Hoteliers The Don Group recorded a R9.177 million headline loss for the year ended June compared to a R6.972 million profit the previous year.

This translated into a headline loss per share of 3.12 cents versus a profit last time around of 2,37 cents per share.

"Despite the inherent positives in The Don suite hotel operations, these collectively were not strong enough in the financial year ended 30 June 2009 to help the Group withstand the hospitality industry slump, the marked decline in its core revenue source of business travel and the opening of new competitor hotels in Sandton, Johannesburg, Pretoria and Cape Town, putting nearly 1,300 extra competitive hotel rooms into the market place.

"The Group has also experienced an increase in operating costs with an unavoidable increase in staff costs, increased municipal charges and higher electricity costs which have affected bottom line performance," the group lamented.

"The impact of the above mentioned factors coincided with the short-term impact on suites occupancy levels due to The Don's hotel refurbishment programme, which continues to be financed from internal resources," the group added.

These enhancements contributed to the value of the asset base and will continue to do so until the last upgraded hotels come fully on stream. It said.

"Although in previous reporting periods the board cautioned that trading conditions were deteriorating, and took such steps as were possible to meet the challenge, the extent and depth of recessionary conditions far exceeded the directors' fears, with anticipated new income generating areas referred to in the previous reporting period not materialising.

The overall consequence was a decline in revenue and profitability for the financial year ended 30 June 2009.

"Nevertheless, The Don's nine hotels have been able to successfully hold their own against the larger hotel groups. However, the small size of the Group is a prevailing weakness, which the current turbulent economy has exposed once again.

"To counter this, the Group has brought into play a long-standing development programme to expand The Don's activities in the overall hospitality sphere.

The first phase of the development programme was the acquisition of a controlling interest in iKapa Tours & Travel (Proprietary) Limited (iKapa), a leading Cape Town-based company specialising in inbound foreign tourist business from the United States, United Kingdom, Europe and Australia.

"Through iKapa, The Don is able to provide customers with a complete tourism service (including accommodation, sightseeing, transportation, car hire, airline ticket and meals) with a particular focus on inbound foreign visitors.

IKapa operates a 20-fleet luxury coach and mini bus operation covering Southern Africa and has a formal business partnership with a leading tour organisation, Ambula Safaris, which operates in Botswana, Zambia and Zimbabwe (Victoria Falls).

"As a result of the acquisition of iKapa, the board of directors' believe that The Don's suite hotels will enhance its performance through iKapa's hotel offerings to inbound tourists," the hotelier said.

Source: I-Net Bridge