Excerpts from analyst's report
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Improving yield at the Flyer One of Straco’s key considerations for acquisitions is that the target asset’s operating model must be one that it is familiar with, i.e. revenue is primarily from ticket sales and operating costs are largely fixed. This will allow it to apply its expertise from running its two ocean aquariums in China to reap operational efficiencies. |
Plans to revamp the Flyer
Channel checks at the Flyer by CIMB: "We were pleasantly surprised to see a healthy crowd at the F&B outlets, especially the Singapore Food Trail at #01-09/10/11/12."However, the number of visitors to the Giant Observation Wheel (GOW) itself could be better – there was only a short queue at the ticketing boticketing booth for walk-in visitors, while we saw 1-2 persons in each capsule of the GOW."Though the GFA of the 3-storey building is currently maximised, Straco plans to apply for a higher plot ratio in order to increase the lettable area from the current c.60,000 sq ft. When completed, Straco can recognise higher rental income from the larger NLA, which we have yet to factor in to our forecasts pending further details on the redevelopment plan.
New indoor attractions. Given its expertise in indoor attractions from running its two aquariums in China, Straco also plans to open 1-2 indoor attractions at the Flyer as part of the redevelopment.
One of the reasons for lacklustre visitor arrivals the Flyer (19% capacity utilisation) is that it is a standalone attraction in the area, which means that few visitors would make a dedicated trip to the Flyer unless they are first-time visitors or there is a special event at the Flyer.
As a result, about 50% of its visitors arrive by tour groups (and pay a discounted ticket price) while the other half are walk-in visitors (full ticket price).
To change this, Straco plans to introduce new attractions at the Flyer to make it a one-stop tourist destination. Assuming half of the Flyer’s 1.4m visitors visit the new indoor attractions at S$10 per ticket, this would bring in an additional S$7m in revenue per annum (20% upside to our revenue forecast).
Our current forecasts have not factored in potential upside from the introduction of new attractions.
