Shangri-La Asia Limited (HKEX stock code: 00069) today reported its financial results of the Company and its subsidiaries (“Group”), and associates for the year ended 31 December 2020. Highlights included:• The consolidated revenues of the Group decreased by 57.5% to USD1,033.4 million.
• Aggregate effective share of EBITDA to the Group decreased 79.0% to USD181.6 million; effective share of EBITDA from Investment Properties segment decreased by only 6.0% from USD259.4 million to USD243.9 million.
• The weighted average occupancy of the hotels was 33% for the year ended 31 December 2020, a decrease of 35 percentage points compared to 68% for the year ended 31 December 2019.
• RevPAR was USD40 for the year ended 31 December 2020, a decrease of 64%, compared to USD110 for the year ended 31 December 2019.
The overall global operating environment was very difficult during the year in review due to the COVID-19 pandemic. With International travel halted and limited domestic travel, hotel business was severely impacted. However, revenue from investment properties showed resilience and provided the Group with a more stable income. Revenue from property development for sale recorded a drop as there were less residential units to be handed over. Nevertheless, there were encouraging signs in Mainland China for both hotels and investment properties. Hotels in the region marked a bottom in early February 2020 but have since seen a gradual recovery that has continued throughout the year. Thisrecovery was helped by a strong rise in demand for domestic leisure travel, coupled with local business demand for corporate events such as exhibitions and Page 2 of 6 trainings, all of which helped make up for some of the losses incurred by the decline in international travel.
Commenting on the year’sresults, Shangri-La Group’s Chief Executive Officer, Lim Beng Chee said, “The year 2020 presented unprecedented challenges for our industry. We have implemented the ‘Shangri-La Cares’ commitment globally, to ensure the safety and wellbeing of our guests and colleagues. We have received very positive feedback from our guests through the TrustYou platform, and high rankings on positive sentiments in the “Public Health” category. We will continue to do our utmost to maintain the highest standards of health and safety. At the same
time, we have rolled out cost management measures to mitigate the financial impact of COVID19. These measures delivered benefits over the second half of the year and helped to limit the impact of the pandemic and are expected to carry through to 2021.”
Shangri-La Group’s Chairman Hui Kuok said, “The past year was tremendously challenging for many businesses including ours, which was significantly impacted due to the closing of borders. However, I am particularly heartened by how our colleagues came together to support their local communities—starting in Wuhan, where the situation was extremely difficult, and then followed by all the locationsthat we operate in. I think it isin tough timesthat one’s culture shinesthrough.
We talk a lot about caring for our community, colleagues, and customers. I do feel that during this pandemic period, we have been able to abide by our core values and put our words into action.”
“There remain many uncertainties for 2021, however we can see glimmers of hope, especially in our biggest market, China, which saw strong recovery last year given the government’s decisive response. We anticipate continued economic recovery in this market this year. At the same time, our management team has made significant efforts to manage our costs. With the launch of vaccine programmes around the world, I sincerely hope that it will not be long before we welcome international travellers and guests back into our properties with our heartfelt hospitality,” she added.
Hotels saw a sharp decline in business as COVID-19 continues to spread globally since January 2020, particularly in those destinations reliant on international tourism. However, with nearly half of its business in Mainland China, the Group’s hotels in the region have seen sustained, gradual recovery since March, supported by domestic leisure, corporate travel, and some government business. In the second quarter, business also improved in regions such as Australia and Malaysia, where the pandemic has shown signs of being controlled. In both countries, there was strong domestic demand, but when travel restrictions were re-imposed in late 2020, it resulted in additional temporary suspensions which put further strain on the Group’s occupancy rate and RevPAR.
On investment properties, there was a drop in revenue as a result of temporary rental concessions at the beginning of the pandemic. The One Galle Face Mall and Tower (opened November 2019) coupled with the continued growth of the Group’s subsidiary Investment Properties in Mainland China was partially offset by weakened demand for serviced apartments in Singapore.
Despite the impact, the Group has continued to proceed cautiously with development plans and unveiled two hotels in Mainland China, Zhoushan and Putian respectively. The Group has also reached a management cooperation agreement with Shenzhen Metro Group and China Vanke for a new Shangri-La hotel in Shenzhen Bay Huiyun Centre. The collaboration between Shougang Group and Shangri-La reached a new milestone in October with the opening of the standalone restaurant and craft brewery – Shang Brew in Shougang Park, Beijing. Additionally, the Shangri-La
Centre, Wuhan soft opened in November to offer all-encompassing office space as part of the revitalisation of Wuhan’s financial centre.
The recovery the Group has witnessed in Mainland China throughout the latter half of 2020 is expected to sustain momentum into 2021. The Group’s earlier investment in new products designed to enhance the family experience has begun to yield returns, helping hotels generate a new source of revenue and growth. The Group also saw reassuring outcomes from its efforts in new offerings, such as home deliveries and takeaways, and will continue to innovate and expand these products and services. There were very encouraging results from the 2021 Chinese New
Year sales promotions, which served as a strong testament to the general health of China’s consumption demand. The improvement of business was also apparent from the retail stores in the Group’s investment properties, where some of the tenants have seen year-on-year growth during the Golden Week holidays in October 2020.
The financial position of the Group continues to be strong. As at 31 December 2020, the Group had cash and cash equivalent of USD990.9 million and committed undrawn facilities of USD2.0 billion (of which USD725 million is reserved to be drawn down to replace existing facilities from the same banks), which has remained largely stable over the past 12 months despite the pandemic situation.
The Board has proposed no final dividend for the year and drastically cut back on CAPEX plans as a prudent effort to conserve accessible cash reserves in the event of a prolonged period of uncertainty.