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:
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:
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.
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.
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:
| Hotels | Gross Revenue FY16 S$'000 | Gross Revenue FY17 S$'000 | Variance $ | Variance % |
|---|---|---|---|---|
| Singapore | 89,265 | 89,037 | -228 | -0.3% |
| Orchard Hotel | 21,707 | 20,712 | -995 | -4.6% |
| Grand Copthorne Waterfront Hotel | 18,117 | 18,948 | 831 | 4.6% |
| M Hotel | 13,741 | 13,572 | -169 | -1.2% |
| Copthorne King's Hotel | 7,733 | 7,237 | -496 | -6.4% |
| Studio M Hote | 7,047 | 6,875 | -172 | -2.4% |
| Novotel Singapore Clarke Quay | 20,920 | 21,693 | 773 | 3.7% |
| Australia | 14,438 | 14,466 | 28 | 0.2% |
| Mercure Brisbane | 2,570 | 2,576 | 6 | 0.2% |
| Ibis Brisbane | 1,714 | 1,717 | 3 | 0.2% |
| Novotel Brisbane | 5,217 | 5,227 | 10 | 0.2% |
| Ibis Perth | 1,956 | 1,960 | 4 | 0.2% |
| Mercure Perth | 2,981 | 2,987 | 6 | 0.2% |
| New Zealand | ||||
| Grand Millennium Auckland | 13,274 | 19,419 | 6,145 | 46.3% |
| Maldives | ||||
| Angsana Velavaru | 8,304 | 8,289 | -15 | -0.2% |
| Dhevanafushi Maldives Luxury Resort | 17,481 | 14,587 | -2,894 | -16.6% |
| Germany | ||||
| Pullman Hotel Munich | - | 5,468 | 5,468 | 100% |
| Japan | ||||
| Hotel MyStays Asakusabashi | 5,994 | 5,701 | -293 | -4.9% |
| Hotel MyStays Kamata | 4,578 | 4,144 | -434 | -9.5% |
| United Kingdom | ||||
| Hilton Cambridge City Centre | 21,418 | 20,344 | -1,074 | -5.0% |
| The Lowry Hotel | - | 16,053 | 16,053 | 100% |
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 $6 Million more to its revenue in FY17.
Far East Hospitality Trust - 8 Hotels, 4 Serviced Residences
Far East Htrust is a pure Singapore hospitality investment. All its properties are located in Singapore which has not been doing well for the past few years. Similarly, 2018 should be the year of recovery for the hotels in Singapore as the hotel supply tapers off this year. Let's take a look at the gross revenue breakdown of each hotel:
| Hotels | Gross Revenue FY16 (S$Million) | Gross Revenue FY17 (S$Million) | Variance $ | Variance % |
|---|---|---|---|---|
| Village Hotel Albert Court | 5.7 | 5.9 | 0.2 | 3.5% |
| Village Hotel Bugis | 11.5 | 11.2 | -0.3 | -2.6% |
| Village Hotel Changi | 10 | 9.5 | -0.5 | -5.0% |
| The Elizabeth Hotel | 6.9 | 6.3 | -0.6 | -8.7% |
| Oasia Hotel Novena | 14.3 | 13.1 | -1.2 | -8.4% |
| Orchard Parade Hotel | 20.6 | 20.3 | -0.3 | -1.5% |
| The Quincy Hotel | 3.4 | 3.4 | 0.0 | 0.0% |
| Rendezvous Hotel Singapore | 13.5 | 12.4 | -1.1 | -8.1% |
| Serviced Residences | ||||
| Village Residence Clarke Quay | 9.2 | 8.9 | -0.3 | -3.3% |
| Village Residence Hougang | 2.9 | 2.2 | -0.7 | -24.1% |
| Village Residence Robertson Quay | 4.9 | 4.4 | -0.5 | -10.2% |
| Regency House | 6.2 | 6.2 | 0.0 | 0.0% |
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 |
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