Damage caused to the Corinthia Tripoli Hotel in a terrorist attack last month has been estimated to cost around €1 million, hotel owners International Hotel Investments said today.
The property suffered limited damage, mostly glass panes on the façades and repairs are under way.
"Going forward, and in the wake of reduced demand for hotel accommodation in Tripoli, we are further downsizing our operational costs at the hotel to a bare minimum," IHI said, while adding that the Commercial Centre was not affected and has continued to operate uninterruptedly,
In a statement to the Malta Stock Exchange, IHI said the events in Tripoli came about just as it was putting final touches to a public announcement confirming record performances in its hotels in Malta, Prague, Budapest, Lisbon and
London.
It said Corinthia Hotel Budapest recorded a 17% rise in operating profits in 2014 over the previous year; Corinthia Hotel Lisbon saw its operating profit rise by 31% and Corinthia Hotel Prague's operating profit was up 43% year on year.
The Corinthia St George's Bay saw operating profit grow by 90%.The best performance was by Corinthia Hotel St George's Bay Malta, where operating profit rose by 90% year on year. This, IHI said, was the result of a two-pronged strategy to drive efficiencies in operating costs and payroll, coupled with a yield strategy aimed to maximize room rates.
The next-door Corinthia Marina Hotel saw its operating profit rise by 36% year on year. "The hotel trades at close to full occupancy for more than half the year
and the strategy for 2014 has been to yield room rates to levels nudging the five-star market in Malta," IHI said.
The Corinthia Hotel London also saw growth, with IHI saying it had continued to establish itself at the forefront of London’s luxury hotel market. IHI owns 50% of this hotel and adjoining residential development.
At the Corinthia Hotel Tripoli performance dropped to a loss of €(1,215,200) from an operating profit of €6,567,915 in 2013. The commercial centre is performing well and is generating annual rent of almost €6 million.
"Our strategy remains focused at re-opening the hotel to a break-even target thereby allowing rental income to contribute towards overall profitability. One can only hope for the return of normality to the city’s business climate, and it is worth noting that GOP in 2010 was of over €17 million, IHI pointed out.
The uncertainty in Russia impacted the performance of the Corinthia St Petersburg hotel, where operating profit dropped to €2,949,277 from €7,619,172 in 2013.
"The downturn in profits in St Petersburg is driven partly by sanctions on Russia but mostly by the devaluation of the local currency. The Rouble to Euro rate has devalued from a rate in the 40’s at the start of 2014 to one in the high 70’s by the year end, and this in the wake of a collapse in the price of oil, which in itself principally drives the Russian economy. The actual volume of business in our hotel in December 2014 and January 2015, which are the two immediate months following the Rouble devaluation, have stayed static, both in terms of occupancy as well as in terms of room rates as quoted in Roubles, when compared to the corresponding months 12 months prior.
"The foremost market for St Petersburg has always been Russian travellers – and with overseas trips for Russians now prohibitively expensive, our Russian market is increasing in importance, up to almost half of our guests. In building on this business, the hotel has established an online presence in Russian, opened a sales office in Moscow and consolidated its senior management team, IHI said.
IHI said it is facing 2015 with confidence. "We will repair the damages incurred at the Tripoli hotel and re-open with a product and service that is calibrated to match a break-even position at the very least in the hotel operation. We are of the view that Libya will no doubt achieve stability at some point in the future. We sincerely augur for this to happen for the benefit of all and particularly for the people of Libya.
"The same applies to St Petersburg, where the hotel has been able to mitigate exchange rate losses to some degree. Indeed, data suggests that our hotel has made inroads in market share in recent months. IHI is following developments in Russia with interest, but is mostly concerned with the price of oil on international markets, which in itself underpins the Russian economy and the Rouble exchange rate.
"In any case, IHI’s business as a developer and operator of hotels and real estate has moved on, and our dependence on any single hotel is now marginal. The outlook for profits at all our remaining hotels remains positive for 2015, and whilst budgets have been ambitiously set, the Company remains focused
on reaching all its targets in 2015. This also means the repayment of all our funding commitments as and when these fall due, which remain well within industry parameters for debt-service cover ratios.
On the acquisition of Island Hotels Group, IHI said it is about to commence a due diligence exercise.
It explained that intended to maximize synergies in its Malta operations by merging the Malta operations of Island Hotels into those of IHI while retaining IHGH as a corporate entity in its own right.
"We also intend to enhance development opportunities at our respective, adjoining sites in St Julian’s, where we aim to redevelop fully the combined land plots, in a phased project over several years."