The managers of ARA US Hospitality Trust have reported a distribution per stapled security (DPS) of 1.427 US cents (1.971 cents) for the 1HFY2022 ended June.
The half-year period’s DPS is a 302% growth from the trust’s DPS of 0.355 US cents in the 2HFY2021. There was no DPS distributed in the 1HFY2021.
During the 1HFY2022, revenue increased by 53.8% y-o-y to US$81.3 million as the portfolio’s average occupancy grew by 11.5 percentage points y-o-y to 62.7%.
The trust's average daily rate (ADR) for the six-month period stood at US$127.
Consequently, revenue per average room (RevPAR) grew to US$80 from US$52.
On the back of the higher revenue, gross operating profit (GOP) grew by 95.0% y-o-y to $27.6 million, while net property income (NPI) surged by 131.2% y-o-y to $21.1 million.
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GOP margin increased by 7.2 percentage points y-o-y to 33.9%.
Distributable income stood at US$8.1 million.
According to the trust, there were several factors leading to the higher average occupancy and ADR, including the recovery of both domestic and international travel in the US in the 2QFY2022.
Within the country, Covid-19 is transitioning from a pandemic to an endemic situation.
“Although the Omicron variant of Covid-19 surged in January temporarily disrupting travel, case counts quickly subsided by February and the travel recovery resumed. While lodging demand growth historically exhibited a close correlation with economic growth in the US, this dynamic decoupled during the past two years with the Covid-19 pandemic,” says the REIT manager in its Aug 4 statement.
“High vaccination rates led to a return in travel confidence, and the lifting of lockdowns and other restrictions imposed during the height of the Covid-19 pandemic unleashed strong pent-up demand for travel, particularly for the leisure segment,” it adds.
Lee Jin Yong, CEO of the managers says, “The operating performance of ARA US Hospitality Trust is expected to continue to outperform this year on the back of the robust US lodging recovery supported by the pent-up demand and pricing strength. The hotel portfolio ADR has surged and this pricing strength is enabling hotel revenue growth to outpace expense increases, mitigating inflation concerns on margins.”
He adds, “We were pleased to resume distributions for 2HFY2021. Our DPS for 1HFY2022 has increased substantially with the continued recovery in our operating performance. Moving forward, the return of business and group demand on top of leisure demand will drive future operating performance and profits.”
As at June 30, cash and cash equivalents stood at US$19.8 million.
Looking ahead, the managers believe that the gradual return of business and group demand on top of leisure demand will lead to a full recovery in US hotel market occupancy, as well as drive further increases in market RevPAR.
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Domestic travel is expected to continue to drive the recovery overall in the US travel industry, with leisure travel and business travel spending to reach 108% and 90%, respectively, of 2019 levels by 2024, it adds.
“I’m optimistic about the future performance of ARA US Hospitality Trust. The strengthening revenues combined with the highly efficient cost structure for select-service hotels are expected to enhance returns and deliver value for investors over the long run,” says Lee.
The trust’s record date is on Aug 18; its DPS will be paid out on Sept 26.
Units in ARA US Hospitality Trust closed at 47.5 US cents on Aug 3.
