Stamford Land Corporate Ltd

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Operations Review

Hotel Ownership & Management

Our hotel owning and management segment achieved an operating profit of $40.8 million, up 0.4% from the last financial year. We had included a one-off land lease rebate of $3.3 million relating to Stamford Plaza Brisbane in the previous financial year. If we exclude this rebate, the segment's profit actually increased by 9.2%.

Revenue rose by 6.6% to $219.8 million, due mainly to higher occupancy rates and the translation of Australian dollar revenue into Singapore dollar at higher exchange rates. Occupancy rate for the Group's eight hotels increased by 3.2% to 83.6% and revenue per available room (revpar) improved by 7.8% over the previous year.

Despite its closure for 11 weeks due to the Queenland flood in January 2011, Stamford Plaza Brisbane performed very well. Its Gross Operating Profit (GOP) rose by 14.3% over the previous financial year. The hotel's good results were due largely to the patronage of corporations, underpinned by a resurgence of the resources boom. Increase in leisure room nights and concerted cost control also had a positive impact on GOP. Revpar increased by 11.2% with strong yield management that saw significant average room revenue increases in business and leisure segments.

Stamford Plaza Brisbane's occupancy rate was 86.6%, rising by just 1.9% mainly due to its closure on January 12. The torrential flood that hit Queensland caused severe damage to the hotel, resulting in its unavoidable closure. Plunging into the muddied waters, management and staff salvaged the situation as best as they could and were praised by the press for their whole-hearted efforts.

The prestigious five-star hotel, with its 252 luxurious guestrooms spread over 22 floors, reopened with a flourish on 31 March. Stamford Plaza Brisbane is a distinctive landmark nestled between the banks of the Brisbane River and the Botanic Gardens. The hotel's speedy resumption of business was an inspiration to the city that was still recovering from the aftermath of the flood.

During the year under review, The Stamford Suite on the top floor of the hotel was beautifully refurbished to create the most luxurious regal hotel suite in Queensland. It has accommodated heads of state, stage and screen celebrities as well as royalty including Her Majesty Queen Elizabeth II. The suite boasts a four-poster king-sized bed, separate lounge and dining room with a baby-grand piano. There is an outdoor private terrace, unique with its own fireplace, where guests can comfortably enjoy spectacular views of the Brisbane River and city skyline.

After extensive renovation, the former Siggi's Restaurant was leased to an acclaimed restaurant operator and reopened as Moo Moo's Wine Bar and Grill in June 2010. It is well known not only for its tasty beef offerings but also for its unconventionally sleek interior design that sets it apart from other traditional steakhouses.

As Brisbane city recovers from the flood, we expect Stamford Plaza Brisbane's business to pick up robustly in the second half of 2011, powered by the continued resources boom. Moreover, there is no new supply of hotel rooms in this micro-market well into 2012.

Also turning in a set of excellent results, Sir Stamford at Circular Quay's GOP rose substantially by 46.3%. This increase was a direct result of stronger revenue generation underpinned by the improved economic situation and effective cost controls.

The hotel's revpar increased by a solid 15.4%. Occupancy rate climbed to a healthy 84.1%, rising by 6.0%. We had intensified efforts to sign new corporate accounts and to effectively manage third-party channels to achieve higher room rates. In fact, our revpar performance was better than other hotels in the competition set.

The elegant Sir Stamford at Circular Quay is truly the luxury hotel of choice in Sydney. It features18th Century Louis XV as well as Georgian antiques and has one of Australia's largest private collections of fine art. The hotel itself partly resides in a building dating back to the late 1800s that is listed with the National Heritage Register.

Superbly situated in the heart of Sydney on historic Macquarie Street, Sir Stamford at Circular Quay is a short stroll to the world famous Opera House, Royal Botanic Gardens, Central Business District and Sydney Harbour.

We expect Sir Stamford at Circular Quay's sterling performance to continue in FY 2011/12 with strong corporate demand as the key contributor to revenue and profitability.

The award-winning Stamford Plaza Sydney Airport achieved a 19.7% increase in GOP due mainly to increases in average room rate and room occupancy. The hotel's revpar improved by a robust 15.1% and occupancy rose to 88.2%, an increase of 1.5% over the previous financial year.

Our Leisure Individual Travel segment increased substantially with a strong dynamic pricing for Best Available Rate and hotel packages over the weekends. The Wholesale Inbound segment also experienced strong growth especially from Asia. Effective payroll cost savings and operating cost control also contributed to the GOP rise.

Stamford Plaza Sydney Airport received the top accolade of Best Airport Hotel for Australia/Pacific region in the Skytrax World Airport Awards. It beat 194 hotels surveyed globally. Some 860,000 hotel guests completed the Skytrax hotel questionnaire of airline passengers in 2010/2011. The survey thoroughly evaluates traveller experiences across wideranging criteria such as comfort and cleanliness of rooms, standard of food and beverage outlets and, most importantly, the overall quality of staff service.

Not resting on our laurels, we are going ahead with hotel improvements. This includes soft refurbishment of the banquet rooms and lobby. The Grove's buffet area will be completely renovated to enhance the restaurant's vibrant ambience. In addition, our AV8 Bar will receive a snazzy makeover to renew its appeal.

We anticipate a healthy profit growth for Stamford Plaza Sydney in FY 2011/12. Our market share will be enlarged by growth in our contracted accounts. Moreover, we are effectively trimming costs for instance, the complete outsourcing of housekeeping services since end- March of this year will lead to significant savings.

Our third hotel in Sydney, Stamford Grand North Ryde, saw its revpar increasing by 10.9%. The hotel's occupancy rate increased by 9.7% to 81.3%, bolstered by rising demand from the corporate segment as business confidence revived in the local business park. However, GOP fell by 8.9% due to expenses related to a kitchen fire. If we exclude the insurance proceeds and expenses related to this fire, the hotel's GOP actually increased by 12.2%, reflecting the growth in business.

We completed refurbishing the restaurant, Captain Cook's Cove, in September 2010. This international brasserie was launched with great success and has positively benefited our accommodation and conference businesses as well.

Stamford Grand North Ryde is expected to perform well in the financial year ending 2012. Several large corporate accounts have been secured that strengthen our weekday business. Over the weekends, the hotel attracts leisure guests and inbound companies that favour the vicinity for its shopping tours.


Stamford Plaza Melbourne improved on its performance with a GOP rise of 6.2%, mainly due to higher room revenue. Tight cost control was also a contributing factor. Against a challenging backdrop of substantial increased supply of 2,500 rooms in the city, Stamford Plaza Melbourne achieved a 3.8% rise in revpar. We aggressively drove occupancy especially over the traditional softer holiday periods. The hotel's occupancy rate climbed by 4.2% to 87.3%.

Reinforcing our Stamford luxury brand, the hotel completed its room refurbishment in March this year, further enhancing its appeal to a discerning clientele. This stylish all-suite hotel offers beautiful and spacious living areas that come complete with High Definition LCD televisions, hi-speed Internet access and kitchenettes. Every room in the suites has its own separate luxurious bathroom. Further upgrading of Stamford Plaza Melbourne will take place this year with improvements to the hotel's two penthouses, lobby, Harry's Bar, Harry's Restaurant and Harry's Cafe.

We are optimistic about Stamford Plaza Melbourne's performance in the current financial year with the overall Melbourne market set for growth in both occupancy and rate. According to industry forecasts, the growth is boosted by forward bookings of the new convention centre, special events and the increased activity of Tourism Victoria and Tourism Australia, especially in China and India. Our improved luxury accommodations, reputation for sterling service and excellent location in the chic Paris end of Little Collins Street will give Stamford Plaza Melbourne an edge over competitors.

Stamford Grand Adelaide improved on its revpar by 2.9% with its occupancy rate rising marginally by 1 % to 80.0% and average daily rate rising by 1.9%. This growth was ahead of the Adelaide competitor set that grew the average daily rate but experienced a fall in occupancy level. Our occupancy growth was mainly in the Business Individual segment which was achieved in spite of a new competitor that introduced another 308 rooms and conference facilities in mid-April 2010. Our GOP, however, fell by 1.9% due mainly to unforeseen increases in work-cover related expenses and maintenance activity.

Our beautiful Stamford Grand Adelaide beachfront resort clinched second place in the category for Best Airport Hotels - Australia / Pacific by Skytrax World Airport Awards. This five-star hotel, known for its charming hospitality, white beaches and panoramic ocean views, is nestled in the interesting seaside shopping area of Glenelg only twenty minutes from the city and ten minutes from Adelaide Airport. The hotel's luxuriously appointed rooms have been upgraded with LCD televisions and installation of high speed Internet access is underway.

We expect Stamford Grand Adelaide to be more profitable in FY2011/12. Occupancy and room rates are expected to rise as a result of focused efforts to increase the Residential Conference segment. This would also benefit our F&B revenue together with recovery in our Grand Bar operation.


Stamford Plaza Adelaide saw its occupancy and average daily rate remained stable at 78% and $156 respectively . In comparison, the Adelaide competitor set dropped in occupancy over the same period by 3.5%. The major challenge in the Adelaide market was the introduction of a new hotel.

The hotel's GOP fell by 9.4% although its occupancy rate remained fairly stable at 78% and its revpar saw a marginal $0.70 increase to $121.67. The drop in GOP was mainly due to a Work-cover claim. The Banquet department and the Swish Bar operation also suffered from a loss in revenue.

We expect Stamford Plaza Adelaide to show moderate improvement in FY2011/12 with better occupancy and room rates. We have secured a major business account and expect other segments such as leisure groups to grow. We aim to generate higher F&B revenue due to the meal component of the increased leisure group business along with the recovery of the Swish Bar revenue-generation after it received a facelift. The hotel continues to trim costs in every way possible to improve its bottom-line. These measures include outsourcing of housekeeping operation that will result in significant cost savings.

Always looking to stay ahead of competition, we will be undertaking a major refurbishment of 232 of the Stamford Plaza Adelaide's 336 guestrooms to enhance its competitive positioning. LCD televisions have been installed and all the rooms and public areas will have high speed Internet access as well. We will complete the AUD$1.2 million-upgrading of guest elevators by July this year.

Stamford Plaza Auckland's GOP rose by a creditable 10.9% over the previous financial year. This was due to a combination of higher revenues and effective cost control measures. Room revenue increased by 4.14% and F&B revenue rose 8.8%. The hotel's revpar was up by 3.3%. Occupancy rate was 83.7%, reflecting an increase of 1.5%, comparing favourably with the competitive set's occupancy average at 74% during the last fiscal year.

Our hotel's good performance was underpinned by growth in the corporate segment especially with the securing of several large-volume accounts from multinational companies. Stamford Plaza Auckland's results were achieved in a challenging environment with the Auckland market still very price sensitive and room rates recovering slowly. The earthquakes in Christchurch in September 2010 and January 2011 were further compounded in February 2011 by the tsunami in Japan - all these had a significant impact on visitor arrivals to Auckland.

Looking ahead, we are optimistic about Stamford Plaza Auckland's performance for the financial year ending 2012 with solid growth expected in occupancy, room rates and F&B revenues. The major driving force is the Rugby World Cup held in New Zealand this September and October. Auckland is the venue for many of the preliminary matches and all of the major finals and grand final. We have confirmed bookings at premium room rates for most of the match dates and this will contribute positively to the hotel's profitability.

As part of our ongoing efforts to improve services, all the guestrooms will have high speed Internet access. Cabling work began in April this year and it is scheduled for completion by August this year.

Property Development & Investment

Operating profit of our Property Development & Investment segment rose substantially by over eleven times to $10.3 million over the previous financial year that had recorded a loss. Rental income from Dynon's Plaza contributed largely to the segment's profitability. The segment's revenue saw an 8.7% drop to $26.4 million due mainly to the sale of 14 apartments at the Stamford Residences Auckland compared with the higher sales of 34 residential apartments in the previous financial year.

Dynon's Plaza Office Tower in Perth's Central Business District is on a 10-year lease to Chevron Australia, generating healthy revenues for the Group. The office property market in Perth is very strong with vacancy rate for the first quarter of this year at a low of 5.6%, according to property consultants Jones Lang LaSalle. In June 2010, the highest offered price for our property was AUD$134 million but we had decided not to proceed with the terms proposed by the prospective buyer. Office property values are expected to remain buoyant, trending upwards in Perth.

The Stamford Residences & The Reynell Terraces is about 87% pre-sold based on number of units available and close to 70% based on value adding up to a total of some AUD$162.6 million as at 31 May 2011. This prestigious development in Sydney is slated for completion by August this year. It comprises 122 tower apartments of which only the two penthouses and seven apartments are left for sale. Five retail/commercial suites are still available and the five Reynell Terraces will not be marketed for sale until completion.

This is the last residential tower that is allowed within The Rocks and, hence, is a truly unique investment opportunity. Since it was launched in 2008, apartment prices have risen by some 19%. The Rocks is a prized location - a world famous precinct - known for its heritage buildings. The area offers a unique blend of old-world charm with attractive cafes and exciting modern retail outlets.

The prime residential property market in Sydney is highly resilient and we are seeking to optimize our Group's assets with the redevelopment of Stamford Grand North Ryde hotel into a mixed-use residential development, pending planning approvals. We are proposing to build 626 apartments on the site that is spread over 22,400 square metres. The location is excellent, just 20 minutes' drive from the Sydney CBD and a short stroll away from and the popular Macquarie Centre with 230 shops, theatres and ice-skating rink. Macquarie University and Macquarie University Hospital are also nearby. The abundant bush-land of Lane Cove National Park and North Ryde Golf Course are just five minutes' drive away.

Our award-winning Stamford Residences in New Zealand has 68 of its units sold, worth a total of NZ$56.5 million as at 31 May 2011. We have leased out 50 units, benefiting from a strong Auckland CBD rental market that enjoys a gross yield of up to 6% p.a.

Built above Stamford Plaza Auckland Hotel, The Stamford Residences is a modern architectural icon in the city skyline. It received the Auckland architecture award for residential architecture - multiple housing in 2009. This freehold development comprises 149 apartment units spread over 10 floors, including 10 sub-penthouses and six penthouses.

The Stamford Residences offers the winning combination of world-class design, a prestigious address and the excitement of city living. An interesting array of boutiques, galleries as well as dining and entertainment is within short walking distance. Residents also get to enjoy easy access to Stamford Plaza Auckland's five-star facilities including superb restaurants, a wellequipped gym, relaxing sauna facilities and a sparkling lap pool. Stepping into The Stamford Residences' private entrance with its own exclusive lobby and concierge, residents return to a tranquil haven.

The New Zealand economy, which saw a GDP growth of 1.5% in 2010, is facing possible contraction in 2011 in the light of Christchurch's second earthquake and the crisis faced by Japan that is the country's fourth largest trading partner. In view of the cautious business climate, we are focused on niche marketing to foreign buyers who can afford these up-market investments. However, with no new developments expected to come on-stream in the vicinity and given the strength of the CBD rental market, we are also prepared to lease and hold the apartments as valuable assets.

Trading

Our trading segment's operating profit remained stable at some $488,000. Revenue improved by 22.8% to $4.3 million. This is due to improved business in the Group's travel agency and interior decoration companies, riding on the back of recovery in the Singapore economy.