International Hotel Investments has successfully continued to achieve the objectives of a business strategy aimed at reducing the company’s income dependency on any specific subsidiary business in any country where it owns hotel and property assets.
In a business and strategic update published on the Malta Stock Exchange, the company said that while in 2009, 66 per cent of the contribution to profit was generated just by the Corinthia Hotel Tripoli and its adjoining commercial centre, by 2014 IHI had migrated to a model where not one of its businesses contributed more than 17 per cent of its EBITDA.
The company’s 50 per cent share in the Corinthia Hotel London registered the largest contribution to profits, “which underlines the company’s resolve to balance its income streams by adding stable investment jurisdictions to its portfolio”.
IHI chairman Alfred Pisani said: “The geographic diversity of our income and our future expectations are not casual. They are the consequence of a deliberate spread of our capital between stable and emerging economies, and more so, the result of investment and effort in our hotel-operating capabilities in CHI Limited, our 100 per cent-owned hotel management subsidiary. CHI is a business in its own right and its function is to use industry-standard fees it levies on our own hotels to drive incremental revenue and bookings into our hotel and to ensure that our service matches five-star expectations through extensive training and the adoption of operating standards and procedures that reflect our Corinthia brand ethos”.
In Libya, the company will continue to be vigilant on its business in Tripoli
The company has also registered an improvement in its consolidated forecast EBITDA for 2014 when compared to 2009 – €33.8 million in 2014 versus €33.3 million in 2009 – and this notwithstanding the revenue slide registered in the Tripoli hotel and the further negative impact of the ruble devaluation on the company’s euro results in St Petersburg.
Challenges faced throughout 2014 in specific jurisdictions, notably Libya and Russia, have been mitigated by record results in other Corinthia hotels in Malta, Budapest, Lisbon and London and markedly improving profits in the Prague hotel, the company said.
Throughout 2014, IHI has continued to derive value from its proprietary booking infrastructure, such that up to October, 20 per cent of all room revenue in all IHI hotels excluding Tripoli, was driven through the company’s own website and GDS codes. No commissions are levied on this business as it is driven entirely on the strength of Corinthia’s brand and online presence.
A further 16 per cent of revenue was driven via third-party travel agencies linking into the company’s booking engines and the rest was booked directly into the hotels.
“This is a marked change to the booking patterns prevailing in 2009 and earlier when very little revenue was booked into IHI hotels without some form of reliance on third-party tour operators and travel management companies,” the company said.
A multi-million euro investment in quality, standards and training has continued throughout 2014 in line with the company’s strategy to strengthen its offering, especially in view of the surge in online bookings that are more likely to rely on actual online customer reviews for reference ahead of their purchase decision.
IHI is expecting its hotels in Malta, London, Lisbon, Prague and Budapest to register further improvements in 2015.
“In Libya, the company will continue to be vigilant on its business in Tripoli with the aim of breaking even in the hotel operation and to maintain the steady flow of annual income from renting its adjoining commercial centre to oil and gas blue chip tenants,” IHI said.
In St Petersburg, IHI has put a new management team in place to execute a strategic refocus of its business.
The company aims to generate as much business as possible from within Russia itself and to operate the hotel with a wide range of room rates targeting upscale corporate to luxury travellers.
A level of success in this strategic refocus has already been registered this year, with 35 per cent of the St Petersburg Hotel revenue generated from within Russia as compared to 25 per cent in 2013.
IHI is in the business of developing, owning and operating five-star hotels and commercial real estate in several countries.
Launched on the Malta Stock Exchange in 2000, IHI is owned by Corinthia Palace Hotel Company Limited, Isthitmar World of UAE, LAFICO and the public.
IHI currently owns hotels and commercial real estate in Malta, London, Budapest, Tripoli, Prague, St Petersburg and Lisbon and operates its hotels under the Corinthia brand.