Amid the gradual reopening of international borders, Ascott Residence Trust (ART) says it is seeing q-o-q recovery in its 3QFY2020 portfolio revenue per available unit (RevPAU), which plunged 70% y-o-y to $47, but increased 27% q-o-q.
In its business update released on Oct 30, ART says 93% of its properties are operational as at Oct 29 with more reopened amid stabilising market conditions.
Average portfolio occupancy for 3QFY2020 stood at 40%, up 10 percentage points from the 30% in 2QFY2020.
During the quarter, domestic demand supported recovery in countries with large domestic markets such as China.
On that, ART’s portfolio continued to generate positive gross profit and cashflow.
As at Sept 30, ART reported that it had over $1 billion of available funding which comprised some $305 million of cash on hand, $550 million in credit facilities and $180 million in net divestment proceeds to be received. The outstanding proceeds were from the ongoing divestments of Ascott Guangzhou, Citadines Didot Montparnasse Paris, Citadines Xinghai Suzhou and Citadines Zhuankou Wuhan.
In Australia, ART saw block bookings from the Australian government, military and heathcare workers at some properties, which mitigated the absence of traditional demand. The block bookings are expected to continue into 4QFY2020.
3QFY2020 RevPAU fell 63% y-o-y to A$47 ($45.40) as most state borders remained closed.
China’s RevPAU for the quarter declined 30% y-o-y to RMB321 ($65.07), registering a recovery from previous quarters with stronger performance from first-tier cities.
The country’s portfolio occupancy of 60% in the quarter was attributable to long stays and domestic demand.
However, ART foresees average daily rate growth expected to be limited in the near-term due to market competition, particularly in the midscale lodging segment.
In France, the situation remains “fragile” with the imposition of lockdown measures.
The country will go back into a nationwide lockdown from Oct 30 to Dec 1 to curb the spike of Covid-19 cases.
Eleven of the 12 properties that were temporarily closed in 1HFY2020 have reopened, with the remaining property expected to reopen in 4QFY2020.
Domestic leisure demand peaked in August during the summer break, which contributed to healthy occupancies of over 80% in ART’s regional properties in France.
In Japan, 3QFY2020 RevPAU plummeted 91% y-o-y to JPY1,068 ($13.95) due to the absence of transient travel demand.
ART’s Singapore portfolio saw a 50% drop y-o-y in RevPAU to $85 on lower room rates.
Block bookings by the Singapore government mitigated the absence of international travellers.
ART says it expects to see elevated occupancies due to the businesses contracted by the government.
Ascott Orchard Singapore could also receive a boost from the government’s domestic tourism drive.
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In the UK, RevPAU for 3QFY2020 plunged 89% y-o-y to £17 ($30.11) as its four London properties were more affected by the lack of international travel demand.
3QFY2020 RevPAU for the US fell 78% y-o-y to US$48 ($65.40) with current bookings mainly arising from leisure segment and drive-to markets, with spikes in demand on weekends.
Vietnam’s RevPAU for the quarter fell 58% y-o-y to VND687,000 ($40.39) on dampened travel sentiment following the second wave of outbreaks in Danang.
On the lack of travel demand, ART has pursued alternative sources of business such as providing accommodation to those on self-isolation and those affected by border shutdowns.
It has also pivoted towards using its spaces to provide alternative spaces for workers seeking to work remotely with its Work-in-Residence and Space-as-a-Service initiatives.
Looking ahead, ART says it is “well-placed” to ride the recovery despite near-term headwinds.
It expects a gradual pick-up in occupancy, with recovery driven by domestic segments.
It adds that it will review distribution payout “holistically” taking into consideration the market outlook and past divestment gains received.
Units in ART closed 2.5 cents lower or 2.9% down at 82.5 cents on Oct 29.
