BTH’s business model is based on three core segments: Hotel Investments, Property Sales and Fee-based. Although only the Property Sales segment recorded a rise in revenue (the other two segments both experienced a drop in revenue), all three segments achieved increases in operating profit for FY 2018.

The main driver of BTH’s FY 2018 results was its continued restructuring of its China assets, and the resulting divestments of the entities. In 2017, BTH entered into a 50:50 joint venture with China Vanke to create Banyan Tree Assets (China) Holdings (BTAC), to consolidate the ownership of its Banyan Tree-branded hotels and assets in China. BTH had since deconsolidated certain entities and recognised the gain on the interest divested, as well as agreed to sell part of its interest in BTAC to China Vanke.

Performance Drivers (Positive Factors)

• Hotel Investments Segment

FY 2018 revenue for BTH’s Hotel Investments segment dropped by SGD 9.0 million year-on-year to SGD 192.5 million, primarily due to revenue declines in China, Seychelles and Maldives. For China and Seychelles, the decline was because BTH stopped consolidating their results for FY 2018, after the company disposed of the entities in the respective countries in 2017. For Maldives, the decline was mainly due to a drop in tourist arrivals during the year, after a state of emergency was declared in the country during the first quarter of 2018.

Nevertheless, the Hotel Investments segment experienced a higher revenue from its Indonesia business due to increase in room inventory during the year. Further, despite the lower revenues recorded, operating profit for the Hotel Investments segment rose by SGD 2.1 million in FY 2018. This was mainly because BTH stopped consolidating the results of the loss-making China hotels following the company’s disposal of the assets in 2017.

• Property Sales Segment

BTH’s Property Sales segment experienced a 50% year-on-year hike in revenue to SGD 77.0 million in FY 2018. This revenue hike in turn contributed to the SGD 2.7 million year-on-year increase in operating profit for the Property Sales segment.

Although fewer properties were recognized in FY 2018 (128 properties) compared to the previous year (139 properties), overall revenue was still higher in FY 2018 due to the higher value of properties recognized. Meanwhile, unrecognized revenue as at 31 December 2018 stood at SGD 189.9 million, as compared to SGD 166.2 million as at 31 December 2017 – of which about 40% will be progressively recognized in 2019.

• Fee-Based Segment

FY 2018 revenue for BTH’s Fee-Based segment dropped by 8% year-on-year to SGD 59.6 million. This primarily resulted from lower revenue recorded from China, as the company stopped consolidating results from their China operations. Nevertheless, BTH continued to receive license fees from that arrangement.

Further, even with the lower revenue, operating profit in FY 2018 surged by 81% to SGD 13.6 million. This was attributed to lower provision for doubtful debts, smaller foreign exchange losses, a decrease in staff costs, as well as lower provision for bonus and incentives.

Performance Drivers (Negative Factors)

• Other Income

BTH’s other income dropped by SGD 7.8 million, mainly due to lower gains from the divestment of certain Banyan Tree-branded hotels and assets in China, as well as the absence of a one-off fair value gain on debentures recognized last year. Nevertheless, this decline was partially offset by a gain on disposal of assets in Seychelles.