12
ANNUAL REPORT 2015
FRASERS HOSPITALITY TRUST
LETTER TO STAPLED SECURITYHOLDERS
tourism industry is expected to
receive a further boost following the
signing of the Free Trade Agreement
between China and Australia, while
the completion of the Sydney
International Convention, Exhibition
and Entertainment Precinct
(“SICEEP”) and the Barangaroo
Development is also expected to
drive demand. We are optimistic
that Sydney’s hospitality market will
continue to grow given its strong
performance against a benign room
supply pipeline.
For Japan, international visitor
arrivals continued to grow strongly
in 2015, reaching an all-time high of
12.9 million from January to August
2015, up 49.1%
1
year-on-year. The
strong growth was driven by the
weakening Japanese yen as well
as by the Japanese government’s
continued efforts to facilitate visa
approvals. Kobe City, as part of the
Kansai region (Osaka, Kyoto, Kobe),
has benefited from the heightened
interest from regional and
international tourists. As the build-
up to the 2020 Olympics gathers
momentum, the growth in tourists
to the region is expected
to continue.
FHT’s UK properties recorded a
stable performance with strong
demand from the corporate business
segment. London continued to draw
a record number of international
arrivals as a major business hub and
tourist destination. For 1Q 2015,
international arrivals to London
reached 3.4 million, up 0.16% year-
on-year.
2
The strong demand for
London’s accommodation came
from a broad base of corporate,
MICE and leisure travellers as well
as visitors arriving in London for
medical services and education. The
lodging markets of both Edinburgh
and Glasgow also performed well.
As at June year-to-date, revenue per
available room was up year-on-year
by 3% and 9% respectively.
3
In Singapore, the hospitality industry
faced some headwinds as a result
of competition from other tourism
markets on top of the increased
supply of hotel rooms. Recognising
the challenges, Singapore Tourism
Board has been active in promoting
a full events calendar with marketing
campaigns to target leisure, business
and MICE travellers from more
than 15 markets worldwide. A
new Singapore Stopover Premium
package has also been planned to
target premium leisure and business
travellers. In July 2015, Singapore
Botanic Gardens was accorded the
UNESCO World Heritage Site status,
and this is expected to support the
country’s tourism initiatives.
In Malaysia, the twin aviation
tragedies involving the national
carrier Malaysia Airlines as well as the
recent soft oil and gas industry, led
to weak leisure and corporate visitor
arrivals. In addition, the introduction
of Goods and Services Tax of 6% in
the country further contributed to a
lacklustre performance all-round in
the KL hospitality market. However,
we are confident of the long-term
prospects of The Westin Kuala
Lumpur, as we see opportunities for
it to continue capturing a good base
of guests with its strong branding
and strategic location in Bukit
Bintang in the heart of KL.
PRUDENT CAPITAL AND RISK
MANAGEMENT
In managing its capital structure and
financial risks, FHT aims to maintain
a strong balance sheet through
prudent and dynamic capital and
financial management, so as to
ensure continuous access to funding
at optimal cost and to maintain
stable distributions to our stapled
securityholders.
During the IPO, Moody’s Investors
Service accorded FHT a Baa2 rating.
This rating helped FH-REIT to secure
unsecured bank loans at favourable
rates. During the year, the REIT
Manager also secured diversified
sources of funding to support FH-
REIT’s growth aspirations.
FHT’s financial position remained
strong in FY2015. Total assets as at
30 September 2015 was SGD2.03
billion, an increase of 16.9% compared
1
Japan National Tourism Organisation
2
VisitBritain
3
Savills Market Review, September 2015
