Frasers Hospitality Trust fiscal 4Q net property income fell on weaker Australia, Malaysia operations

Malaysia ringgit notesMalaysia ringgit notes

Frasers Hospitality Trust reported on Friday that its fiscal fourth quarter net property income fell 6.7 percent on-year to S$29.4 million on a softer performance in Malaysia, Australia and Japan.

“FY2018 has been a challenging year for FHT,” Eu Chin Fen, CEO of the trust’s manager, said in the statement. “Notwithstanding these headwinds, we turned in a reasonable set of results.”

She added, “Going forward, we will proactively pursue opportunities to optimise our portfolio and strengthen the competitive positioning of our properties.”

Gross revenue for the quarter ended 30 September fell 6.9 percent on-year to S$38.7 million, the trust’s manager, Frasers Hospitality Asset Management, said in a filing to SGX on Friday.

The distribution per stapled security (DPS) fell 4.8 percent on-year in the quarter to 1.2154 Singapore cents, down from 1.2763 in the year-ago quarter, it said. The units will trade ex-distribution on 1 November, with the payment on 28 December, it said.

“The softer performance of the Australia portfolio was attributed to the more competitive trading environment in Sydney. However, Novotel Sydney Darling Square continued to perform better year-on-year with the return of its full room inventory compared to last year when there was renovation,” the trust manager said.

“The Westin Kuala Lumpur turned in significantly lower room and food and beverage (F&B) revenue for the quarter as corporate demand remained weak,” it added. “ANA Crowne Plaza Kobe’s revenue also declined following the closure of its banquet space to replace partition walls. In addition, the hotel experienced cancellations due to the recent typhoons.”

However, it said the Singapore portfolio’s performance was stable in the quarter, with increased room revenue and operating efficiencies at Fraser Suites Singapore, while in Germany, the Maritime Hotel Dresden also saw higher room revenue and “healthy” revenue per available room (RevPAR) gains.

For the full fiscal year, net property income fell 2.6 percent on-year to S$117.0 million, while gross revenue fell 1.8 percent on-year to S$155.9 million, the filing said. The DPS for the full fiscal year was 4.7613 Singapore cents, down 5.6 percent from  5.0458 Singapore cents in the previous fiscal year, it said.

Outlook

In its outlook, it pointed to concerns about the U.K. market, noting that while VisitBritain is forecasting 2018 inbound tourism volume to rise 4.4 percent on-year, it was down 7.0 percent on-year in the first half.

In addition, business visits to the U.K. were 8.0 percent before levels in the year-ago first half, it said.

“Going forward, ongoing Brexit and economic uncertainty, and any escalation of global trade tensions could continue to slow business travel growth in 2019. New room supply could also weigh on hotel trading performance,” it said.

In Singapore, it said it expected continued visitor arrivals growth and limited new room supply to potentially lead to higher room rates.

In Japan, it noted that tourist arrivals are expected to increase, while the growth rate of new hotel room supply has decreased and home sharing accommodation has declined sharply, potentially leading to greater pricing power.

Frasers Hospitality Trust has a portfolio of 15 assets across nine cities in Asia, Australia and Europe.