Tuesday, April 10, 2018

Investing In The Hospitality Industry - Breakdown of Individual Hotels Revenue

Its earnings season again. I've received a couple of annual reports as many companies have just closed their financial year to wrap up FY2017. I'm particularly interested in the results of the hospitality trusts which I own as 2018 is suppose to be the year where we should see some great recovery for this sector.

Most of the annual reports are now in a booklet format which saves a lot of cost for the companies as well as the environment. I have to go online or use the CD to view the annual reports. 2 hospitality trusts which I own are CDL Htrust and Far East Htrust.

In this post, I will deconstruct and dive down into the performance of individual hotels which they own which I believe will give us a better picture of the outlook of the hospitality sector in Singapore as well in other countries.

CDL Hospitality Trust - 20 Properties in 7 Countries

CDL Htrust has done well over the years not because its Singapore hotels have done well but because of the stellar performance of some hotels overseas. Let's take a look at the gross revenue breakdown of each hotel:

HotelsGross Revenue FY16 S$'000Gross Revenue FY17 S$'000Variance $Variance %
Orchard Hotel21,70720,712-995-4.6%
Grand Copthorne Waterfront Hotel18,11718,9488314.6%
M Hotel13,74113,572-169-1.2%
Copthorne King's Hotel7,7337,237-496-6.4%
Studio M Hote7,0476,875-172-2.4%
Novotel Singapore Clarke Quay20,92021,6937733.7%
Mercure Brisbane2,5702,57660.2%
Ibis Brisbane1,7141,71730.2%
Novotel Brisbane5,2175,227100.2%
Ibis Perth1,9561,96040.2%
Mercure Perth2,9812,98760.2%
New Zealand
Grand Millennium Auckland13,27419,4196,14546.3%
Angsana Velavaru8,3048,289-15-0.2%
Dhevanafushi Maldives Luxury Resort17,48114,587-2,894-16.6%
Pullman Hotel Munich-5,4685,468100%
Hotel MyStays Asakusabashi5,9945,701-293-4.9%
Hotel MyStays Kamata4,5784,144-434-9.5%
United Kingdom
Hilton Cambridge City Centre21,41820,344-1,074-5.0%
The Lowry Hotel-16,05316,053100%

As we can see, most of CDL Htrust's income comes from Singapore. It makes up about 56.8% of its net property income. The Singapore hotels performance largely remained flat with Orchard hotel as its main contributor of income. The boost comes mainly from its one and only New Zealand hotel which contributed $6 Million more to its revenue in FY17.

Far East Hospitality Trust - 8 Hotels, 4 Serviced Residences

Far East Htrust is a pure Singapore hospitality investment. All its properties are located in Singapore which has not been doing well for the past few years. Similarly, 2018 should be the year of recovery for the hotels in Singapore as the hotel supply tapers off this year.  Let's take a look at the gross revenue breakdown of each hotel:

HotelsGross Revenue FY16 (S$Million)Gross Revenue FY17 (S$Million) Variance $Variance %
Village Hotel Albert Court5.
Village Hotel Bugis11.511.2-0.3-2.6%
Village Hotel Changi109.5-0.5-5.0%
The Elizabeth Hotel6.96.3-0.6-8.7%
Oasia Hotel Novena14.313.1-1.2-8.4%
Orchard Parade Hotel20.620.3-0.3-1.5%
The Quincy Hotel3.
Rendezvous Hotel Singapore13.512.4-1.1-8.1%
Serviced Residences
Village Residence Clarke Quay9.28.9-0.3-3.3%
Village Residence Hougang2.92.2-0.7-24.1%
Village Residence Robertson Quay4.94.4-0.5-10.2%
Regency House6.

2017 was a tough year for Far East Htrust. Both its hotels and serviced residences properties suffered a drop in gross revenue. In 2018, it will have a new addition to its portfolio which is Oasia downtown hotel where they acquired just recently. Another hotel, The Outpost hotel at Sentosa will also be opened in the second half of 2018. These 2 hotels are expected to boost its income for FY2018.

Artist impression of the outpost hotel, Sentosa

The hospitality sector is very much affected by the demand and supply of rooms. Tourist arrival is expected to be strong in Singapore increasing by about 4% in 2018. Supply of rooms will be low in 2018 as compared to 2017. Globally, the economy is on track for a recovery and this should benefit tourism as a whole. As corporate demand increases, serviced residences should be in demand as well. Let's see what happens in 2018 for the hospitality sector. I continue to be vested in this sector.

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1 comment:

  1. It'll be very interesting to read a similar post at the end of the year to see how it turns out!