OUE Hospitality Trust reported Thursday its first quarter net property income fell 2.2 percent on-year to S$27.7 million amid lower hospitality income and higher interest expenses.
That was partially offset by higher income from the retail segment as occupancy at the Mandarin Gallery mall rose and is now fully leased, OUEHT said.
Net property income from the Mandarin Orchard Singapore hotel fell 6.0 percent on-year to S$16.77 million in the quarter, amid lower average room rates and lower demand from the corporate and wholesale segments, OUEHT said. The hotel also had lower food and beverage sales due to the suspension of services of the Grand Mandarin Ballroom and its attached kitchen, it said.
The Crowne Plaza Changi Airport’s net property income increased 6.6 percent on-year to S$4.50 million, the trust said.
At the Mandarin Gallery mall, net property income rose 2.5 percent on-year to S$6.39 million, OUEHT said.
Gross revenue for the quarter ended 31 March fell 3.0 percent on-year to S$31.7 million, the trust said in a filing to SGX after the market close.
The distribution per stapled security (DPS) was 1.18 Singapore cents for the quarter, down 6.3 percent from 1.26 Singapore cents in the year-ago quarter, OUEHT said.
Finance expenses increased 12.8 percent on-year in the quarter to s$6.48 million, on higher cost of debt and accounting changes related to lease, the filing said.
“The trading environment for the hospitality sector was soft in the beginning of 2019, in the absence of the large-scale biennial events this year,” Chen Yi-Chung Isaac, acting CEO of OUE Hospitality REIT Management, the REIT manager, said in the statement.
“The lower DPS in the first quarter of 2019 was mainly due to lower average room rates and demand, as well as lower banquet and food and beverage sales at Mandarin Orchard Singapore, resulting in lower income from the hospitality segment,” Chen said.
But he added that in the quarters ahead, the Crowne Plaza Changi Airport hotel was well positioned to benefit from the expansion of Changi Airport and from the newly opened Jewel Changi mall, which includes the world’s largest indoor waterfall as a tourist attraction.
In its outlook, OUEHT pointed to continued growth in Singapore’s visitor arrivals as well as increased investment in tourist attractions, such as plans to revamp the Orchard Road shopping belt, the expansion of the city-state’s two casino-resorts, the continued development of the cruise industry and the development of the Mandai eco-tourism hub.
“The trading environment of the hospitality industry shall benefit from the continued growth in tourist arrivals, transformation of the tourism sector and reduced supply of new hotel rooms, while it will be impacted by uncertainty in the global economy and absence of large-scale events in certain periods of 2019,” the trust said.