But weaker room rates drag down RevPAR by 13.6% to $159 in Q4′09

CDL Hospitality Trusts (CDLHT), a favourite stockmarket proxy for the improving outlook for Singapore’s tourism sector, achieved an average occupancy rate of 88.9 per cent for its five Singapore hotels in the fourth quarter last year, a better showing than the fourth quarters of the preceding two years.

‘We’re seeing demand levels back to where they were prior to the economic crisis, albeit room rates are lower,’ said Vincent Yeo, CEO of the trust’s manager.

‘In November 2009, we did the highest occupancy rate ever bar one month (since the inception of our Reit in July 2006),’ he added.

However, weaker room rates dragged down room revenue per available room (RevPAR) by 13.6 per cent to $159 in Q4 2009 from $184 in Q4 2008. RevPAR peaked at $222 in Q2 2008.

The trust posted income available for distribution to unitholders of about $21.7 million for Q4 2009, a 14 per cent improvement from the same year-ago period.

Despite a 7.1 per cent year-on-year (y-o-y) drop in gross revenue to $26.1 million in Q4 2009, CDLHT achieved a 14 per cent y-on-y rise in net property income to $24.7 million. This was due to lower property tax expenses (inclusive of a 40 per cent property tax rebate granted by the Singapore government last year) and lower other property expenses.

The latest Q4 distributable income reflects a distribution per unit (DPU) of 2.58 cents.

For full year ended Dec 31, 2009, CDLHT posted total distributable income of $75.8 million, a decline of 17.6 per cent from the preceding year. The trust is paying out a total of $71.7 million, reflecting a 94.6 per cent payout ratio. It is retaining the balance $4.1 million (which is tax-exempt income) to help fund future capital expenditure on its properties.

CDLHT had $5.7 million in cash and cash equivalents as at end-2009.

CDLHT, which pays distributions semi-annually, will be making a payout of 4.71 cents per unit for the second half of last year. The full-year 2009 payout works out to 8.57 cents, which translates to nearly 5.2 per cent yield based on the counter’s $1.66 closing price yesterday.

The trust, which was listed on the Singapore Exchange in July 2006, owns five hotels in Singapore – Orchard, Grand Copthorne Waterfront, M, Copthorne King’s and Novotel Clarke Quay – and Orchard Hotel Shopping Arcade. It also owns a hotel in New Zealand – the Rendezvous Hotel Auckland.

London-listed Millennium & Copthorne Hotels (M&C), as sponsor of CDLHT with a 39.5 per cent stake, has given a right of first refusal to sell its Singapore properties to the trust for a five-year period starting from CDLHT’s listing date in July 2006. M&C will open a new hotel, Studio M, in the Robertson Quay area around April.

M&C’s parent City Developments has a stake in the St Regis Singapore. Overseas, the trust’s acquisition strategy is dependent on where the deals emerge and ‘the markets where we’re seeing the most deals flow are Australia and Japan’, Mr Yeo said.

Singapore’s pool of hotel rooms is expected to increase by about 5,800 rooms or 17 per cent this year. Most of the additional supply will come from the two integrated resorts (IRs).

Achieving even a 0.5-night increase in the average length of visitor stay in Singapore will help to offset a large part of the additional supply in 2010, Mr Yeo argues.

The demand-pull factors in Singapore are escalating to a new plane with the opening of the IRs. With a mix of gaming entertainment, conference facilities and the Universal Studios theme park, ‘the IRs mark a significant step forward in Singapore’s transformation into a world-class travel destination and a preferred mono-travel destination’, the trust manager said.

Mr Yeo said that ‘gaming is somewhat addictive so you could see very frequent visits’ from visitors in neighbouring countries such as Indonesia and Malaysia.

The draw of the IRs should also help to convert some of the transit passengers at Changi Airport to visitor arrivals into Singapore.

‘Less than 7.4 million of a total of 37.2 million passengers passing through Changi Airport in 2009 would have visited Singapore,’ the trust manager noted.

Source: Business Times, 28 Jan 2010

PROPERTY developer Hiap Hoe and SuperBowl Holdings, which owns and manages leisure and recreational facilities, are investing $300 million to open two hotels in Balestier through their 50:50 joint venture company, HH Properties.

HH has appointed Wyndham Hotel Management – which is part of the Wyndham Hotel Group – to run the two hotels. The hotel group’s portfolio consists of over 7,000 hotels and 11 brands.

The two hotels will be operated under the Ramada and Days Inn brands, which are new-to-market brands for Singapore.

The 390-room Ramada Singapore at Zhongshan Park will have more than 6,400 square feet of meeting space and will be linked to an adjacent office block. The Days Hotel Singapore, also at Zhongshan Park, will have 405 rooms. Both hotels are slated to open their doors in 2014.

‘Singapore is one of the most important business and leisure destinations in the Asia-Pacific region and we are thrilled to introduce our Ramada and Days Inn brands to the market,’ said Tom Monahan, Wyndham Hotel Group’s executive vice-president of international development. ‘We are very excited to be working with HH Properties as we expand our global footprint.’

While Hiap Hoe and SuperBowl Holdings have worked together in the past on residential projects such as The Beverly, this is the maiden venture into the hospitality industry for both companies.

The Balestier site was awarded to HH Properties in August 2008, when HH Properties acquired the land for some $75 million. The land cost is included in the $300 million investment.

Located opposite the Sun Yat Sen Nanyang Memorial Hall, it has a land area of about 190,000 sq ft and a gross permissible floor area of about 421,000 sq ft. HH Properties will also construct commercial developments on the site.

Teo Ho Beng, managing director of Hiap Hoe Group said: ‘We have spent a considerable amount of time planning the project. We selected Wyndham Hotel Group to manage the hotels based on its strong brand portfolio and track record.’

Source: Business Times, 28 Jan 2010

DESPITE a tough year, CDL Hospitality Trusts had some bright news for unit-holders when releasing its annual results yesterday.

Retail space at one property in its portfolio, Orchard Hotel, has been boosted by about 5,000 sq ft – which has been leased by a new tenant who will set up a bistro and live music venue.

The trusts, a combined hospitality real estate investment trust and a business trust, put in a stronger fourth quarter with income to be distributed to unit-holders up 48.3 per cent to 2.67 cents.

However, for the full year ended Dec 31, income to be distributed fell 19.3 per cent to 8.57 cents per unit.

The trusts recorded gross revenue of $26.1 million in the fourth quarter, down 7.1 per cent. Full- year gross revenue slid 20 per cent to $91.8 million.

The decline in gross revenue was attributed to the economic downturn and H1N1 that affected the tourism industry in the first half of last year.

The trusts’ net property income showed improvement in the fourth quarter by increasing 14 per cent to $24.7 million. But the full-year figure dropped 16.4 per cent to $85.9 million.

Distributable income for stapled securities holders stands at $21.7 million in the fourth quarter, up 14 per cent from $19 million the year before. The full-year distributable income, however, declined 17.6 per cent to $75.8 million.

Despite the general negative outlook of the full- year results, analysts remain upbeat as they expect the entertainment and tourism industry to grow this year with the opening of the integrated resorts.

Mr Vincent Yeo, chief executive of M&C Reit management, the manager of CDL Hospitality Real Estate Investment Trust, said the trusts saw increasing demand throughout the second half of last year.

‘In the fourth quarter, we achieved an occupancy rate of 89 per cent, which was not only the highest for the year, but also higher than that of all four quarters in 2008, albeit at a reduced room rate,’ he said.

Source: Straits Times, 28 Jan 2010

The world’s largest hotel company Wyndham Group is starting operations in Singapore by managing two new hotels at Balestier Road.

Wyndham will partner a joint venture (JV) between local property developer Hiap Hoe and Superbowl Holdings.

This is also the JV’s foray into the hospitality sector.

The busy Balestier Road area is fast becoming home to more hotels.

The latest two will be managed by the Wyndham Group.

There will be about 10 hotels in the area eventually, but Wyndham said there will still be demand for its mid-scale hotels.

They will cater mainly to medical tourists, due to their proximity to nearby hospitals.

Thomas Monahan, EVP, International Development, Wyndham Group, said: “Singapore is a critical market place in Asia. It is a showcase market place. It is where every hotel company wants to be, and there is certainly a shortage of room inventory in the three- and four-star market place for international brands.

“Our brands are a perfect fit for the market place, and they will help us grow in the Asia Pacific. If you look at the room inventory, most of it exists in the upscale (segment) and so these two properties will be positioned in the midscale, three- and four-star, where there is a lack of inventory in that market place.”

Wyndham is planning to use Singapore as a base to build up its Asian presence.

The two new hotels will operate under the Ramada and Days Inn brands, and will each have about 400 rooms.

They will be separated by a public park, which is being developed as part of a government condition attached to the land development.

Besides the hotels, there will also be an adjacent office block and an integrated hub for dining and entertainment.

This is the first time that Hiap Hoe and Super Bowl are going into the hospitality business.

It is part of the duo’s strategy to seek more steady growth.

Teo Ho Beng, managing director, Hiap Hoe Group, said: “The hotel will give us a very good recurring income, whereas for property development, you will be more dependent on the property cycle.

“Our location is near to the medical facilities that are coming up in this area, and we will be able to cater to some of this outpatient requirement that comes here for consultation.”

The total cost of the development is about S$300 million.

Both hotels are expected to be open in 2014.

Source: Channel News Asia, 27 Jan 2010

Visitors now have fewer reasons to accuse Singapore of being home to only soulless shopping malls and chain hotels.

When German businesswoman Claudia Ionker was searching the Internet for a place here to stay for two nights recently, she chose Wangz Hotel, a boutique hotel in Outram Road which opened last month.

‘I used to stay at those big chain hotels and the experience was so cold and impersonal,’ says the 44-year-old. ‘At a boutique hotel, I’m treated as a first- class guest.’

Wangz is one of a handful of interesting new hotels sprouting across the island.

Mr Brian Patterson, 64, an Australian mining manager, has been staying at the four-month-old Nostalgia Hotel in Tiong Bahru since last month. He says of his experience there: ‘The staff are very friendly and co-operative. The service is wonderful – they offer you free apples, which is a nice touch.’

Apart from attentive personal service, boutique hotels offer unique decor.

Wangz is a 41-room boutique hotel housed in a six-storey, barrel-shaped building previously occupied by offices and a hostel.

Glastech, which is in the serviced office business and is also developing a serviced residence in Novena, bought the property in 2007 to convert it into its first hotel. It is named after the Wang family, which owns Glastech.

Local architecture firm CPG Consultants landed the job of transforming the cylindrical building into a hotel. It was not an easy task.

As an MRT track runs below the building, its original structure has to be retained. The architects also could not increase the load on the building.

Given its round shape, carving out space within the hotel was also more problematic than inside a rectangular building.

In one respect, however, the curves are a blessing in disguise. Hotel manager David Yap, 40, says: ‘The rounded walls make the rooms feel more comfortable as there is no claustrophobic feeling.’

Making the rooms and even the shower stalls in bathrooms feel more spacious are glass windows, some of which are full-length, giving guests great views of Tiong Bahru’s old-world charm.

The view from the hotel’s rooftop bar is even more spectacular – you sip your drink while gazing at the city skyline.

While the service and interiors of the rooms will get the thumbs-up from guests, Mr Yap says it is the hotel’s artworks that make it stand out. The inn commissioned seven local and foreign artists to create 35 pieces of artworks featuring flora and fauna for its interiors.

He says the artworks cost the hotel $400,000 and they are for sale. The hotel will commission the artist to create new works to replace the ones sold.

‘Some guests even pick their rooms because of the artworks,’ he says.

The hotel, whose makeover costs $8million, currently enjoys 20 per cent occupancy. Most of its clients are European business travellers.

Source: Straits Times, 16 Jan 2010

Millennium & Copthorne Hotels chairman Kwek Leng Beng is optimistic Singapore’s hospitality industry will recover this year.

He is seeing improved occupancy rates at his Singapore hotels and expects average room rates to recover soon, he told BT.

And with the opening of the two casino resorts, the local hospitality sector will be transformed, he believes.

The resorts will attract new and different types of visitors and the number of leisure and MICE arrivals is expected to increase, he said.

Many of these people will extend their stay to take in other attractions, so the hotel industry as a whole will benefit.

Mr Kwek, who was speaking during the New Year weekend, also believes all hotels that have been operating for more than two years should be making profits because of their low ‘cost-base’.

Millennium & Copthorne Hotels owns or manages more than 120 hotels worldwide.

Source: Business Times, 5 Jan 2010

At least 10 mid-range hotels opened last year. They include the three-star French chain Ibis, which opened in Bencoolen, and Santa Grand in Bugis. More mid-range ones are coming onstream this year, such as Park Regis Singapore, Hotel Grand Chancellor and Santa Grand Hotel East Coast.

Movenpick Hotel will open in Sentosa and there will be a hospital-hotel complex, Connexion, in Farrer Park.

Next year, Ibis will open another hotel in Balestier, competing with at least four new ones, such as Aqueen Hotel Balestier and Value Hotel Nice, which have sprung up there.

Boutique hotels

Developers are zooming in on the boutique-hotel niche.

‘Travellers are becoming more sophisticated and discerning. So there is more demand for boutique hotels for those who want something different, and more personal,’ said Ms Chua Chor Hoon, head of South-east Asia research for property consultancy DTZ Debenham Tie Leung.

Rider’s Lodge, Klapsons and Wangz are just a few that have recently opened.

This year, more will join the fray.

Millennium & Copthorne (M&C) Hotels’ new brand, Studio M, will open near Mohamed Sultan.

Singapore’s largest bar-chain operator Harry’s Holding plans to open its first boutique hotel in Ann Siang Road.

The right mix

The Singapore Tourism Board tries to keep the mix of hotels right by monitoring trends and sharing the data with the industry.

It also works with the Urban Redevelopment Authority (URA) on the sale of hotel sites.

URA recently announced that Ogilvy Centre, an 82-year-old conservation office building next to Lau Pa Sat hawker centre, will be sold this year as a hotel site.

There are another nine sites on the agency’s reserve list, and all 10 sites add up to a potential of 3,435 new hotel rooms.

Source: Sunday Times, 3 Jan 2010

Well-heeled as well as budget travellers will be spoilt for room options when they visit Singapore this year.

Big players like Marina Bay Sands, Resorts World Sentosa and The Fullerton Heritage are rolling out top-end hotels.

Together, they alone will inject more than 4,000 rooms to the existing 44,000 in all classes of hotels.

But the majority of Singapore’s visitors – the biggest numbers being from China, Indonesia and Malaysia – will not be left out in the cold either, with more new mid-tier and budget hotels opening.

Tourism is expected to bounce back this year after the industry was hit by the global slump last year.

November’s visitor tally was up 8.4 per cent from a year earlier, to reach 830,000.

Singapore had targeted nine million to 9.5 million visitors for last year.

Given the new supply of rooms, industry players do not expect a repeat of the severe room crunch that plagued the previous tourism peak in 2008. Then, many tour groups had to be diverted to hotels in Geylang and even chalets in the east.

‘Those days, the numbers kept increasing but room numbers were stagnant. This round, we’re seeing new properties,’ said Mr Robert Khoo, chief executive of the National Association of Travel Agents Singapore.

He noted that while affordable hotels have opened, they cannot match the boost in rooms from five-star hotels.

‘Singapore is land-scarce. A hotel developer, if given a choice, will definitely want to develop a high-end property which will fetch higher and faster returns,’ he said.

One new five-star player is The Fullerton Bay Hotel. Slated to open in the second quarter, the 100-room hotel boasts a waterfront location and a grand entrance through the foyer of the historic Clifford Pier.

The substantial overall rise in room numbers means that rates will continue to be under pressure, said Ms Chua Chor Hoon, head of South-east Asia research for property consultancy DTZ Debenham Tie Leung.

The average room rate for November last year was about $198.

The average hotel occupancy rate has been holding steady at around 70 per cent to 80 per cent. Last November, it hit 84.3 per cent, a 3.8 percentage point increase over November 2008.

During the 2008 peak, it was in the 80 per cent to 90 per cent range.

With competition in the top tier heating up, travel agents said some hotels in this segment have indicated that they will lower room rates by 20 per cent to 30 per cent.

Ms Karen Tan, executive assistant manager for revenue and marketing at Swissotel The Stamford and Fairmont Singapore, said room rates ‘will be competitive’.

Said Marina Mandarin Singapore’s general manager, Mr Richard L. Dusome, of the competition from Marina Bay Sands: ‘We will keep a close watch on their pricing strategies to ensure we are competitive.’

The integrated resort’s three hotel towers will offer more than 2,500 rooms.

While most visitors are mid-range types, travel agents said the five-star hotels will have their following.

They include high-end travellers who are likely to turn their attention from Macau to Singapore when the integrated resorts open.

Singaporeans looking for ‘an alternative staycation’ are also expected to check into the integrated resorts, said Ms Jane Chang, assistant manager of marketing communications at Chan Brothers Travel.

Source: Sunday Times, 3 Jan 2010

The new upgraded rating criteria will apply to 18,000 hotels across France

France, the world’s top tourism destination, is polishing up its hotel star ratings and introducing a new luxury five-star category to help travellers know what to expect.

The new rating criteria will apply to 18,000 hotels across France, many of which are showing off stars awarded under the previous ranking system that dates back to 1986.

The upgraded star system went into force at the weekend when details were published in the government gazette.

The most spectacular change is the new five-star category – already claimed by some 60 hotels such as the world-class Paris Ritz or the Hotel Negresco in Nice.

Industry leaders say the five-star category will help France face tough global competition at a time when the hotel business is struggling to recover from the global downturn.

‘The terms of reference were out of date,’ said Christine Pujol, president of the hotel owners’ main trade group Umih.

‘Customers did not know what to expect any more from a two-star hotel,’ added Genevieve Balher, president of the Synhorcat group representing the hospitality business.

A hotel ranked in 1986 may well have kept its stars without undergoing any renovation and there is no control over the ranking, she said.

Under the new criteria, stars will be attributed for a period of five years by accredited auditors instead of a government agency.

The prefect or state official for a department will however have the final word on granting stars.

The zero-star hotel is consigned to history under the new regulations, meaning that the lowest possible standard of comfort is now the one-star hotel.

A one-star room should be no smaller than nine square metres and have a shared bathroom with guests from no more than seven other rooms.

More stars means a bigger room and Internet access, for instance, is now a criteria for a three-star hotel.

‘Guests will know that the star ranking is a guarantee of cleanliness and furnishings that are in good condition,’ said Michele Le Poutre, who helped elaborate the new criteria.

But Mark Watkins, president of a committee pushing for more modern French hotels, said the new rating system was already out of sync with that of other international destinations.

‘En suite bathrooms are only compulsory for three-star hotels and you will have to go to a four-star to get international channels on television,’ he complained.

Mr Watkins said the new rating system would benefit mostly hotel chains and that independent owners will have a tougher time satisfying the criteria.

Industry officials estimate that up to 10 billion euros (S$20 billion) will be spent by hotel owners in the coming years for renovation work that will allow them to keep their stars.

France draws tens of millions of visitors each year to its tourist attractions, cultural sites and world-class restaurants, but the global downturn has hit the hotel sector hard.

Major chains like Accor, Europe’s biggest hotel group, have reported a plunge in sales as bookings slowed dramatically over the summer months with the loss of British and American tourists.

Under the new regulations, any hotel can choose to apply for the star rating, but there is a fee.

Source: Business Times, 29 Dec 2009

Much of this activity in the US will be spurred by sale of distressed properties

The recession-ravaged US lodging industry will offer opportunities next year for would-be hotel investors interested in picking up plum properties suffering from falling revenue and high debt.

As much as US$3.5 billion worth of hotels are expected to trade hands in the United States next year, compared to just US$2 billion in 2009, according to projections from hotel investment firm Jones Lang LaSalle Hotels.

Much of this activity will be spurred by the sale of distressed hotels struggling to fund looming debt payments as travel demand remains weak.

‘When these loans come due, I think that’s when you’re going to see an awful lot of product in the market,’ said Daniel Lesser, a senior managing director of CB Richard Ellis.

Nearly 1,300 properties in the US are classified as distressed, representing a value of more than US$32 billion, according to Real Capital Analytics. That figure ticks up daily as more and more hotels buckle under the economic downturn, which has sapped travel demand.

‘At some point, it’s simple math,’ said Dan Fasulo, head of research at Real Capital. ‘If your income from the property (is cut) by half, there’s not enough money to go around to pay the bank, to pay your staff, to pay your suppliers.’

Hotel deals in the US have been few and far between in 2009 as buyers and sellers haggled over the worth of these properties. ‘There’s been a huge disconnect between bid and ask,’ Mr Lesser noted, adding that valuations are now not as far apart as they were 18 months ago. Many take this as a sign that transactions will pick up again in 2010.

The daily resetting of room rates means hotels are highly sensitive to fluctuations in the economy.

Daniel Vosotas, chief executive of Trans Inn Management, said his company had to revamp its hotels’ budgets at least four times this year to cope with volatile economic conditions.

‘We lease every 24 hours,’ Mr Vosotas said. ‘Our product is more perishable than fruit.’

This sensitivity, coupled with looming debt maturities coming due over the next three years, may bode badly for hotels scrambling to meet payments, but could spell opportunity for funds looking to buy.

‘In 2010, there will be a pick-up in transactions, not just in hotels, but in commercial real estate in general,’ said David Weymer, a managing principal at Noble Investment Group.

Noble has about US$200 million available in a fund dedicated to buying hotels.

Mr Weymer said the Atlanta-based firm has not closed on an acquisition in about 20 months, but he expects it will buy a property ‘fairly soon’.

‘It’s like being at the junior high dance waiting to see who goes on the dance floor first,’ Mr Weymer said. ‘In 2010, they’re going to start to see more couples get on the dance floor.’

This week, Stifel Nicolaus analyst Rod Petrik wrote that more than US$38 billion in opportunity funds stand at the sidelines looking to buy distressed assets. Of that sum, US$7.5 billion could be earmarked for buying hotels, he wrote.

Host Hotels & Resorts Inc said in October it was looking to buy hotels that might fit into its stable of top-tier properties. Pebblebrook Hotel Trust raised about US$350 million in an IPO this month to acquire distressed hotels.

But other funds are struggling to raise the cash to fund hotel acquisitions, suggesting there are mixed feelings about the pace and number of choice properties that could come up for sale in 2010.

Last week, another company vying to go public, Chesapeake Lodging Trust Corp, had to postpone its initial public offering indefinitely.

‘A lot of people are little bit hesitant to commit into a fund without knowing how long it’s going to take before you start acquiring assets,’ said Paul Novak, president of Bedrock Partners. Mr Novak is trying to put together a fund of US$200 million to US$250 million to buy hotels. He projects there will be some pick-up in hotel sales by spring.

Source: Business Times, 22 Dec 2009