Hospitality warns of slow hotel trading

Hospitality Property Fund, the only hotel-focused real estate investment trust (Reit) on the JSE, says growth in hotel trading is expected to remain under pressure given the weak economic growth prospects in SA.

The company released financial results for the six months to September wherein CEO Keith Randall said it continued to improve its performance since becoming a subsidiary of casino and gaming group, Tsogo Sun.

“Hospitality completed the acquisition of 29 hotel properties from Tsogo Sun as well as the acquisition of additional sections in the Sandton Eye Sectional Title Scheme and the real right of extension on the Radisson Gautrain building, which formed part of the scheme,” said Randall.

Hospitality’s results were not comparable with the previous reporting period due to the seasonal variability in the rental income, a change in year-end, as well as the additional properties acquired in September 2016 and July 2017, according to Randall.

Hospitality’s rental income rose to R314m and its investment property value increased through acquisitions to R13bn.

Trading volumes for the fund’s Western Cape hotels were “generally good” with occupancy at 60.4%, a growth of 3.2% on the prior year.

While some of the Cape Town properties produced double-digit growth in revenue per available room, this was offset by poor performances at hotels experiencing a drop-off in higher-rated international business and association business.

In Gauteng, trading volumes declined 1.3% on the prior year to an occupancy of 59.7%.

Individual hotels’ trading was volatile over the period with the average room rate only increasing 2% on the prior year. This led to revenue growth per available room of 0.6%.

The hotels in the rest of Africa segment’s occupancy grew 4.1% to 68.6%. The average room rate declined 3.4% to R890. This resulted in revenue growth per available room of 0.5% to R610.

Hospitality declared a distribution per share of 41.83c.