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ARA US Hospitality Trust outperforms in 9MFY2022 amid travel recovery

Samantha Chiew
Samantha Chiew11/4/2022 01:32 PM GMT+08  • 2 min read
ARA US Hospitality Trust outperforms in 9MFY2022 amid travel recovery
Travel recovery boosts ARA US Hospitality Trust's 3QFY2022 performance. Photo: ARA US Hospitality Trust
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In its latest 9MFY2022 ended September business update, ARA US Hospitality Trust announced that its occupancy has increased by 9.5 percentage points (ppt) to 65.4%, while average daily rate (ADR) saw an 18.9% y-o-y increase to US$130 ($184).

Thanks to the growth in occupancy and ADR, revenue per average room (RevPAR) grew 39.0% y-o-y to US$85, while gross operating profit (GOP) margin gained 3.5 ppt to 34.5%.

During the period, gross revenue increased by 38% to US$130.0 million, compared to US$93.9 million a year ago. Gross operating profit came in at US$44.9 million, some 54% higher than US$29.1 million last year. This brings net property income to US$33.0 million, 80% higher than US$18.3 million in 9MFY2021.

For the 3QFY2022 period, occupancy came in at 71.0%, while RevPAR was US$97. Revenue came in at US$48.7 million, while net property income was at US$11.9 million.

On the outlook, the trust’s manager believes that the US hotel market demand growth remains optimistic, outweighing economic uncertainty and geopolitical risks. With that, it expects occupancy for FY2022 to FY2024 to come in at 63%, 65% and 66%, respectively.

RevPAR for FY2022 is expected to come in at US$93, while FY2023 and FY2024 is predicted to expect US$98 and US$103, respectively.

See also: ESR plans to simplify business, "evaluate" Cromwell, monetise sub-scale REITs

Despite mixed macroeconomic signals, US travel and hotel markets are continuing countercyclical recoveries, according to the trust’s manager in its business update. Steady and consecutive improvement in US hotel market RevPAR y-o-y; business and group travel growth represents further upside.

While the manager is concerned about inflation, but it says that it will support ADR strength, which mitigates operating cost increases and protects operating margins.

The trust boasts sound financial management in a rising interest environment as over 80% of its loan portfolio interest expense are fixed and hedged. Moving forward, the trust believes that its operating and financial performance recovery, plus pass-through structure will support future DPS increases.

See also: Second Chance set to report higher 1HFY2023 net profit

As at 1.30pm, units in ARA US Hospitality Trust are trading at 36 US cents.

Photo: ARA US Hospitality Trust

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