Hospitality’s room rate climbs to beat industry over half year

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Johannesburg - Hotel occupancies were reaching levels last seen in 2008. This was despite the boost in December to revenue on available rooms from many foreign dignitaries travelling to South Africa to pay tribute to Nelson Mandela, real estate investment trust Hospitality Property Fund said yesterday.

Hospitality chief executive Andrew Rogers said rand’s weakening since the beginning of this year had made South Africa more affordable for international visitors, which could further boost demand in the domestic hospitality sector.

Rogers said Hospitality had outperformed the industry’s revenue per available room growth of 14.7 percent by growing by 18.4 percent in those properties in the fund’s portfolio that were subject to variable rental income in the six months to December.

He said: “The quality of Hospitality’s hotel portfolio was an important contributor to the strong performance, with our properties in Sandton and Cape Town in particular performing well.”

Occupancy improved by 4.5 percent to 62.5 percent compared with the 2.7 percent improvement of the hotel industry to 63.5 percent. The fund’s average room rates increased by 13.4 percent.

Hospitality reported a 5 percent increase in distribution an A-linked unit to 69.83c for the six months to December and 109 percent growth in B-linked unit distribution to 19.25c.

Distributable earnings a combined linked unit increased by 18 percent to 89.08c.

Rental income grew 22 percent to R212.6m and was led by the inclusion of the Radisson Blu Gautrain Hotel and rental income growth of 13.1 percent by the portfolio’s remaining 22 properties that were subject to variable rental.

Rogers said the fund continued to benefit from improving fundamentals in the South African hospitality industry in the reporting period and was on track to meet the forecast distributions for the remainder of the financial year.

The fund’s capital expenditure was contained at R40m because virtually all fixed and variable lease properties have been refurbished over six years.

However, the addition of a new outdoor swimming pool at Westin Cape Town, the upgrade of the public areas at Radisson Waterfront and the expansion of the Protea Edward with 24 new bedrooms are planned in the short term.

Rogers said Hospitality’s focus for the rest of the financial year remained on further rationalising its capital and funding structure, and optimally growing room rates while being sensitive to the impact on trading volumes.

Hospitality’s A-linked units fell 1.1 percent to R16.18, while its B-linked units rose 0.19 percent to R5.40. - Business Report

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