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Orascom Hotels' total revenues decreased by 33.7% in 9M2016

Orascom Hotels' total revenues decreased by 33.7% in 9M2016

Arab Finance: OHD (“Orascom Hotels and Development”) (ORHD) has released its consolidated financial results for its nine months ended 30th of September 2016. 

Orascom Hotels and Development; achieves a turnover of EGP 959.7 million and adjusted EBITDA of EGP 274.8 million against the backdrop of a challenging economic environment. 

Total revenues decreased by 33.7% to EGP 959.7 million compared to EGP 1,447.6 million in 9M 2015, mainly due to the strategic decision to become more selective with future land sales, which amounted to EGP 514.5 million in the comparative period. It is important to note that when results are normalized for land sales in both comparative periods, Revenues will reach EGP 935.8 million in 9M 2016 compared to EGP 933.1 in 9M 2015.

In November 2016; in line with the Central Bank of Egypt’s efforts to support the tourism industry, OHD has signed its EGP 2.05 billion debt refinancing package allowing the company to postpone its principal payments for the coming 3 years and its interest payments for FY 2016 with an option to postpone the interest payments for FY 2017. The rescheduling will strengthen the balance sheet of the company and thereby lead to more flexibility to advance its projects.

Net loss for the period reached EGP 150.3 million vs. a net profit of EGP 290.0 million in 9M 2015 due to the absence of land sales revenues and foreign exchange losses of EGP 85.8 million.

Real Estate continued its positive momentum in terms of revenues and sales, recording an increase of 26.0% in revenues to reach EGP 269.8 million vs. EGP 214.1 million in 9M 2015.

Q3 2016 witnessed enhanced operational performance whereby the value of contracted units has significantly increased by 361.4% to reach EGP 133.8 million compared to EGP 29.0 million in Q3 2015.

The increase came on the back of the aggressive sales and marketing activities that we started implementing with our new launches during Q2 2016. In El Gouna, the Fanadir bay project that we launched in April 2016 got solid demand and has sold almost 75% of its inventory. We also launched a limited project called «The West Villas» in July, holding 11 units for a total value of USD 3.0 million, which has successfully sold out during 48 hours from its launch.

Total value of contracted units has increased to reach EGP 535.2 million in 9M 2016 compared to EGP 532.4 million in 9M 2015, while net value of contracted units has increased by 6.0% to reach EGP 487.1 million compared to EGP 458.3 million. Total deferred revenue has increased by 27.6% to reach EGP 818.5 million in 9M 2016 compared to EGP 641.3 million in 9M 2015.

We continued to prove our trust and commitment to our clients with our timely construction activity, delivering ahead of schedule in some of our projects in El Gouna.

The severe decline in the country’s tourism sector continued to affect the segment’s performance, yet several efforts were undertaken to limit the negative impact on the segment’s revenues which reached EGP 330.7 million compared to EGP 440.4 million in 9M 2015.

Segment’s revenue is continuing to suffer from the huge decline in the country’s tourism sector. According to the latest figures by the Central Agency for Public Mobilization & Statistics (CAPMAS) Egypt tourist arrivals fell c41% y-o-y to 473,000 tourists in September 2016 compared to 802,000 tourists in September 2015. Furthermore, the Central Bank of Egypt (CBE) announced that tourism revenues dropped by 48.9% to USD 3.8 billion in FY15/16 compared to USD 7.4 billion in FY14/15.

 

However, continued marketing efforts with market leading tour operators has improved local market presence along with more direct bookings. As a result, El Gouna fostered its leading market position recording an occupancy of 56% in 9M 2016 versus 66% in 9M 2015 and increase the ARR levels by 14.5% to reach EGP 473 vs. EGP 413 in 9M 2015.

In Makadi, we continued to operate only one hotel representing 44% of the destination’s total capacity during the reporting period since Q4 2015, due to the prolonged impact resulting from the ongoing Russian travel bans. Occupancy rate for the operating hotel reached 34% in 9M 2016 compared to 69% in 9M 2015. Nevertheless, we successfully introduced measures to overcome the drop in business and have signed a 3year lease agreement starting 1st of November 2016, with FTI Group for 3 of our hotels in Makadi for a total of EUR 3.3 million per annum net to owner, subject to an annual increase of 5%. It is important to note that those 3 hotels have recorded a GOP loss of EGP 6.6 million (EUR 0.69 million) in 9M 2016, and have given the company a GOP of only EGP 21.4 million (EUR 2.5 million) in FY 2015 and EGP 9.9 million (EUR 1.1 million) in FY 2014.

In Taba Heights, demand has started to pick up since the end of Q2 2016 due to the aggressive marketing campaigns we implemented in Jordan and the local Egyptian markets. Subsequently, we managed to reopen 276 rooms out of the 503 rooms in Strand Beach & Golf Resort. To date, we have a total of 718 operating rooms in Taba Heights out of 2,365 rooms.

Total occupancy of the available rooms increased to 33% in 9M 2016 vs. 19% in 9M 2015. In Fayoum, we successfuly held the soft opening of Byoum Lakeside Hotel on the 1st of September recording an occupancy of 27% during its first month of operation.

The segment revenues decreased by 24.9% to reach EGP 330.7 million vs. EGP 440.4 million. Foreign exchange losses has continued to negatively impacted our Hotels EBITDA.

Outlook for FY 2016


Corporate

Inline with the Holding company’s intiaitve to focus on its core destinations in Egypt, Oman and Montenegro, the Group is undertaking the direction to sell its non-strategic assets and accordingly has reclassified Tamweel Group companies as an asset held for sale.

It is important to note that post the recent decision of the CBE to float the Egyptian pound and raising the interest rates for deposites in EGP by approximately 3.0%. The value of monetary assets and liabilities in subsequent periods may differ and may affect the statement of profit and loss. The severity of the impact is currently being assessed.

Real Estate

We will continue executing on the new development strategy, offering a wider range of products across our destinations. In El Gouna, we are capitalizing on our new project ‘Tawila’ launched in October, recording postive sales momentum expected to increase the value of contracted units in Q4 2016. We are still planning the launch of products in Fayoum with a total inventory of EGP 30.0 million in Q1 2017. In addition, we are currently studying several opportunities for the first and second home markets in Cairo and the North Coast.

Hotels

We are continuing to enhance marketing activities and outreach and also further develop our relations with the different tour operators to secure more ongoing businesses.

 

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