The first quarter of 2009 saw lower occupancy rates and lower revenues at Warimpex's hotels. Group sales fell by 19% from 18.2 million to 14.7 million in the first three months of the 2009 financial year.
"Tourism is very sensitive to economic trends and cycles. The Warimpex hotels were not able to escape the effects of the currently poor economic environment and saw significant decreases in sales, especially in the Czech Republic and France. However, business at our hotel in Munich has grown nicely as of late, and conference business at the newly opened andel's in Berlin has gotten off to a promising start. And in Prague, we are seeing a slight turnaround after the significant declines in recent months," reported Franz Jurkowitsch, chairman of Warimpex's Management Board.
"Falling interest rates and rising property yields in CEE are causing increased interest among institutional real estate investors. Because of this change, I expect that the volume of real estate transactions will begin rising again at the end of 2009. Cheap money is effective, even if it is only flowing very slowly into the economy right now because banks are still pursuing cautious lending strategies," said Jurkowitsch, expressing his cautious optimism.
Financial result
Consolidated sales fell by 19% from 18.2 million to 14.7 million in the first three months of financial year 2009. Revenues from the hotel segment declined to 13.3 million compared to 16.8 million in the first quarter of 2008 in spite of the fact that the average number of rooms increased. Most of this decline in sales can be attributed to the adverse conditions in Prague and Paris.
According to HotStat (European Chain Hotels Market Review March 2009), occupancy rates at four- and five-star hotels in Prague were down by 17% compared to the first quarter of 2008, while average occupancy fell by roughly 7% in Paris. The Warimpex hotels were not immune to the effects of these adverse market conditions and saw turnover decline significantly.
Revenues from the rental of offices and the provision of development services remained stable at 1.5 million. EBITDA fell from 9.8 million to -3.8 million, and EBIT were down from 6.9 million in the first quarter of 2008 to -7.3 million. This 14.2 million decline can primarily be attributed to the higher revenues achieved through the sale of properties and shares in development projects in the prior period.
The Group's financial result improved from -9.5 million to -2.6 million. Above all, this 6.9 million change can be attributed to adjustments in the fair values of short-term financial investments in the amount of 5.9 million in the first quarter of 2008.
Key events
The largest four-star superior andel's design hotel to date was opened in Berlin at the beginning of March 2009. With a total of 557 rooms on 10 storys, a flexible conference area of 3,800 m², a 570-m² ballroom and a sky bar on the 14th story of the 60-m high tower, andel's Berlin is one of the most attractive conference and event locations in the city.
The hotel was developed in only 19 months through a joint venture with UBM, at a total investment of roughly 102 million. Compared to March 31, 2008, the number of available hotel rooms (adjusted for the proportionate share of ownership) rose by 427, from 2,489 to 2,916, as of March 31, 2009. This is primarily attributable to the opening of the angelo hotel in Munich, the 69 additional rooms at angelo airport hotel in Bucharest, the opening of the angelo in Plzen, and the opening of the andel's in Berlin. The Hansa hotel ship, which was operated as a branch of the Amber Baltic hotel, was closed.
Real estate assets
At March 31, 2009, the real estate portfolio of the Warimpex Group comprised eighteen hotels with a total of 4,300 rooms (2,916 rooms when adjusted for the proportionate share of ownership), plus seven office properties with a total lettable floor area of some 32,000 m² (23,000 m² when adjusted for the proportionate share of ownership). 11
