By Martin Morris
Hotels group says too early to call market turn as trading remains difficult.
, which is due to announce its results on August 26, reported a 14% RevPAR (revenue per available room) decline in the Middle East in a half year trading update issued Monday.
Overall RevPAR declined 18% for the first six months of the year (13% on a currency neutral basis) reflecting global economic conditions and strong first half 2008 comparables. On a consolidated basis the decline was 12%.
Whilst the rate of deterioration has slowed the firm said it is too early to call the turn as visibility on trading across its portfolio remains difficult.
Meanwhile, it has taken impairment charges totaling $37 million - due to the Mövenpick Mauritius ($13.0 million); Mövenpick Phuket ($12.3 million); and Swissôtel Kunshan ($11.3 million) operations.
Elsewhere, the Mövenpick Beirut continued to perform well with RevPAR expanding as the city continued to benefit from increased political stability.
Sub-Saharan Africa meanwhile showed a slight RevPAR decline (-3%) on a reported basis (+1% on a currency neutral basis).
In Asia, RevPAR dropped 26% (-23% on a currency neutral basis) as tourism continued to be impacted by civil and political unrest in Thailand as well as an overall softness across the region.
In Paris, the George V hotel experienced a 22% drop in RevPAR (-11% on a currency neutral basis) with the second quarter seeing an overall improvement over the 29% fall in Q1.
Despite the general RevPar decline the hotel’s operations remained profitable and cash generative. Net debt as of June 30 totalled $122 million, including cash balances of $345 million, and an 11% net gearing ratio reflecting the continued strength of the company's balance sheet.
Looking forward, the Four Seasons Beirut is due to open in the latter part of 2009, while in Marrakech, construction of the Four Seasons Private Residences is scheduled to be completed this year, the hotel in mid-2010. Construction in Accra, Manila and Seychelles is proceeding and on track.
The company also reported an $88 million exceptional and overall profit of $38 million on asset sales – driven by the disposal of the Four Seasons Resort Sharm El Sheikh, land sites in both Vietnam and Uganda, and the Fairmont Nile City development in Cairo.