Shangri-La Hotels (Malaysia) Bhd, controlled by tycoon Tan Sri Robert Kuok, expects the performances of its investment properties, which include UBN Tower and UBN Apartments to soften further through the fiscal year 2020, in tandem with weakening economic activity resulting from the Covid-19 pandemic.
The group expects the market conditions for its hotel operation to also remain weak and highly uncertain.
For the six months ended June 30, 2020, Shangri-La Hotels said its group revenue declined by 62 per cent to RM98.42 million from RM257.21 million for the same period in 2019.
It incurred a net loss of RM27.053 million for the first six months, compared to a net profit of RM31.68 million achieved in the previous year.
In a filing with Bursa Malaysia, the group said its investment properties saw their combined rental revenue fall by 13 per cent to RM12.36 million, while their combined pre-tax profit decreased by 14 per cent to RM7.42 million.
UBN Tower and UBN Apartments, located adjacent to Shangri-La Hotel Kuala Lumpur, off Jalan P Ramlee are two 35-storey buildings housing apartments and office units. The smallest unit in this property has a built-up area of 1,000 square feet while the size of the largest unit is more than 6,000 square feet.
Shangri-La Hotels is one of the world's premier developers, owners, and operators of hotel and investment properties which comprises office buildings, commercial real estate, and serviced apartments/residences.
It currently owns, operates, and manages over 100 hotels and resorts in 76 destinations around the world under the Shangri-La, Kerry, JEN, and Traders brands.
The group has a substantial pipeline of the upcoming hotel and mixed-use development projects in Australia, Bahrain, Mainland China, Cambodia, Indonesia, and Saudi Arabia. It builds and develops residences for sale in prime locations in major cities.
On its website, the group has listed a few residential properties which are for sale.
The first is The Residences at One Galle Face, a luxurious beachfront development in Colombo, Sri Lanka. It is Colombo's first internationally developed and managed mixed-use development project and comprises One Galle Face Mall, The Residences at One Galle Face, Shangri-La Hotel Colombo, and One Galle Face Tower.
In China, the group is selling Yavis Residence in Dalian, Kunming Apartment in Kunming, and Lakeview Yangzhou in Yangzhou.
Shangri-La Hotels said the ongoing profound impact of the Covid-19 pandemic on the travel and hotel industry, combined with the unprecedented uncertainties presented by the crisis will continue to weigh heavily on the operating performances of the group's hotels, therefore, it expects its results to record a further significant loss over the second half of 2020.
The group said its hotel operations were significantly disrupted by the outbreak of Covid-19 as travel restrictions and lockdown measures implemented by the government globally, along with the nationwide Movement Control Order (MCO) applied by the local government to slow the spread of the disease which prompted a drop in leisure and business travel demand.
This resulted in its hotels and resorts experiencing material reductions in business levels in both rooms and food and beverage operations.
Revenue from Shangri-La Hotel Kuala Lumpur dropped by 70 per cent over the first six months of 2019 to RM25.522 million. The hotel ended the first half of 2020 with a pre-tax loss of RM18.24 million, compared to a profit of RM13.564 million for the corresponding period in 2019.
The group said the occupancy for the hotel was 18 per cent down from 65 per cent in the previous year.
At Rasa Sayang Resort, revenue fell by 55 per cent from the first half of 2019 to RM18.734 million, in line with a reduction in occupancy from 71 per cent in the prior-year period to 32 per cent. For the first six months of 2020, the resort reported a pre-tax loss of RM4.963 million, compared to a profit of RM6.95 million for the first half of 2019.
The group said since the onset of the Covid-19 outbreak, it has embarked on cost savings across the business, while taking proactive actions to conserve cash as well as to strengthen the operational and financial resilience of the group.