Stamford Land Corporate Ltd

Email This Print This

Operations Review

Hotel Operations & Management

The Group's hotel operations and management businesses performed creditably for FY2016. Despite business slowdown in two key cities, overall operating profit is consistent with the previous financial year after accounting for a 10% decline in AUD and NZD and loss of contributions from the closure of Stamford Grand North Ryde.

The falling AUD has resulted in an increase in both domestic and international visitors in FY2016. This trend looks set to continue in FY2017. Demand for hotel rooms is expected to remain strong in Sydney and Melbourne. However, secondary cities such as Brisbane and Adelaide will continue to experience pressure on RevPAR in near term as prevailing supply exceeds demand.

SYDNEY

Stamford Plaza Sydney Airport ("SPSA")

  • SPSA reported a modest 1.5% improvement in RevPAR in the competitive Sydney airport precinct. Room revenue is expected to remain strong, as domestic and international visitors continue to flow in.
  • In September 2015, the Group opened its second La Boca Bar and Grill restaurant in SPSA, following raving reviews of its first outlet in Adelaide. Since its opening, F&B revenue for SPSA has increased by 13%. Ongoing marketing efforts continue to anchor SPSA La Boca as the choice venue for Argentinian cuisine within the Mascot vicinity.

Sir Stamford at Circular Quay ("SSCQ")

  • SSCQ reported another year of respectable results, with improvements in both ADR and GOP margins. This award-winning hotel has also been inducted into TripAdvisor's Hall of Fame after being awarded the popular travel website's Certificate of Excellence for five consecutive years.
  • To maintain its leading position as a choice hotel, SSCQ will undergo a soft refurbishment programme in FY2017.

MELBOURNE

Stamford Plaza Melbourne ("SPM")

  • SPM maintained its GOP and market position for FY2016.
  • Construction for another 26 rooms has commenced, and is expected to be completed in 2H2017. Upon completion, this addition to the inventory will augment room revenue and enhance SPM's asset value.
  • The Group is exploring feasibility of converting Harry's Restaurant and Bar to a La Boca restaurant or leasing out the premises to enhance revenue.

BRISBANE

Stamford Plaza Brisbane ("SPB")

  • An increase in room supply over and above demand has resulted in falling occupancy levels and declining room rates in Brisbane as hotels compete for market share. FY2016 RevPAR decline was further magnified as results were measured off FY2015, which was boosted by G20 Summit.
  • Despite less favourable market conditions, SPB maintained its position as the hotel and wedding venue of choice in Brisbane for FY2016.
  • A soft refurbishment programme is planned for SPB as it strives to maintain its lead in the competitive Brisbane market.

ADELAIDE

Stamford Plaza Adelaide ("SPA")

  • Outlook for Adelaide economy remains weak, with some 1.1% decline in RevPAR observed across the market. Despite business slowdown, SPA maintained its GOP due to concerted efforts in cost management.
  • SPA La Boca continues to perform well, with an annual increase in revenue of 6%. To augment F&B revenue, the hotel has also converted part of its extended lobby area to a Celebrity Lounge that offers light F&B options to guests.
  • The hotel has also completed the refurbishment of its lobby and will be commencing the refurbishment of its porte-cochere to enhance overall guest experience.

Stamford Grand Adelaide ("SGA")

  • Overall revenue for SGA declined by 8% as rooms and banqueting facilities were progressively taken out of operation for refurbishment during FY2016. Despite this, GOP margin decline is less than 2 percentage points due to prudent cost management.
  • The first phase of the refurbishment has been completed and the second phase is scheduled to begin in FY2017. In addition, plans are underway to increase the Grand Bar's outdoor seating capacity.
  • These upgrading programmes, once completed, will reinforce SGA's position as the only 5-star hotel in Glenelg.

AUCKLAND

Stamford Plaza Auckland ("SPAK")

  • SPAK recorded a stellar performance for FY2016 with RevPAR growth of 34%, following the timely completion of a NZ$7.9 million room refurbishment. GOP reached a new record, with a YOY improvement of 30%.
  • With international visitors hitting new highs and no new supply expected in FY2017, the hotel is well positioned to continue its strong performance with its refreshed room stock.
  • Plans are also in progress to upgrade guest lifts and refresh SPAK's conferencing and banqueting facilities. When all upgrading is completed, overall guest experience will be enhanced and SPAK's position as the choice hotel in Auckland will be strengthened.

PROPERTY DEVELOPMENT

  • Property development segment revenue declined 56% in FY2016 on absence of a one-off divestment of Dulwich Hill.
  • This, despite the Group having sold the three remaining units at The Stamford Residences & The Reynell Terraces, including a penthouse that fetched a record selling price.
  • Four more units at The Stamford Residences Auckland were sold and ongoing marketing efforts continue for the remaining seven units.
  • Last year, it was reported that some 142 units at Macquarie Park Village were under reconsideration as development application approval for a portion of the carparks was not granted. Most owners have retained their units, given the significant increase in valuation since launch.
  • The Group has applied for an additional 60 apartments to be added to the Melbourne Tower, bringing the total number of apartments within the development to over 700 units.
  • Construction for Macquarie Park Village is ahead of schedule. The Group is hopeful of early completion for some units in 1H2017. The remaining project is scheduled to complete in 2018.

PROPERTY INVESTMENT

  • The Group made a significant fair value writedown of S$23.4 million for Dynon's Plaza, owing to the depressed Perth market. There is, however, a four-year tenancy remaining and the property will continue to post stable rental income.