REAL estate group Far East Orchard posted earnings of S$7.6 million for the first nine months ended September, up 18.8 per from S$6.4 million the year before, on the back of a continued recovery in the hospitality sector.

Revenue jumped 36.7 per cent to S$134.1 million for 9M FY2023, from S$98.1 million in the year-ago period.

In a business performance update on Wednesday (Nov 8), the group attributed its revenue growth to the hospitality business, which has continued to recover strongly, with international demand for travel driving higher occupancies and room rates.

Despite the higher revenue, the group’s profit after tax for 9M FY2023 was flat against the corresponding year-ago period, at S$7 million.

This was mainly due to higher operating expenses, higher financing costs driven by the rising interest environment, and the absence of one-off gains in the prior period including that from the de-recognition of lease liabilities in the first half of FY2022, the group said. It also recognised an impairment loss of S$3.4 million on its mixed-use development in the United Kingdom in the first half of FY2023.

Meanwhile, the business performance of Far East Orchard’s purpose-built student accommodation business remained resilient, supported by a strong demand from domestic and international students, and a slowdown in bed supply, the group said.

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This led to a 99 per cent portfolio-occupancy rate and rental growth for the academic year, it added.

On the rebound of its hospitality business, Far East Orchard said: “The group will continue to position itself for growth by adopting technological innovations while creating unique experiences for the spectrum of travellers visiting the destinations in which we operate.”

The group added that it remains “cautiously optimistic” about the full return of international tourism in 2024. It noted that factors such as the prevailing geo-economic fragmentation, persistent inflationary pressures, as well as higher labour and energy costs would provide “a challenging backdrop” for the group’s medium-term outlook.

“In the near term, besides the challenging economic environment and geopolitical tensions, persistent inflation and rising oil prices – which translate into higher transport and accommodation costs – could impact travel behaviour.”

Shares of Far East Orchard closed flat at S$1.03 on Wednesday, before the release of the business update.