Abu Dhabi National Hotels (ADNH), the capital's largest hotel owner, is the latest casualty of the global economic slowdown.
Hotel group's earnings down 37%
Abu Dhabi National Hotels (ADNH), the capital's largest hotel owner with properties including the Hilton, Le Méridien and Al Diar hotels, saw annual net profits last year drop by 37.9 per cent compared with the year earlier, due to the global financial crisis. The company's net annual profit was Dh292.7 million (US$79.6m) compared with Dh471.6m in 2007, ADNH said in a statement yesterday.
"Earnings generated from overseas and local investments trimmed net annual profits," ADNH said, while no one was available to comment from the hotel owner on how the group performed during the fourth quarter. Operating revenue increased 29.5 per cent to Dh1.73 billion from Dh1.34bn in 2007, the preliminary financial results indicated. Analysts declined to comment on the results before the company releases a more detailed financial statement on March 5. However, last year Richard Riley, the chief executive of ADNH, attributed the 78 per cent decline in net profits for the third quarter of last year to the dramatic drop in non-operational profits in local and foreign investments, combined with lower bank interest rates on deposits due to the international financial crisis reducing interest income.
Hotels in Abu Dhabi have already started to cut room rates by as much as 15 per cent to shore up demand as travellers are looking to cut their budgets. Some hotels in Dubai have cut rates by as much as 60 per cent, a move analysts believe will severely dent year-end profits. National Hotels owns 14 hotels in Abu Dhabi and Fujairah. Many are operated by international groups such as Hilton, Mercure, Sheraton and Le Méridien, with the profits shared between the owner and operator. As part of its foreign investments, in 2001 ADNH created a joint venture with Compass, a UK-based catering group which operates in more than 94 countries.
The statement added that ADNH has plans to add two properties to its portfolio of hotels this year which include the Sofitel Jumeirah Beach and Al Diar Barsha Hotel and Apartments in Dubai. It has three hotels under construction in Abu Dhabi, including the JW Marriott Resort and Spa, Park Hyatt Saadiyat Island and Capital Centre Hotel. email@example.com