OVERVIEW AND
FINANCIAL REVIEW
growth in China has also contributed to a higher risk of
economic vulnerability worldwide. Any further slowdown
in economic activities will weigh on attendant demand
for hotel rooms in Singapore.
Notwithstanding the near-term challenges, the long-term
outlook for Singapore tourism sector remains positive,
augmented by initiatives of the Singapore government.
These include the continuing pipeline of tourist
attractions and ongoing construction of Changi Airport’s
Terminal 4 which will serve to entrench Singapore’s
position as a leading aviation hub in the region.
For CDLHT’s Australia and New Zealand Hotels, fixed
rent contributions were lower in FY 2015 due to local
currency weakness against the Singapore dollar. The
lack of new investments in the mining sector in Perth
and Brisbane as a result of the weak commodity prices,
coupled with the addition of new hotel supply, may
weigh on the trading performance of the hospitality
sector. However, any weakness in the performance of
the Australia Hotels is mitigated by the defensive lease
structure which provides CDLHT with largely fixed rent.
In New Zealand, the tourism sector is seeing good
growth momentum and the near-term outlook for the
hospitality sector looks promising.
In Maldives, the operating environment was affected
largely by the continued strength of the US dollar against
most currencies which rendered the travel destination
more expensive. In addition to the currency weakness
of key source markets against the US dollar, the slowing
growth in China and the recent devaluation of the
Chinese yuan are also expected to dampen demand for
luxury resort stays. Recognising the challenging trading
environment, the Managers have also been proactively
working with operators of the two resorts to work on
cost containment measures to protect the profit margins.
Strong performance and contributions from the newly
acquired Hilton Cambridge City Centre and the Japan
Hotels have helped to mitigate the weaker contributions
in other markets in 2015. For the period in which CDLHT
owns the UK Hotel (4Q 2015), it traded strongly post-
refurbishment, recording a yoy RevPAR growth of 20.8%.
The Japan Hotels, which was acquired in December
2014, saw RevPAR growth of 22.2%
(1)
in FY 2015 due
to a surge in visitor arrivals and active revenue
management strategies. Going forward, the Japanese
hospitality sector is expected to continue to benefit
from the various government initiatives to bring in more
tourists into Japan and from the potential growth leading
up to the Tokyo Olympics in 2020.
Overall, the Managers remain cautious over the health
of the global economy given lingering concerns on the
slowing growth in China, as well as the tepid economies
in the United States and Europe. The weak economic
sentiment may exert challenges for some of the
markets that CDLHT operates in. Nevertheless,
the geographically diversified portfolio is expected to
continue to provide CDLHT with the benefits of income
diversification when some markets are going through
unfavourable cycles.
OVERVIEW AND FINANCIAL REVIEW
(1)
The yoy RevPAR comparison assumes H-REIT, through the Japan Trust, owned the Japan Hotels for year ended 31 December 2014.
Club Room (post-refurbishment), M Hotel
7
Annual Report 2015
