Hospitality Property Fund (HPF) was let down by a lack of business travel as a result of a weak economy, fears about xenophobia and a lack of government conferences in the first half of its financial year, with its income payouts shrinking in the period.
The group said government restrictions on spending on conferencing in the lead-up to the general election in May had resulted in a drop-off in bookings.
Also, the unusual timing of school holidays, which did not coincide with Easter, disrupted people’s holiday plans. These factors weighed on interim results to end-September, with its dividend falling 9% to R215m, HPF said.
HPF is the hotel-focused subsidiary of JSE-listed Tsogo Sun Hotels, which was unbundled from the Tsogo Sun Group earlier this year.
“It’s been a very tough period for us. The majority of our business comes from business and state travel and these took hits. There just weren’t as many business travellers. Notably African business travellers from Nigeria and North Africa cancelled last minute after they learnt of the xenophobic attacks. It is hard to replace that business quickly,” said CEO Mara de Lima.
Foreigners were attacked in September after mobs descended on their stores in Johannesburg's inner city.
De Lima said a lack of bookings was noticeable in Gauteng, with a weaker trading performance at the Birchwood Hotel and OR Tambo Conference Centre.
HPF’s busiest periods were between October and November and February and March.
“There may still be a pick up in business on the second half of the financial year. The year 2019 has seen very erratic trade,” she said. “We need businesses to gain confidence in the country, then more people will book conferences.”
Rental income for the six months fell 3% to R335m.
The fund’s portfolio includes 54 hotel and resort properties in SA, including the Southern Sun Pretoria. Hotel trading was expected to remain under pressure until the outlook on the economy improved.
Tsogo Sun Hotels reported total income for its six months to end-September rose 2% to R2.1bn.
HPF’s share price was down 1.3% to R7.60 in afternoon trade on Thursday, having fallen 13.14% in the year to date.
The share price of Tsogo Sun Hotels was down 1.97% to R3.49.
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