Gulf Hotels reports FY18 profit

Gulf Hotels Group (GHG) announced its annual financial results for the year ended 31 December 2018 with year-to-date net profit affected by pre-opening expenses of the new Gulf Court Hotel Business Bay Dubai. The company recorded net profit of BD6.922 million compared to BD11.036m in 2017, a decrease of BD4.114m or 37.28 per cent. Earnings per shares was 31 fils in 2018 compared to 49 fils in 2017. Net comprehensive income was BD7.432m, compared to BD10.636m in 2017, a decrease of BD3.204m or 30.13pc.

The decrease in the net profit for YTD in comparison to last year resulted from the pre-opening expenses of the new Gulf Court Hotel Business Bay Dubai (BD1.058m) which opened in August 2018, interest costs pertaining to the Hotel’s purchase (BD420K) and additional depreciation for the same (BD838K), together with the new beverage operation in Sri Lanka. The result, GHG said, was also impacted by the closure of the Gulf Convention Centre and a number of outlets, which were under renovation till Q3. Development cost of the land in Dubai were also written down this year (BD1.058m).

In addition, reduced profit from associates and share investments rose to BD 634K. The Group achieved revenues of BD35.111m, compared to BD37.262m in 2017, a decrease of BD2.151m or 5.77pc. Gross Operating Profit was BD13.233m, compared to BD13.356m in 2017, a decrease of BD0.123m or 0.92pc. For the fourth quarter, net profit was BD1.182m compared to BD2.357m during the prior year quarter, a decrease of 49.85pc. Earnings per shares is 5 fils compared to 10 fils in the fourth quarter of last year. The decrease in the net profit for the fourth quarter in comparison to the fourth quarter of last year relates mainly to preopening expenses incurred for a number of food and beverage outlet renovations in Bahrain and interest costs on the financing of Dubai project and additional depreciation for the same.

Also, hotel’s operations continue to be affected by a decrease in Room’s revenue, which is driven by lower room rates and lower occupancies. Food & Beverage income was also affected by lower occupancy levels. Net comprehensive income for the quarter was BD1.397m, compared to BD2.445m in the year ago quarter, with a decrease of 42.86pc. The operating profit for the quarter was BD4.469m, compared to BD3.383m in the fourth quarter of last year, with an increase of 32.10pc. With regards to revenue/ sales, the company achieved BD10. 286m, compared to BD9.716m in the quarter of last year, with an increase of 5.87pc.

Commenting on the results, Chairman, Farouk Almoayyed, said: “Whilst the hospitality industry in the Bahrain continues to face challenges due to declining occupancies and room rates, the government had started to take positive steps to bolster tourism and has recently reduced Government Levy to 5pc to compensate for the introduction of VAT”. CEO Garfield Jones: “The upcoming year also represents the 50th anniversary of the Gulf Hotel which will enjoy a year full of celebratory events”.