Minor International narrowed its third quarter loss, to Baht 5.6bn from Baht 8.4bn in the prior quarter, with Australia reporting the strongest recovery.
The company said that over 80% of its hotel portfolio was operational at the end of the quarter, while it continued to “cautiously expand”.
Dillip Rajakarier, group CEO, Minor International said: “As we all know, the pandemic has not only had a severe health humanitarian impact, it is also affecting the global economy. As countries around the globe started to relax the lockdown since May and businesses resumed operation in the third quarter, we started to see positive recovery across the businesses and geographies, all at different pace.
“Minor Hotels has seen good recovery in Australia and its mixed-use business, both of which generated positive Ebitda in the third quarter. In Europe, although the recovery has been slower than we expected as a result of the surge in Covid-19 cases, NH Hotel Group has clearly outperformed their closest competitor in terms of financial performance, including revenue, Ebitda and net profit recovery. Although recovery to the normal level, especially for the hospitality industry will take time, we are encouraged by the improving signs, particularly with the likely arrival of vaccine.”
Minor Hotels’ average occupancy of the entire portfolio improved from 9% in the second quarter, to 32% in the third quarter whilst revpar decline recovered from -91% in the second quarter to -63% in the third.
Australia saw revpar decline of only 32%, bringing it above break-even point and generating positive Ebitda during the quarter. Maldives saw good traction since hotel reopening at the end of September with Anantara Kihavah Villas, Mint’s flagship hotel, boasting an average occupancy of almost 70% in November, as the high season approached.
NH Hotel Group saw a turnaround to positive gross operating profit in the quarter vs negative gross operating profit in the prior. NH Hotel Group’s negotiation with landlords led to potential lease and rental-related savings of up to €90m for the full year.
Furthermore, Minor Hotels continued to “cautiously expand” its portfolio, with the launch of 12 new hotels during the quarter, including the luxury Anantara Maia Seychelles and seven hotels in Europe previously known as the Boscolo hotels.
Minor Hotels will launch its first fully integrated scientific wellness and medical retreat, RAKxa in Bangkok, in the fourth quarter. In addition, the performance of Minor Hotels has been supported by residential sales and the recovery of Anantara Vacation Club, which drove mixed-use business to report positive Ebitda during the quarter. This has helped alleviate the adverse impact of the COVID-19 pandemic on other parts of the portfolio, including Europe, the Americas and Asia.
The group said that, with aggressive cost cutting coupled with savings from leases, of which the combined amount resulted in a reduction of 40% of costs compared to the third quarter, Minor Hotels reported an improvement in its core losses from Baht 6.4bn in the second quarter to Baht 4.5bn in the third.
Rajakarier said: “We find ourselves in a unique and unprecedented situation where the key focus has been to manage our P&L, cash flow and balance sheet. With our businesses across the globe being impacted, we remain agile, yet focused on driving our business. Minimising cash outflows and maintaining liquidity remain our priority, and we continue to monitor our balance sheet position closely while proactively mitigate any potential downside risks. Fundamentally, our various businesses are well-positioned within our core industries, with key assets in great locations resulting in customer goodwill, trading partner relationships, reputation, best-in-class intellectual properties and brand values. We have a portfolio of quality assets which continue to be in high demand even in this challenging environment, and therefore we can easily implement an asset rotation strategy to strengthen our balance sheet further.”
Minor International has continued to pursue Marriott International over the performance of the JW Marriott Resort & Spa in Phuket, Thailand, which Minor owns and Marriott International has managed since its opening in December 2001.
The accusations from Minor include that Marriott International was forcing the JW Marriott Phuket to accept high volumes of low margin business through Marriott’s loyalty programme and operating its loyalty programme in bad faith and against the interests of Minor as hotel owner; that it was failing to manage the JW Marriott Phuket in a manner to properly protect and benefit the owner’s interest, including implementing poor purchasing practices, high staff turnover and making damaging sales/marketing decisions; and that it is unduly enriching itself at the expense of the hotel and Minor, through non-transparent licence fee arrangements, supplier rebates and use of monies in the Marriott loyalty programme fund.
Insight: Minor International was pegged as one of the hotel companies most likely to have a, let’s call it tricky time during this pandemic, with Fitch concerned about its debt and the pull that would have on NH Hotel Group.
Global diversification and a certain shoring up has seen the group through to the other side, freeing up the rest of us to return to our favourite Minor activity - watching it pursue Marriott International, with the intent of seeing them in court.
So far it’s been a slow grind but the group continues to pile woe upon woe on the US-based group, which has had a year of pandemic, GDPR fines and this. Other investors continued to be gripped by a case which, if it comes to open court, will lay bare how the largest operator treats its owners, good or bad.