continue this year amid Brexit-related uncertainty.

“While stronger global growth could help cushion inbound business and leisure travel to the U.K., the weaker economic growth of the country is likely to depress ADR growth,” it said, noting the positive impact of the weaker British pound on inbound tourism may also not continue.

In the Singapore market, the trust manager said hotel demand was expected to remain strong, with continued arrivals growth and limited additions to hotel supply in the near term.

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