ARA US Hospitality Trust has reported total revenue of US$134.6 million ($183.1 million) for the 9MFY2023 ended Sept 30, 3.6% higher y-o-y.
Gross operating profit (GOP) rose by 8.6% y-o-y to US$48.7 million while GOP margin increased by 1.7 percentage points y-o-y to 36.2%.
Net property income (NPI) increased by 6.7% y-o-y to US$35.2 million while NPI margin was up by 0.8 percentage points y-o-y to 26.2%.
Revenue per available room (RevPAR) increased by 14.8% y-o-y to US$98.
For the 9MFY2023, occupancy stood at 70.6% while average daily rate (ADR) stood at US$139, 6.5% higher y-o-y.
The higher figures stood as the US lodging market continued its recovery for the period with demand remaining resilient in spite of elevated interest rates and inflationary concerns. According to the trust, the outlook for the rest of the year remains positive.
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Demand from business and group segments are also gaining traction, boosting overall lodging demand. The growing trend of hybrid work arrangements is also contributing to an increase in demand for travellers seeking to combine business and leisure travel.
Large group meetings and conventions, which take longer lead times to plan, are starting to return and represent a potential pool of additional hotel guests.
As at Sept 30, the trust’s gearing stood at 40.9%, higher than the 39.4% posted as at Dec 31, 2022. Interest coverage ratio (ICR) stood at 2.6x.
“We are pleased to report that our portfolio remains healthy and continues to outperform year-on-year across all performance indicators in 9MFY2023, demonstrating the strength of our assets and the differentiation of hotel versus other real estate asset classes. Our well-diversified portfolio of upscale, select-service hotels has been able to benefit from the robust ADR and occupancy growth in US year-on-year, which outpaced the inflationary and interest rate increases to preserve profit margins for our stapled securityholders,” says Lee Jin Yong, CEO of the managers.
“Over the course of the year, amidst a tight credit market environment, our financial and liquidity positions have also significantly improved with the recent refinancing of our maturing loans due in 2024, adding stability to our balance sheet,” he adds.
Looking ahead, Lee says the trust is seeing upticks in travel activities for groups and businesses while demand for leisure normalises.
“We believe that the outlook for the US lodging market remains optimistic, outweighing economic uncertainty and geopolitical risks, as the US economy remains robust and travel is back to normal. With US hotel RevPAR now above pre-Covid-19 levels, the continuing recovery of business and group travel will represent further upside for our portfolio. We are cautiously optimistic that the operating metrics for our portfolio will further strengthen, barring any unforeseen circumstances,” he continues.
Units in ARA US Hospitality Trust XZL closed flat at 27 US cents on Nov 9.
