NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2025 4 PROPERTY, PLANT AND EQUIPMENT (CONT’D) The fair value measurement was categorised as a Level 3 fair value based on the inputs to the valuation technique used. In 2025, the Group recognised a net impairment loss of $584,000 on certain hotel properties and a club, comprising impairment loss of $8,092,000 on two hotels in Australasia and a club in Asia, net of reversal of impairment loss of $7,508,000 on one hotel in United States of America (US), one hotel in Europe and one hotel in Australasia. The impairment losses recognised on the two hotels in Australasia mainly arose from weaker trading performance. The impairment loss recognised on the club in Asia was a result of its weak financial performance. The impairment losses reversed during the year mainly arose from improved trading performances of certain hotel properties, following progressive recovery of the hospitality sector in countries where these hotels are located. The total recoverable amounts of properties on which impairment losses were recognised and reversed during the year were estimated to be $229,895,000 as at 31 December 2025, using discounted cash flow method. In 2024, the Group recognised a net reversal of impairment loss of $59,797,000 on certain hotel properties, comprising reversal of impairment loss of $65,183,000 on three hotels in US, one hotel in Europe, one hotel in Australasia and a club in Asia, net of impairment losses made of $5,386,000 on one hotel in Europe, one hotel in Asia and one hotel in Australasia. The impairment losses reversed during the year mainly arose from improved trading performances of certain hotel properties, following progressive recovery of the hospitality sector in countries where these hotels are located. The impairment loss reversed on the club in Asia was a result of its stronger financial performance. The total recoverable amounts of the properties on which impairment losses were recognised and reversed during the year were estimated to be $674,356,000 as at 31 December 2024, using discounted cash flow method. Impairment losses recognised or reversed were included in “other operating expenses” in the consolidated statement of profit or loss, and the hotel operations and others segment. The key assumptions used in estimating the recoverable amounts are set out below: US Europe Asia Australasia Occupancy rate 2025 84.0% to 89.0% 76.0% to 83.0% NA 50.1% to 78.3% 2024 87.0% to 95.0% 68.0% to 76.0% 52.7% to 56.5% 50.4% to 73.9% Average room rate growth 2025 2.6% to 5.0% 2.0% to 13.0% NA 1.3% to 13.2% 2024 0.3% to 5.4% 2.5% to 10.4% 2.0% to 5.0% 2.0% to 4.5% Discount rate 2025 8.8% 10.5% NA 10.5% to 11.8% 2024 9.0% 9.0% to 12.5% 10.6% 10.5% to 12.0% Terminal rate 2025 6.8% 8.5% NA 9.0% to 10.3% 2024 6.8% 6.5% to 10.0% 10.0% 9.0% to 10.5% The cash flow forecasts under the discounted cash flow method cover a five to ten years (2024: five to ten years) period, and cash flows beyond this period are extrapolated using a growth rate ranging between 2.0% to 3.0% (2024: 2.0% to 3.0%), which is based upon the expected trading growth for each hotel and inflation in the country in which the hotel is located. Sensitivity analysis The Group’s impairment review is sensitive to changes in the key assumptions used. An increase in occupancy rate and/ or average room rate growth in isolation would result in a higher recoverable amount. An increase in discount rate or terminal rate in isolation would result in a lower recoverable amount. ANNUAL REPORT 2025 | 149
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