Far East Orchard: 2022 hospitality performance to remain under pressure

Novena Medical Center, UOL building and Oasia Hotel in SingaporeNovena Medical Center, UOL building and Oasia Hotel in Singapore

Despite the easing of Covid-related restrictions globally, hospitality player Far East Orchard said Wednesday it expected 2022’s operating performance would remain under pressure.

The property company’s hospitality segment is its largest contributor, Far East Orchard said in a filing to SGX with responses to shareholder questions ahead of its annual general meeting (AGM). 

“The outlook for FY2022 remains clouded and uncertain due to various downside risks such as Covid-19 flare-ups, supply chain issues, manpower shortages and the ongoing geopolitical tensions between Russia and Ukraine,” Far East Orchard said. 

In Singapore, the hospitality demand from government isolation and movement control order is expected to “dwindle,” the company said. 

“In addition, despite the opening of the international borders, China being one of Singapore’s key inbound source markets, still has its borders closed. This will affect Singapore’s tourism recovery,” Far East Orchard said.

For Germany and Australia, the strong domestic markets will continue to lead the recovery, the company said. While Germany’s borders were already opened to vaccinated visitors, Australia only made that move in early March, the filing said, adding Australia is set to see a tourism boost.

Student accommodation outlook

Far East Orchard noted the outlook for its purpose-built student accommodation (PBSA) portfolio in the U.K. remained resilient, with the country removing all travel restrictions in mid-March. 

“The group believes this would be an added advantage for international students who are interested to pursue higher education in the U.K. This bodes well for our PBSA business as domestic and international students can now attend in-person lessons,” Far East Orchard said.

Far East Orchard’s hospitality segment owns more than 10 assets and manages more than 100 properties with nearly 18,000 rooms across Australia, Austria, Denmark, Germany, Hungary, Japan, Malaysia, New Zealand, and Singapore.

The PBSA portfolio in the U.K. has 3,561 beds across multiple cities. The healthcare segment holds purpose-built medical suites for lease and for sale at Singapore’s Novena Medical Center and Novena Specialist Center.

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