Frasers Hospitality NPI slipped 11% in Q3

This was attributed to the weak performance of its Australian portfolio.

Frasers Hospitality Trust’s net property income eclipsed 11% YoY to $25.4m in Q3 from 28.5m, an announcement revealed. Revenue also fell by 8.4% YoY from $38.2m to $35m last year.

Declines in NPI and revenue were attributed to the weaker performance to their Australian portfolio. Australian revenue and gross operating profit (GOP) were down 5.4% YoY and 14.8% YoY in Q3, respectively, due to a tough trading environment, softer corporate demand, fewer events and concerts, and higher staff costs across its properties in Melbourne and Sydney.

Foreign exchange impact to the Australian dollar, British pound, Japanese yen, Malaysian ringgit and the Euro also accounted for 32% and 20% of the decline in the revenue and NPI, respectively.

Colin Low, CEO, commented, “While most of our country portfolios recorded better YoY performance in this quarter, our Australia portfolio reported weaker room revenue on the back of continued pressure on rates and lower occupancy. In Sydney, the trading environment has remained challenging and softer corporate demand has led to lower room revenue across our properties while in Melbourne, the performance of our property has been affected by fewer sporting events and concerts.”

Income available for distribution fell 9%, from $21.1m to $19.2m in the third quarter. As a result, Frasers Hospitality Trust cut its distribution per stapled security (DPS) down to $0.010086 in Q3 from $0.0101226 during the same period last year.

Their Singapore portfolio remained stable, although revenue dipped by 0.4% YoY and the lower occupancy caused the portfolio’s RevPAR to decline marginally by 0.5% YoY. However, GOP improved by 3.8% YoY due to lower staff costs at Fraser Suites Singapore. Their UK portfolio’s revenue and GOP rose by 6.0% YoY and 1.4% YoY, respectively, whilst the portfolio’s RevPAR was 7.2% higher.

Frasers Hospitality Trust noted that the expected growth of room supply in Sydney by 29% over as well as the development of 7,000 rooms in Melbourne for the next four years will continue to put pressure on occupancy and hotel performance.