Hotel owner and operator Hotel Royal has been hit hard by travel restrictions as a result of the Covid-19 pandemic. This is apparent as the group recorded a loss of $3.0 million in 1H20, compared to earnings of $2.4 million in 1H19.
This came on the back of a 37.6% drop in revenue to $17.4 million from $27.9 million a year ago.
Group room revenue decreased by 42.4% y-o-y, mainly due to lower room occupancy and lower room rates. Due to Covid-19, Burasari Resort, Phuket, Hotel Royal Bangkok and Hotel Royal Penang were temporarily closed during 2Q20.
Food and beverage revenue recorded 59.9% lower y-o-y to $1.7 million, mainly due to lower breakfast sales, while spa revenue dipped 64.7% to $176,000.
Rental income from within premises fell by 36.1% from the previous year, mainly due to rental rebates granted to tenants due to Covid-19.
The drop in overall revenue was partially offset by an 8% y-o-y increase in the group’s rental income from investment properties mainly due to higher contributions from investment properties in both the Company and the New Zealand subsidiary
With cost of sales only seeing a 19.4% y-o-y decline, gross profit came in at just $6.2 million, 55.7% lower than $14.0 million last year.
Although Hotel Royal did manage to cut overall costs and expenses, it still did not manage to offset the hefty drop in revenue.
Distribution costs were 21.7% lower y-o-y at $0.5 million, administrative expenses declined by 18.9% to $5.9 million, other expenses were 5.6% lower at $1.2 million and finance costs decreased by 22.2% to $1.7 million.
As at end June, cash and cash equivalents stood at $17.1 million.
On the outlook, the Covid-19 outbreak has severely disrupted the hospitality and tourism industry, as countries impose travel restrictions and close their borders. The group expects this trend to continue in the near future.
The group’s operations and financial performance will depend on the global recovery from the Covid-19 pandemic and the resumption of international travelling. For now, its managed fund portfolio will continue to be affected by the Covid-19 virus outbreak, global economic condition, geopolitical and trade tensions.
Shares in Hotel Royal closed at $2.98 on Aug 7.
