Central Plaza Hotel Plc (Centel) reported a 23.6% year-on-year rise in net profit to 398.4 million baht in the second quarter, driven by a recovery in the hotel business and a drop in interest expense and corporate tax.
Centel chairman Suthikiati Chirathivat says upcountry properties were the quarter’s star performers.
Consolidated revenue was 4.77 billion baht, down 1.4% year-on-year, as revenue from food business fell, reflecting an overall decline in domestic consumer spending and demand.
Consolidated earnings before extraordinary items totalled 863.4 million baht, down 1.6% year-on-year, due to the the overall decline in revenue and lower operating profit in the food business.
Centel's hotel business represented a slightly smaller share (1.6% less) of total revenue than it did in the comparable quarter of 2016.
Net profit margin in the hotel business rose by 2.6% year-on-year in the second quarter, while net margin in the food business climbed 1.1%.
Occupancy rates of Centel hotels in the capital region fell by 5.2%, but these drops were partially cushioned by a 2.7% increase at hotels in the provinces.
Upcountry locations were the star performers of the quarter. Room rates increased across the board, but upcountry locations' rates rose by 5.8% year-on-year, outpacing Bangkok hotels by 3.2 percentage points.
Revenue per available room fell by nearly 5% in the capital area but increased by almost 10% in upcountry hotels.
The company also benefited from the gradual recovery of its five-star properties in the Maldives. Those hotels saw a 3.8% year-on-year increase in average room rate.
The 1.4% decline in overall revenue was in large part due to a decrease in the company's food business (which fell by 3% year-on-year).
The industry witnessed declining consumption across the board, a company spokesman said.
Same-store sales for Central Plaza's top four brands saw a 6.7% decrease in the second quarter.
The company benefited from a tax deduction related to investments made in new assets in accordance with the recent Royal Decree 604, which lets companies deduct 1.5 times the cost of new investments.
The substantial reduction in corporate tax bolstered Centel's consolidated net profit in the second quarter of the year.
Food growth was slow in the first half, but governmental measures are expected to stimulate domestic consumption demand in the last six months of the year.
The ongoing expansion of the company's quick service restaurants is also expected to compound the recovery.
CENTEL shares closed last Friday on the Stock Exchange of Thailand at 40 baht, down 75 satang, in trade worth 184.7 million baht.
