Banyan Tree hit by 'perfect storm', posts worst loss in its history in 2015

BANYAN Tree Holdings reported on Thursday net losses for the fourth quarter ended Dec 31, 2015, and full year 2015, as a "perfect storm" sank the luxury hotels and resorts developer into a sea of red.

The group reported a net loss of S$18.4 million for Q4, compared to a net profit of S$4.1 million a year ago. Revenue rose 34 per cent to S$123.2 million, from S$91.8 million a year ago. The bottomline was also hit by a provision for doubtful debts of S$13.7 million and the absence of fair value gains on investment properties.

For the full year, net loss was S$27.5 million, compared to a net profit of S$1.0 million in 2014. Revenue rose 13 per cent to S$370.7 million, from S$327.4 million.

"2015 was the perfect storm for the Banyan Tree Group. We started the year with great momentum in property sales and hotel bookings. But due to a confluence of factors, ranging from the devaluation of the Russian rouble to problems in many of our source markets as well as stoppages in hotel design projects affecting our fee based income, we posted the worst loss in our history," Banyan Tree's executive chairman, Ho Kwon Ping, said.

Q4 saw lower contribution from its hotel investments and fee-based segments, higher provision on delinquent debts from China following economic slowdown, absence of fair valuation gains on investment properties, as well as higher sales and marketing expenses on promoting hotels.

Sustained weakness of the European and Russian economies, compounded by the economic slowdown in China, affected its resorts in Maldives, Phuket and China in Q4. Occupancy of Banyan Tree Phuket was also affected by the ongoing refurbishment works.

Lower hotel management fees and spa/gallery operations, as well as reduced architectural and design fees earned from projects in China, hit its fee-based segment.

However, the group's property sales segment saw higher revenue due to completion of Cassia Phuket and Laguna Park which were progressively handed over to the buyers. In Q4, it recognised 180 units, compared with 20 units a year ago.

By end 2015, the group's cash and cash equivalents was at S$165.5 million.

No dividend has been declared for 2015, unlike 2014 when a final dividend of 0.13 Singapore cent was paid.