NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2024 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 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 United States of America (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 the improved trading performances of certain hotel properties, following the progressive recovery of the hospitality sector in the countries in which 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 reversed during the year were estimated to be $674,356,000 as at 31 December 2024, using discounted cash flow method. In 2023, the Group recognised a reversal of impairment loss of $54,037,000 primarily attributable to six hotels in United States of America (US) and one hotel in Europe. The impairment losses reversed during the year mainly arose from the improved trading performances of certain hotel properties, following the progressive recovery of the hospitality sector in the countries in which these hotels are located. The total recoverable amounts of the properties on which impairment losses were reversed during the year were estimated to be $977,411,000 as at 31 December 2023, 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 2024 87.0% to 95.0% 68.0% to 76.0% 52.7% to 56.5% 50.4% to 73.9% 2023 63.0% to 95.0% 70.0% to 77.0% N/A N/A Average room rate growth 2024 0.3% to 5.4% 2.5% to 10.4% 2.0% to 5.0% 2.0% to 4.5% 2023 0.0% to 16.7% 0.0% to 15.0% N/A N/A Discount rate 2024 9.0% 9.0% to 12.5% 10.6% 10.5% to 12.0% 2023 8.5% to 11.5% 9.3% N/A N/A Terminal rate 2024 6.8% 6.5% to 10.0% 10.0% 9.0% to 10.5% 2023 6.5% to 9.5% 4.5% N/A N/A The cash flow forecasts under the discounted cash flow method cover a five to ten years (2023: ten years) period, and cash flows beyond this period are extrapolated using a growth rate ranging between 2.0% to 3.0% (2023: 2.0% and 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 2024 FINANCIALS 127
RkJQdWJsaXNoZXIy ODIwNTc=