Nicola Mawson

HOTEL company The Don Group says it has broken a trend of losses, but is concerned about rising interest rates and higher oil prices.

The group yesterday reported revenue up 13% to R34,5m for the six months to December from R30,4m previously. Operating profit rose 25% to R8m from R6,4m as a result of revenue improvement. Net profit increased 60% from R1,7m to R2,7m.

The Don attributed growth in profitability to a room rate increase, better yields from each room as well as increasing revenue from food and beverage operations, guest transport and conferencing income.

CEO Thabiso Tlelai said input cost increases for suite accommodation, food and interest rates were offset by higher room tariffs.

The Don has nine hotels in Cape Town, Johannesburg, Sandton and Pretoria, with a total of 410 suites.

Last September, the company, which had a loss of R5,3m after incurring deferred tax of R2m in the 2006 year, posted a 74% increase in operating profit. This was the third year that the company’s operating profit increased, despite 2006’s dip into the red, growing from 2005’s R3,9m to last year’s R15,3m.

The group stepped up its refurbishment programme, spending R2,2m compared with R1,1m previously. Last year, it spent R3,2m on upgrading, mainly in Cape Town. The Don Beach Road Hotel, Cape Town, upgrade was completed.

The Eastgate Hotel at Bruma,

Tlelai said reservation trends for the rest of the year were strong, and the group expected “positive” full year results.

He took over as CEO in 2000, when liabilities exceeded R100m. He is the majority shareholder.

By year’s end, the company would have a better idea of whether it had managed to break with losses.

The share price was unchanged at 60c yesterday.

Source: Business Day