The Steigenberger Hotel Group announces successful financial year 2005
The Steigenberger Hotel Group announces successful financial year 2005
Category: Worldwide -
This is a press release selected by our editorial committee and published online for free on 2006-05-02
Successful financial year 2005
The Steigenberger Hotel Group has ended its financial year 2005 with positive results. Despite continued market sluggishness the Frankfurt-based company was able to increase both turnover and operating profit. Average occupancy rates increased by 1.7 percent to 63 percent, thereby reaching their highest levels since 1991. Yield was up 2.1 percent or 1.01 Euros to 48.29 Euros.
“We have set the course for long term, profitable growth. Our programme for the future has proved its worth. The company is well equipped to face future market developments,” stated Karl Anton Schattmaier, spokesman for the board of Steigenberger Hotels AG, on the occasion of this year’s end of year press conference in Frankfurt.
The hotel portfolio of the Steigenberger Group was reduced by one hotel last year; the Bad-Hotel Zum Hirsch in Baden-Baden. Despite the reduction in the year-round room availability the Group (Enterprise, Management and Franchise operations) managed a slight 1.1 percent rise in room nights to 2.93 million.
The Group’s turnover in the year under review, including franchise operations, rose by 4.8 million Euros or 1 percent from 425 million Euros to 429.8 million Euros. After portfolio adjustment, the increase in turnover reached 2.4 percent.
In the core business, the hotel operations of the group saw an increase in turnover of 6.1 million Euros to 334.8 million Euros, a rise of 1.9 percent. The City hotels made a significant contribution to this total with an increased turnover of 6.5 million Euros and the InterCityHotels saw a rise of 1.3 million Euros. The Resort hotels had to absorb a fall in turnover to the tune of 1.7 million Euros. Following adjustments to take account of the loss of the Gran Canaria hotel from the portfolio, this division also saw a rise of 4.4 percent or 3.6 million Euros.
The GOP (Gross Operating Profit) of the hotel operations – the measure of operative success in the Group – saw a total increase of 1.6 million Euros. It rose from 93.9 million Euros or 28.6 percent of the turnover to 95.5 million Euros (+1.7 %) or 28.5 percent of the turnover.
The City hotels improved the GOP by 2.7 million Euros (+5 %) to 56.7 million Euros, InterCityHotels held the previous year’s value with 22.4 million Euros while the Resort hotels, after the portfolio adjustment, lost 1.1 million Euros (-6.3 %) in GOP.
The average occupancy rate rose by 1.7 percentage points from 61.3 percent to 63 percent. The City and Resort hotels increased their occupancy by 1.7 percentage points (61.3 %) and 0.4 percentage points (60.4 %) respectively. The utilisation of InterCityHotels, with an increase of 2.9 percentage points, reached its best ever value of 67.5 percent.
The pressure on room prices as a result of the difficult economic situation remained as high as ever in the 2005 financial year. The adjusted average room revenue in the Steigenberger Hotel Group fell by 0.31 Euros to 76.88 Euros (previous year: 77.18 Euros). The various divisions achieved different results: the Steigenberger City hotels were able to hold their average rate of 93.42 Euros while the average price of the Resort hotels following the portfolio adjustment dropped by one Euro to 80.57 Euros. InterCityHotels had to face some aggressive competition in the mid-range segment. They conceded 0.70 Euros in their average price and ended up at 52.17 Euros.
The yield (RevPar), the ratio of utilisation to average room rates, underwent a positive change in comparison to the previous year. Significantly improved utilisation levels across all divisions compensated for weaker growth in room revenue. Yield rose by 2.1 percent or 1.01 Euros from 47.28 Euros to 48.29 Euros. After adjustment, yield rose by 1.15 Euros or 2.4 percent to 49.44 Euros.
The adjusted operating profit (EBIT) grew from 6.7 million Euros in the previous year to 8.6 million Euros. As a result of the special costs for restructuring and risk provisioning that fell in this financial year, the company ended up with an annual surplus of 0.2 million Euros compared to 3.1 million the previous year.
The strategic measures put in place in the 2005 financial year made a significant contribution to this good result.
Sales improvements were a major focus. A Global Sales Structure was introduced, tailored to looking after individual enterprises and major customers at home and abroad. Against this background a Key Account System was established, in which Global Key Account Managers work across the board with current and potential new major customers in the different enterprises and in international markets. The new sales direction focuses on the rapid implementation of customer and market relevant activities.
Of great significance for the development of the company was and is the investment programme announced a year ago, which started to be implemented in 2005. 150 million Euros will be invested by 2008 in structural conservation measures in the core hotel business. The aim of the building measures is to secure the foundations for growth and income through the extensive remodelling and modernisation of key hotels. In future these investments in competitiveness will be clearly demonstrated in improvements in both income and the general financial situation.
In preparation for this investment programme Steigenberger Hotels AG has taken a major step forwards in terms of financial consolidation. Based on an increased cash flow and an injection of funds from disinvestments, the company’s net credit level of debt was significantly reduced from 23.8 million Euros (2004) to 3.4 million Euros by 31st December 2005.
One important step in the past year was the introduction of a redesigned Corporate Identity. Under the slogan “Younger, Bolder, Fresher”, the Steigenberger Hotel Group was newly launched and now has a modern and contemporary image. Central to the newly developed CI is the strengthening of the umbrella brand Steigenberger Hotel Group, as well as the promotion of Cross Selling for the two brands Steigenberger Hotels and Resorts and InterCityHotels.
A look at the first quarter of 2006 shows that the Steigenberger Hotel Group continues to show positive growth. The Group’s turnover rose by 5 million Euros to 86.3 million Euros compared to the same period last year (last year: 81.3 million Euros). The rate has increased by 1.18 Euros to 81.03 Euros and the yield has increased by 1.73 Euros to 46.35 Euros.
The Steigenberger Hotel Group considers itself to be well equipped for the future with its new strategies that have been designed to suit changing market conditions.
This year the company has already come one step closer to achieving its declared goal of systematic expansion in key locations. March saw the opening of the Steigenberger Hotel Therme Meran, with interior design by the Italian designer Matteo Thun. It is the first Steigenberger Hotel in Italy.
This was followed in early April by the opening of the Steigenberger Hotel de Saxe opposite the Frauenkirche in Dresden. At the beginning of June the Steigenberger Strandhotel in Zingst on the Baltic Coast is due to open, followed in the autumn by the Steigenberger Al Dau Resort Red Sea in Egypt. In 2007, plans are currently underway to open InterCityHotels in Dresden, Essen and Mainz then in 2008 a Steigenberger Resort Hotel will be opening on the North Sea island of Norderney.