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Covid-infection drags Banyan Tree's 1H20 losses deeper into the red

Amala Balakrishner
Amala Balakrishner • 3 min read
Covid-infection drags Banyan Tree's 1H20 losses deeper into the red
Banyan Tree has not declared a dividend for 1H2020 – similar to 1H2019.
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Resort-developer Banyan Tree Holdings sank deeper into the red with losses of $49.1 million in 1H2020 ended June, from the $2.6 million in losses a year ago.

The deepening losses was due to the impact of the global movement control restrictions on the tourism and hospitality sector.

This translates to losses per share of 5.85 cents on a fully diluted basis in 1H2020, compared to the 0.32-cent loss in 1H2019.

Revenue for the six-month period plunged 43% to $75.4 million, following an “extreme” drop in demand from end March. For instance, overall hotel occupancy fell to 17% in 2Q2020, from 37% in 1Q2020. By contrast, occupancy levels were at 54% at end 2Q2019 and 59% in 1Q2019.

This resulted in a 49% shrinkage in the group’s Hotel-investments segment to $48.2 million. Geographically, the decline in revenue came from Thailand ($33.2 million), Maldives ($10.6 million) and Indonesia ($1.6 million).

Similarly, takings from the fee-based hospitality segment – comprising hotel management, gallery, spa, design and other operations – saw revenue fall 48% to $14.5 million, following soft demand, lower occupancies and project delays.

The drop in income was the sharpest in 2Q2020 at 78%, compared to the 20% decline posted in 1Q2020.

Residences and extended stay was the only segment to report an expansion, with a 15% year-on-year increase in revenue to $12.7 million, thanks to the higher average prices of units recognised.

However, the unfavourable macroeconomic conditions have caused the group to pull back on some projects and even apply a one-off write-down on property development costs amounting to $14.3 million.

In this time, costs and expenses were down 7% to $102.4 million due to lower costs of operating supplies, salaries and sales and marketing.

As at June 30, cash and cash equivalents – comprising cash and short-term deposits less bank overdrafts – stood at $53.2 million, consistent with $53.98 million held the year before.

Banyan Tree has not declared a dividend for 1H2020 – similar to 1H2019.

In fact, the group is pursuing steps to reduce other costs, conserve cash and diversify funding sources to see in through the uncertain duration and effects of the Covid-19 pandemic.

Cash preservation measures implemented include unpaid leave, restructuring initiatives, and the suspension of noncritical capital expenditure.

The group is also reviewing all aspects of operations, including its sales and marketing programme, to ensure that it is ready to meet demand when air travel returns to normal and borders are reopened in each of the countries where it operates.

Over the next 12 months, Banyan Tree is looking to open eight new resorts and seven spas in Thailand, Malaysia, Indonesia, China, Qatar, Mozambique and Greece, of which the latter three are new markets.

In the longer term, it is looking to open 46 new properties over the next three years as part of its ambition to double its operating footprint by 2025.

Shares of Banyan Tree were flat at 23 cents as at 12.18pm on August 13.

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