City Developments Limited (CDL) on Nov 30 reported that global occupancy of 38.3% for year-to-date ended September from 74.0% previously as the hospitality industry remains adversely affected by the impact of the Covid-19 pandemic.
Year-to-date, global revenue per available room (RevPAR) plunged 62.7% to $54.30 from the $145.40 reported during the same period a year ago.
Despite the lower figures, the group says it has embarked on new strategies such as digital market, focusing on domestic retail travellers, staycations and other innovations, as well as cost containment measures during the period. These, it says, have contributed to the recovery of its gross operating margin in several locations.
CDL’s global hospitality portfolio comprises mainly of its wholly-owned subsidiary Millennium & Copthorne Hotels Limited (M&C)
M&C says it expects to close 2020 with an occupancy rate that is at least half the 73% rate achieved during its pre-Covid-19 levels in 2019.
Entities under M&C have reported that they have begun recovering from losses to see gross operating profits in Asia since May and New Zealand since June.
The subsidiary added that it has seen positive gross operating profits globally since July.
However, CDL says it expects to record losses for the FY2020 owing to the unprecedented collapse of global travel and tourism from the pandemic.
As at Sept 30, 11% of the group’s global portfolio of 153 hotels were temporarily closed, down from 28% in the previous quarter.
In a separate announcement on SGX, CDL maintains that its overall business and financial position remains “healthy with sufficient liquidity to meet its operating and financial commitments”.
The group’s net gearing ratio stood at 52% with interest cover at 4.1 times as at Sept 30. It also has strong cash reserves of $3.3 billion.
“There are no material concerns over the Group’s ability to fulfil its near-term debt obligations,” it says.
On the property development front, CDL says the Singapore residential property market remains “resilient” with strong sales of new private homes. This is supported by demand from both its domestic and foreign buyers.
“The resilience is underpinned by demand drivers including the low interest rate environment, debt relief scheme and Government support measures to preserve jobs,” says the group in a Nov 30 statement.
CDL and its joint venture associates sold an average of 25 units weekly from its existing inventory and sales were further boosted by the launch of Penrose, its 566-unit joint venture residential project at Sims Drive in September.
For the 3QFY2020, CDL sold a total of 710 units with a total sales value of $914.1 million, compared to the 174 units with a sales value of $240.9 million in the previous quarter.
In the same quarter, CDL reported a committed occupancy of 92.0% for its Singapore office portfolio, with its flagship office property Republic Plaza reporting an occupancy rate of over 96%.
Almost all of CDL’s retail and food and beverage (F&B) tenants in Singapore have reopened for business except for those in the entertainment trade.
CDL’s largest mall, City Square Mall, says it continues to attract new tenants such as MOS Burger, Shihlin, as well as Haidilao and Skechers.
In China, Thailand and the UK, malls have been allowed to reopen, while CDL’s residential rental apartment in Japan has seen “resilience” amid Covid-19.
Looking ahead, CDL says it is “optimistic” on developments such as the pending vaccine rollout and a gradual easing of border restrictions, but it does not expect the current pace of recovery to counter the adverse impact on its operations and financial performance for the current financial year.
“To ride out the turbulence, the group remains focused on cost-containment and capital management measures, even as it continues to drive forward its long-term growth plans,” it says.
As at 10.16am, shares in CDL are trading 2 cents higher or 0.3% up at $7.89.
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