S Hotels and Resorts PCL (SET: SHR), a global hospitality company from Singha Estate PCL (SET: S), announced accelerating 1H of 2023 total revenue of THB 4,821 million, a 28% rise YoY. Adjusted EBITDA recorded atTHB 1,112 million, increased 74% YoY . The performance was derived from 69% occupancy rate of the overall portfolio in the first six months of 2023, compared with 54% during the same period in the last year, and an increase of 11% in average daily rate (ADR) from the first half of 2022.
The properties in Thailand have reflected a concrete recovery in Thai tourism industry which is close to the pre-pandemic level after the country has fully opened the border. The performance has illustrated the improved occupancy rate from January to June 2023, registering an average of 76%, compared to 48% recorded in the first half of 2022. Inducing the ability to command higher ADR. The ADR in the first half of 2023 was THB 8,431, significant growth of 72% compared to the same period of last year.
The economic challenges in Europe at present have affected the traveling behavior, driving the European to travel more in their own countries or within the region. This has resulted in the ability of SHR’s UK properties to maintain positive momentum as the majority of the guests or approximately 90% was composed of local tourists. The UK portfolio has recorded an occupancy rate of 70%, compared to 54% during the first six months of the previous year. Additionally, the ADR was up by 10%, at approximately GBP 83 amid consumers’ discretionary spending strained by higher living costs. It is expected that both the occupancy rate and ADR in 3Q23 will continue to increase, supporting by the advance booking during the high season.
The change in the European’s traveling behavior mentioned earlier has also affected the properties’ performance at CROSSROADS Maldives. CROSSROADS Maldives recorded an occupancy rate above 87% but slowed down in 2Q23 due to seasonality impact with lower number of tourists from Europe who travel to overseas less and slower-than-expected recovery of Chinese tourist.
Looking conservatively ahead towards the end of this year, SHR foresees a relatively similar performance compared to last year in occupancy, however, this rate is in a sensitive market as tourists are expected to explore other destinations, corresponding with fully opened borders around the world. Additionally, the Europeans prefer to travel domestically while the return of Chinese tourists is slower than expected.
The property in Mauritius has been temporarily closed for a complete overhaul and upgrade of the water management system and will reopen in the fourth quarter of this year, making only a minimal impact on SHR’s annual performance as the Mauritius property accounts for just 3% of total revenue.
Mr. Dirk De Cuyper, Chief Executive Officer of S Hotels & Resorts, said, “Our operating performance in the first half of the year has been highly satisfactory, especially with the statistics in Thailand and the UK showing positive signs of continued strong recovery. Properties in other locations, for instance, the Maldives and the Fiji Islands, also show a promising trajectory. The customers base in Fiji has been expanded, welcoming more tourists from North America especially the Canadians to the properties, apart from the current market share dominators who are the Australians and the New Zealanders. We are confident that the tourism sector will remain strong with the support from the new market expansion. Castaway Island – Fiji has enjoyed an occupancy rate of over 93% during the second quarter, while CROSSROADS Maldives has recorded a consistent performance despite the low season.”
“In addition, we are ambitious to boost portfolio efficiency by deploying the optimal RevPAR management strategies from the renovations in many hotels in Thailand, Fiji, and the UK whose new rooms will be ready to welcome guests towards the end of 2023. All of these initiatives together with our strict cost measurement will support our trajectory towards revenue targets of over THB 10,000 million.” He added.
SHR is prompt to overcome challenges thanks to a strong financial position where leverage is constantly maintained at a low level and capital expenditures have been managed efficiently. TRIS rated SHR at “BBB+” and a good credit rating will pave the way for SHR to acquire a lower cost of capital and grow more efficiently. At present, the debenture issuance plan is proceeding as scheduled.
SHR continues to put sustainability at the heart of its operations, and those efforts have been recognized with six properties receiving Green Globe™ Certifications. This reassures investors and hotel visitors that SHR hotel operations comply with international standards and expectations. Starting in 2023, SHR has strategically laid out its plan to become a carbon-neutral company by 2030.
