CDL Hospitality Trusts (CDLHT) posted a net property income (NPI) of S$36.3 million for the third quarter ended Sep 30, down 6.8 per cent from S$39 million in the previous corresponding period.
Revenue for the quarter was down 3.7 per cent on the year at S$67.5 million.
The declines were mainly due to a normalisation of pent-up post-pandemic travel demand, as well as a mixed revenue per available room (RevPar) performance across its portfolio markets, said the managers on Tuesday (Oct 29).
RevPar across its portfolio markets logged gains, except for Singapore, New Zealand, United Kingdom and Italy. Other markets in its portfolio include Australia, Japan, Maldives and Germany.
RevPar for its Singapore hotels fell 10.3 per cent on the year, led by a fall in average room rate of 8.2 per cent. Occupancy inched down two percentage points on the year to 84.9 per cent in Q3 2024.
“Demand continued to normalise after a period of exceptional average rate growth in 2023,” said the managers.
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They added: “Despite an increase in visitor days of 6.9 per cent, the incremental demand was likely absorbed by new hotel supply. Shorter booking windows have been observed for Chinese travellers.”
NPI of the group’s main market in Singapore was down 5.5 per cent at S$23.8 million, mainly due to normalisation of hotel trading performance.
In Japan, RevPar measured in the local currency rose 16.6 per cent on the year – buoyed by the continued increase of international visitors. In Q3 2024, Japan had 9.1 million visitors, up 36.6 per cent from the previous corresponding period, noted the managers.
NPI rose 8.8 per cent year on year despite the depreciation of the Japan yen against the Singapore dollar.
“Positive trends for Japan’s tourism sector are likely to continue in the near term due to the country’s strong appeal as a travel destination, despite the rebound of the yen from extremely weak levels,” said the managers.
For the nine months ended September, the stapled group, which comprises CDL Hospitality Real Estate Investment Trust and CDL Hospitality Business Trust, posted 2.9 per cent growth in revenue to S$194.8 million.
The growth was partially offset by lower contributions from hotels in New Zealand, due to the absence of nine Fifa Women’s World Cup games hosted by the city last year, as well as room refurbishment which reduced the number of available rooms.
NPI for the nine months was S$102.9 million, inching up 1 per cent on the year, driven by the Singapore, Australia, Japan and Germany portfolios, which collectively grew by S$3 million year on year.
As at end-September, CDLHT’s gearing stood at 38.8 per cent, with S$707 million debt headroom to 50 per cent gearing. Its weighted average debt to maturity was about two years.
The group has cash reserves of about S$68.3 million and S$210.4 million of committed revolving credit facilities available to fund working capital needs, said the managers.
Market outlook
They noted that in Q3 2024, the group’s existing term loan facilities were refinanced as sustainability-linked term loans for a tenor of five years, thus increasing the total sustainability-linked facilities to S$477.2 million.
Refinancing for the remainder of the maturing loans in Q4 2024 is expected to be completed before the end of the year, said the managers.
“With expectations of further rate cuts by major central banks, CDLHT is well-positioned to benefit from potential interest rate reductions when they occur,” they added.
Looking ahead, the managers expect CDLHT’s overseas portfolio to continue to grow at different paces given the varying market conditions.
“The Auckland market remains challenging, primarily from increased competition as room supply outstrips demand, which remains shy of pre-pandemic levels, a sluggish economy, and the increase of the international visitor levy and prices for visitor visas,” they said.
“Despite the rebound of the yen from extremely weak levels, inbound demand for Japan is expected to remain buoyant given its enduring tourism appeal.”
The managers are also positive on China’s stimulus plans, which they say could “bode well for discretionary consumer spending such as travel”.
Stapled securities of CDLHT were trading flat at S$0.93 as at 9.34 am on Tuesday.
