CDL Hotels weathers the storms

By SIMON HENDERY

The country's largest hotel operator, CDL, has weathered the fallout from September 11 and the collapse of Qantas New Zealand and Ansett Australia, yesterday reporting a six-fold increase in full-year after-tax profit.

CDL Hotels' $10.7 million bottom line result for the year to December 31 compares to its $1.45 million result a year earlier.

The result included earnings from CDL's 28 hotels and its listed hotel and property investment subsidiaries, Kingsgate International and CDL Investments.

CDL's previous result was affected by a $23.7 million write-down of the value of its Millennium Hotel in Sydney.

CDL Hotels managing director Tsang Jat Meng said the result, underpinned by a solid performance from the local hotel operation, had been pleasing because of the demands placed on the tourism industry by the two airline collapses and a travel slump after September's terror attacks in the US.

CDL owns, leases, franchises and manages the country's Millennium, Copthorne and Quality hotel chains.

"Any one of these situations on its own would have been a significant issue for us," Tsang said.

When international visitor flows "virtually evaporated overnight" on September 11, the company realised the need to switch its focus from the international market to the domestic tourism market, he said.

A strong domestic marketing push and a strong demand for conference facilities in Christchurch and a good ski season helped push up occupancy rates at the group's hotels by 4 per cent in the second half of the year.

Total group turnover fell from $242.1 million to $202.3 million, but local hotel turnover was up 5 per cent to $105 million.

The group-wide result was affected by a drop in earnings from the property operations of CDL's subsidiary companies, which fell from $21.4 million the previous year to $11.9 million.

The fall was mainly due to reduced apartment sales at the almost-completed Birkenhead Quays waterfront apartment development in Sydney, and a $2.1 million loss from property management company Knight Frank New Zealand, which CDL has since sold.

Kingsgate, 51 per cent owned by CDL, produced an operating profit of $10.8 million, up from $6.8 million the previous year.

Kingsgate's operations include the Millennium Hotel in Sydney, the Birkenhead Point Shopping Centre, the Kingsgate Shopping Centre, the Birkenhead Marina and the Birkenhead Quays project.

CDL Investments, 60 per cent owned by CDL, lost $264,000, compared to a $4.1 million profit the previous year a reflection, the company said, of a disappointing year for its New Zealand property development and services subsidiaries.

CDL will pay a fully imputed dividend of 1.4 cents per share on April 9.

CDL shares closed up 1c, or 4.3 per cent, at 24c yesterday. CDL Investments was down 1c to 21c and Kingsgate was unchanged at 14c.