COVID-19’s impact continue to weigh down on the group’s financial performance, particularly on its hospitality business. Image: Orchard Rendezvous Hotel by Far East Hospitality via Google maps
Far East Orchard registered a net loss of $6.3 million during the nine-month period ended 30 September, compared with a net profit of $5.4 million over the same period last year.
In an SGX filing, the company noted that the loss came as COVID-19’s impact continue to weigh down on the group’s financial performance, particularly on its hospitality business.
The group saw sales drop 25.1% to $84 million, while total operating profit plunged 74.8% to $6.4 million during the period under review. Losses from the group’s hospitality business were partially offset by contributions from its purpose-built student accommodation (PBSA) portfolio.
For the first nine months of 2020, Far East Orchard benefitted “from the full period of contributions from the PBSA assets acquired in 2019”.
Its property development business segment also posted profit from its joint venture project, Woods Square, which secured Temporary Occupation Permit in February this year.
But with COVID-19 cases resurging in various countries and global travel at a standstill, demand for accommodation within the hospitality sector stood at below historical lows, resulting to “low occupancies and significant declines in revenue per available room (RevPAR) year-on-year across all the group’s hotels”, said Far East Orchard.
Singapore saw the decline in demand to be mitigated by accommodation for isolation facilities as well as corporate lodging requirements, the latter being mainly for Malaysian workers in Singapore.
Far East Orchard shared that its PBSA properties have been operational, with students checking in for the start of the UK academic year 2020/2021 in September.
“Although there has been a small uptick in cancellations compared to previous years, and some university courses pushed back by one semester to commence in January 2021, overall occupancy for the Group’s PBSA portfolio remains high at over 80% as at end September 2020,” it said.
The group also revealed that it had a healthy cash balance of $276.1 million as at 30 September, compared to $257.4 million as at 31 December 2019.
Looking ahead, Far East Orchard expects its financial performance for FY2020 to be “severely impacted by the challenging operating conditions”.
“We are likely to see a protracted recovery period for the hospitality industry. Despite the challenging environment, our hospitality business has pushed ahead with numerous hotel openings this year, in Australia and Japan where hotel demand is supported by domestic travel,” said Far East Orchard Group Chief Executive Officer Alan Tang.
“We will also step up in our efforts to grow our hospitality operating footprint in Asia Pacific through management agreements.”
Far East Orchard is on track to open around 1,300 rooms this year, 50% of which are set to open in the last quarter of 2020. These will add to the group’s hospitality portfolio of 98 properties as well as over 16,000 rooms globally.
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