Hotels, travel & tourism group The Don on Wednesday reported a headline loss per share of 3.10 cents for the year ended June 30, 2010, from a loss of 3.12 cents previously.

It recorded a loss per share of 3.12 cents, from a prior loss of 3.04 cents.

Revenue of R171.5 million was higher than R65 million recorded in 2009, and the group pointed to a pre-tax profit of R1.5 million, from an earlier loss of R11.3 million.

No dividend was declared or paid.

"This impressive increase in revenue resulted from the board's decision to expand The Don's primary business focus beyond that of `Suite Hotel' operations.

The group's investment in 2009 of a 51% stake in iKapa Tours & Travel contributed 112.8 million rand in revenue during the reporting period, up from 3.3 million rand which it contributed during the last two months of the previous comparative period," it said.

In segmental revenue, The Don said its hotels division brought in R58.7 million, from R61.7 million previously, however, it noted a pre-tax loss of R9.3 million, from a loss of R2.8 million previously.

Travel & tourism added R112.8 million to revenue, from R3.3 million before, with pre tax profit of R19.3 million, against a prior loss of R1.7 million in 2009.

The group said that 'football fever' helped the Travel & Tourism' segment, through iKapa's successful management of soccer supporter operations in Cape Town and Nelspruit, as well as a cruise liner project that delivered a pre-tax profit exceeding R18 million, to generate income and ride out the prevailing economic turbulence.

"The Don Suite Hotels' segment however, did not fare as well. Although, as a result of the SWC, The Don generated revenue of 12 million rand during the month of June 2010, on the whole, the SWC did not deliver to the extent anticipated so as to offset the low accommodation demand and price-war-induced-tariffs which persisted throughout the financial year," the group said.

It said that the release of additional rooms by the FIFA booking agency, Match, as a result of the drastic fall-off of anticipated soccer world cup (SWC) visitors to South Africa, and the consequent industry-wide lowering of accommodation rates, added to the pressure on the group's income stream as well as market share.

It said that partly as a result of the SWC, the hospitality sector had become grossly over-traded.

"The entry and expansion of deep-pocket hotel groups has impacted negatively on The Don's business in Gauteng and Cape Town.

In Sandton alone, new hotels have increased capacity by an additional 773 rooms, and in Pretoria there are now 500 additional competing rooms. Price-wars are expected to be a marketing staple for the foreseeable future," the group said.

Looking ahead, The Don said: "The Reserve Bank's recent reductions in interest rates in an attempt to 'kickstart' the economy will hopefully result in the increased return of corporate and individual business and vacation travel, which will benefit the group."

The group said it would focus on focus on increasing sales through a re-structured marketing department.

In a hospitality market beset by robust competition, The Don said it was anticipating that its strengthened relationships with travel agencies, the efficacy of internet reservation systems, and dedicated service delivery from committed staff would assist in achieving budgeted revenue by 30 June 2011.

"From September 2010, uncompromising measures to reduce overall operating costs are being implemented to offset low price-war tariffs. The management of iKapa are, in addition, undertaking cost-cutting steps of their own to take advantage of improving the tourism business.

"Whilst it is encouraging to note that the hotels segment revenue in the first months of the interim period to December 31, 2010 is meeting target, the board is cognisant of the fact that the most important goal for the group going forward is the return to profitability," it concluded.

Source: I-Net Bridge