The Ng family that&rsquo s most famous for owning real estate giant Far East Organization, has emerged as a substantial shareholder of resort operator Banyan Tree Holdings.

According to an SGX filing, Goodview Properties Pte Ltd, controlled by the Ngs, on Aug 3 paid $465,387 for 1.5 million Banyan Tree shares from the market, which works out to an average of just over 31 cents.

With that, the Ngs now hold a total of 43.5 million Banyan Tree shares, equivalent to 5.12%, up from 4.94% earlier.

Pegasus Investment and Consultancy JSC and Banyan Tree Hotels and Resorts have signed a hotel-management agreement to operate Dhawa Quy Nhon Vietnam, an eco-resort, upon its completion, expected in 2023.

 

Mr Ho Kwon Ping, executive chairman of Banyan Tree Holdings, said: " As the world tourism gradually rebounds, this signing marks Banyan Tree Group' s continued growth and our second Dhawa resort signed in Vietnam.

 

" The Vietnam economy has proven its resilience in the face of Covid-19. This strategic partnership highlights the like-minded collaboration and entrepreneurship of two home-grown brands with strong overseas footprints. We are excited to be working alongside our fellow Singaporean company - Pegasus, on their mixed education tourism development."

 

With an estimated total investment value of $100 million, Dhawa Quy Nhon Vietnam is the second phase of Pegasus Education Tourism Development. The development' s first phase kicked off with the opening of Outward Bound Vietnam (OBV) in 2016 its third phase will comprise eco-residences.

 

Pegasus chairman Ricky Tan said: " With Covid-19 vaccination programmes underway globally and in Vietnam, we believe Dhawa Quy Nhon Vietnam will benefit from the pent-up demand of leisure travel, especially in nature-based resort environments, when borders reopen and domestic tourism recovers.

 

" We are optimistic about the strength of the economy in Vietnam and long-term prospects of the tourism sector in Vietnam."

 

Dhawa Quy Nhon Vietnam sits on 10.5ha of land and sits on tiered platforms that step down towards the seafront. It will have 240 rooms when completed.

Its chairman says it' s early days, but its resorts in the reopened Maldives show promise

 

THE shares of Singapore-listed resorts operator Banyan Tree Holdings, which had eight hotels and six spas in in its Thailand portfolio as at last December, have been rallying lately.

 

Last Friday, the counter closed at a 52-week high of S$0.39, with this optimism possibly linked to the recent easing of travel restrictions in Thailand.

 

A panel led by Thai Prime Minister Prayuth Chan-ocha, in a bid to resuscitate the kingdom' s pandemic-battered tourism industry, has given the go-ahead for the mandatory quarantine period for foreign travellers to be cut from two weeks to 10 days, starting April 1.

 

Then last Friday, the country announced that it would waive quarantine requirements for vaccinated visitors arriving in Phuket from July 1.

 

Banyan Tree classifies its revenue into three segments: hotel investments, fee-based and property sales.

 

Under its hotel investments segment, the group owns and manages hotels under its Banyan Tree, Angsana and Cassia brands its fee-based segment generates revenue through hotel, fund and club management fees, spa and gallery operations, and design and other services.

 

Its operations span 22 countries, but Thailand has long been its key market.

 

In FY 2019, Banyan Tree' s hotels in Thailand posted a combined revenue of S$129.9 million - more than a third (37.4 per cent) of the group' s overall revenue of S$347 million for the year. The Thai market contributed 75 per cent of the revenue of the hotel investments segment.

 

At the time, Banyan Tree' s portfolio in the country comprised seven hotels and seven spas.

 

The company' s reliance on the tourism sector has generally hobbled Banyan Tree this financial year.

 

In FY 2019, it reported revenue growth of 5 per cent year on year (yoy). Its core operating profit had jumped 43 per cent yoy, to S$65.1 million, although its net profit fell from S$13.5 million to S$651,000 due to one-off gains in FY 2018 and a one-off allowance for impairment in FY 2019.

 

Operating profit from hotel investments was S$18.2 million and represented 32.3 per cent of total operating profit for FY 2019. Operating profit from fee-based businesses was 15.7 million, constituting 28 per cent of total operating profit.

 

But for FY2020, Banyan Tree' s revenue more than halved to S$157.8 million. It also reported an operating loss of S$35.1 million.

 

The hotel investments segment posted the sharpest decline in revenue, of 64 per cent, and an operating loss of S$14.3 million for the full year.

 

Occupancy levels for its Thailand hotels fell to 17 per cent in H2 2020, from 65 per cent in H2 2019. Revenue per available room fell from S$138 to S$18 in the same period.

 

As for its fee-based segment, revenue fell by 56 per cent to S$26.3 million in FY2020. The segment also posted an operating loss of S$8.6 million.

 

Ho Kwon Ping, executive chairman of Banyan Tree Holdings, said government programmes to stimulate domestic travel " have been helpful" , but cannot make up " for even a small portion of what we lost in foreign tourism demand" .

 

With Thailand opening its doors to foreign travellers, what impact can Banyan Tree shareholders expect?

 

Mr Ho, in e-mailed answers to questions from The Business Times, was cautious. He said: " It is too early to tell. The waiving of quarantine requirements is dependent on a 70 per cent vaccination rate for Phuket residents, which is more an aspiration than a certainty at this stage."

 

There are, however, signs of a potential turnaround, as seen in Banyan Tree' s reported numbers for its properties in the Maldives. In a commentary accompanying its FY2020 results, Banyan Tree said its Maldives properties have already benefited from a re-opening that allows tourists to enter if they test negative for Covid-19. Overall forward bookings for its owned hotels in Q1 2021 are still 81 per cent below the same period last year, but forward bookings for hotels in the Maldives are only 31 per cent below where they were in Q1 2020.

 

Quite a bit of the anticipated recovery may already be priced in.

 

Banyan Tree' s shares ended Tuesday at S$0.35 - roughly half their book value of S$0.67 as at last December.

 

This is close to the group' s average price-to-book ratio of 0.54 time over the past three years.

 

The company is currently loss-making, but how investors view the stock may change if it begins to show some profits.

 

Resort-developer Banyan Tree sank deeper into the red with losses of $49.8 million in 2H2020 ended December, down from earnings of $5.2 million in the year before.

This follows a 61% plunge in its revenue to $82.5 million in 4Q2020 from $213.97 million in the year before that came as a result of the travel restrictions imposed globally to curb the spread of the coronavirus.

 

Specifically, hotel investments contributed to less than 20% of 2H2020 revenue as compared to the 37% it accounted for 2H2019.

 

Hotel occupancy levels increased by 29% in 2H2020 as compared to 26% in 1H2020.

China saw healthier occupancy levels as demand was sustained by a surge in domestic tourism. 

 

Conversely, demand was poorer in the Asia Pacific region, specifically Thailand where most of the group&rsquo s owned hotels are located, due to the absence of international travelers. 

 

Still, the group reports that its hotel revenue per occupied room, or RevPar, was up by 11% to $87 in 2H2020 compared to the preceding six-month period. However, RevPar was down by 40% when compared to 2H2019.

 

Similarly, RevPar dropped by 43% between 4Q2020 and 4Q2019 in the Maldives &ndash where the group has three operating hotels &ndash due to testing-only quarantine-free requirements for international arrivals.

 

Meanwhile, Banyan Tree&rsquo s fee-based segment saw a drop in its revenue due to a reduction in hotel management fees, revenue from Spa/Gallery operations, royalty income and recognition of architectural and design fees.

 

In the same regard, the property sales segment reported lower revenue as only 33 units were recognised in 2H2020, compared to 209 units in the year before.

For the full-year ended December 2020, Banyan Tree posted losses of $95.8 million, as opposed to earnings of $651,000 in FY2019.

 

On a fully diluted basis, this translates to losses per share of 11.41 cents, as opposed to gains of 8 cents a share in FY2019.

 

With this, Banyan tree&rsquo s net asset value per share was 55 cents in FY2020 compared to 57 cents in the year before.

 

Revenue for the year had plummeted by 55% to $157.8 million, as compared to $346.95 million in FY2019.

 

The developer&rsquo s core operating profit &ndash which records operating profit excluding one off gains or losses &ndash came in at $4.3 million, a 93% shrinkage from the $65.1 million recorded in the year before.

 

The near-break even core operating profit was achieved through effective cost containment measures which reduced operating costs by 46% y-o-y, the group notes. 

This was complemented by a 11% uptrend in hotel revenue per occupied room in 2H2020, compared to 1H2020.

 

Additionally, the group expects the reorganisation exercises it did last year to yield $15 million of annualised recurring cost savings. This represents about 20% of operating costs. 

 

Executive chairman Ho Kwon Ping acknowledges that 2020 &ldquo has not been an easy year, but we are determined to build back better&rdquo .

 

&ldquo We have taken the opportunity to lay the foundations of a more agile, resilient and responsive organisation, while re-centering on our core purpose of wellbeing and sustainability which, fortunately for us, has become even more relevant post-Covid,&rdquo he adds.

 

In line with this, the group has opened three new properties in Hacienda (Mexico) Krabi (Thailand) and Penang (Malaysia). It had also signed 20 hotel management agreements in 2020, adding to its pipeline of 35 properties which are slated to open over the next three years.

 

Within the next 12 months, the group expects open eight new resorts, which will increase its room count by 16%. It also expects to launch seven spas, with six under management.