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Operations Review

Hotel Operations & Management

The Group’s hotel owning and management segment continued to deliver stable results in the financial year ended 31 March 2019 (“FY2019”). Compared to the previous financial year, the Group reported a decrease in revenue of 4.4% and a decrease in operating profit of 9.7% from this segment which was mainly due to the weaker Australian Dollars and higher operating costs.

International visitor arrivals to Australia continued to increase and reached a record high at the end of March 2019 with a year-on-year growth of 2.5%. This contributed to the growth in our revenue per available room (“RevPar”) of 1.8% in FY2019. While this upward trend in international visitor arrivals to Australia is set to continue in the financial year ending 31 March 2020 (“FY2020”), the weaker economic landscape will be facing headwinds, both globally and also in Australia. Weaker global economic conditions will likely lead to a moderation of growth for inbound tourism in the near term. There is also a considerable addition in the supply of hotel rooms in 2018 and more supply of hotel rooms is expected to enter into the market in 2019 and 2020. This will put pressure on RevPar for the hotel owning and management segment.

SYDNEY

Stamford Plaza Sydney Airport ("SPSA")

SPSA reported another year of good results in FY2019, with an increase in room revenue due to RevPar growth of 3.8%, offset by a slight decline in food and beverage (“F&B”) revenue.

SPSA was again awarded the Best Airport Hotel in Australia/Pacific Region at the SKYTRAX World Airport Awards in 2019. This is the sixth consecutive year that SPSA has won this award. As a choice hotel in the competitive Sydney airport precinct, SPSA achieved occupancy of above 90.0%. Room revenue will continue to remain strong as domestic and international visitors continue to fly into Sydney. SPSA has built a strong base business over the years and is in a good position to capture this strong demand.

On the F&B business, our concept restaurant, La Boca Bar and Grill (“La Boca”) delivered stable results as SPSA continued its marketing efforts to promote it as the choice restaurant for Argentinian cuisine in the vicinity.

SPSA has plans to refurbish its lobby and rooms in FY2020 to enhance overall guest experience and strengthen its position as the best airport hotel in Australia.

Sir Stamford at Circular Quay ("SSCQ")

SSCQ delivered stable results in FY2019, with an increase in revenue of 1.3%. F&B revenue increased by 6.2%, offset by a decrease in room revenue due to the decline in RevPar of 1.4% in FY2019. With domestic and international visitor arrivals continuing to increase in Sydney, SSCQ is well-positioned to maintain its position as a prestige hotel with old world charms in Sydney.

SSCQ completed the rebranding of its bar and relaunched the Highlander Whisky Bar in April 2019. SSCQ has further plans to refurbish its restaurant, the Dining Room, and to create an outdoor dining area to showcase the attractions of its iconic location.

MELBOURNE

Stamford Plaza Melbourne ("SPM")

SPM reported another year of good results in FY2019, with improvements in both room and F&B revenue. As an all-suites hotel in the Central Business District, SPM was able to achieve RevPar growth of 5.0% in FY2019 which was contributed by improvements in both occupancy and room rates. Also, SPM was able to grow F&B revenue by 13.6% in FY2019.

SPM has plans to refurbish its rooms in FY2020 to enhance overall guest experience and to remain competitive in the Melbourne market. In addition, SPM also has plans to convert its restaurant and bar to our concept restaurant, La Boca. If successful, this will be our third La Boca in Australia.

BRISBANE

Stamford Plaza Brisbane ("SPB")

Despite a challenging year, SPB maintained its position as the top hotel in Brisbane. An increase in room supply over and above demand resulted in falling occupancy levels and declining room rates in Brisbane as hotels compete for market share. As a result of the less favourable market conditions, SPB reported a decline in RevPar of 5.4% in FY2019.

SPB has commenced the refurbishment of its rooms in FY2019. The refurbishment when completed in FY2020 will enhance overall guest experience and strengthen SPB’s leading position in the competitive Brisbane market.

ADELAIDE

Stamford Plaza Adelaide ("SPA")

SPA delivered stable results in FY2019, with improvements in both room and F&B revenue.

Despite the disruptions arising from the refurbishment of the rooms in FY2019, SPA recorded a marginal increase in room revenue. Excluding the rooms placed on out-of-order during the refurbishment, SPA was able to achieve RevPar growth of 3.9% in FY2019 which was contributed by improvements in both occupancy and room rates. The refurbished rooms will enhance overall guest experience and strengthen SPA’s position in the competitive Adelaide market.

On the F&B business, La Boca continued to generate stable revenue in FY2019.

Stamford Grand Adelaide ("SGA")

SGA reported another year of good results in FY2019, with improvements in both room and F&B revenue. SGA was able to achieve RevPar growth of 7.7% which was contributed by improvements in both occupancy and room rates. Also, SGA was able to grow F&B revenue by 8.2% in FY2019 with banquets achieving a remarkable growth of 11.6%.

SGA has plans to refurbish its rooms in FY2020 to reinforce its position as the only five star hotel in Glenelg.

AUCKLAND

Stamford Plaza Auckland ("SPAK")

SPAK delivered stable results in FY2019, with an increase in revenue of 0.6%. SPAK recorded an increase in F&B revenue of 15.0% and a slight decrease in room revenue due to decline in RevPar of 2.9% in FY2019.

PROPERTY DEVELOPMENT

The Group’s property development segment recorded a decline in revenue of 55.3% and operating profit of 50.6% due to the decrease in the number of units in Macquarie Park Village (“MPV”) settled during the financial year. The Group settled 135 units in FY2019, compared to 361 units in the last financial year. This brings the total number of units in MPV settled to 670 as at 31 March 2019.

The Group sold the last two remaining commercial units at The Stamford Residences and The Reynell Terraces in FY2019. In addition, the Group sold two more units at The Stamford Residences (Auckland) and continues its ongoing marketing efforts to sell the last remaining unit.

PROPERTY INVESTMENT

The Group made a further impairment loss of S$6.7 million on Dynons Plaza, owing to the reduced tenure in the lease term remaining. The Group is closely monitoring the lease expiry profile of Dynons Plaza and working to replace the single tenanted lease when it expires in April 2020.

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