Hoteliers The Don Group witnessed a 9% rise in headline earnings from R6.539 million to R7.105 million for the year ended June. Headline earnings per share grew from 2.22 cents to 2.41 cents.

Revenue increased 12% year-on-year from R62.6 million to R70.1 million and this was attributable to increases in suite tariffs and a demand for accommodation from guest categories other than corporate business, the traditional mainstay of Don's clientele, which in itself increased 45%.

"The Don brand of suite hotels with concierge, food and beverage services at affordable prices also drew increased travel agent activity. This was bolstered by the employment of major domestic and international online-booking engines as well as targeting specific travel markets, which in one market sector alone yielded a 195 percent increase in revenue.

"However, momentum in operating profit growth relative to the upward growth pattern of recent reporting periods was tempered by the swing in the economy from a positive upbeat environment in the first half of the year to the contraction of the economy in the second half of the year," the hotel chain said.

"Rising interest rates, tightening credit legislation and waning consumer confidence have, unfortunately, been in line with the caveat expressed at the half year stage where untoward risks to the economy affecting year end profit prospects were identified.

"Inflationary pressures and the factors referred to above had the effect of reducing profit before interest and taxation in comparison to last year, restated, from 12.5 million rand to R11.5 million, a decline of 8%. The five 50 basis point increases in the prime interest rate, during the year, was government's response to control inflation and resulted in an increase in interest paid," the group added.

"Also affecting bottom line profits were increased marketing costs, an unbudgeted increase in travel agents' fees and the introduction of back office reservation technology. Training of staff to better staff retention rates in a high staff turnover industry lead to an increase in staff related costs. These increases will, however, ensure that The Don is able to meet the challenges associated with 2010."

Profit attributable to shareholders increased to R7 million, a 7% increase from the previous year's profit of R6.5 million on a restated basis.

"The group continued with its refurbishment programme of its hotels in Cape Town, Johannesburg, Sandton, Pretoria, and the OR Tambo International Airport precinct during the year.

"Refurbishment resulted in acquisitions of fixed assets increasing from R3.1 million to R6.7 million, an increase of 112% and was financed from internal resources. The upgrading is as much essential to maintain three-star status consistent with its ranking as the premier JSE-listed all-suite hotel group as to ensure the hotels are in top class condition for the 2010 World Cup, for which Don is a Fifa-accredited accommodation provider," The Don Group said.

Source: I-Net Bridge