The Island Hotels Group said today that it made a net loss of € 2,085,660 in the first six months of the current financial year after depreciation, finance costs and income tax.

The group achieved a turnover of € 10,493,675, down 9.7%.

It explained that the financial year commencing 1 November 2009, continued on the same challenging path on which the previous year closed.

"As expected, the lingering effects of the international economic downturn impacted the business during the first six months of the year. Price sensitivity, shorter lead times and exchange rate volatility, compounded by the effect of the volcanic ash cloud crises in April, left their effect on tourism generally and not less so, the group's performance, with turnover falling by € 1,134,325 (9.7%) over the previous year."

On a positive note, despite the material increases in utility rates, management succeeded in reducing the overall cost base of the group by just under 5% resulting in cost reductions of just over €600,000, the group said.

It added that based on the generally positive outlook for the tourism industry, as well as the increase in seat capacity, it was optimistic for the second half of the year which, in any event, contributes a more than proportionate part of the group's annual performance because of the seasonal nature of the business.

The months ahead will also see management working on detailed plans for the redevelopment of the Hal Ferh complex that was taken over at the end of 2009. Construction on the new resort is expected to commence in 2011.