Monday, August 16, 2010

Banyan Tree Resorts post huge losses in Q2

The April-June quarter had been a tough one for luxury resorts operator, Banyan Tree, for it posted huge financial losses. The company’s loss doubled to S$9.2 million on a year-over-year basis. Revenue grew by only two percent to S$60.7 million mostly contributed by its hotels and resorts in Maldives and Phuket.

Banyan Tree blamed the anti-government riot in Bangkok that took place this year. The company is now looking forward to reduce its dependence on Thailand and explore new markets in China. Ho Kwon Ping, Executive Chairman, Banyan Tree Holdings, said, "We have more than 60 per cent of our total assets in Thailand, and in the past, we thought that we would not actively divest; (so) we would just reduce that mix by growing elsewhere……As a result of what has been happening, we decided to accelerate this whole process, not just by growing elsewhere, but also by actively reducing that concentration in Thailand……We would hope to get it to be below 50 per cent for sure over the next few years,"

Added with it, the volcanic ash cloud of Iceland also caused huge losses as it disrupted air travel. FIFA World Cup is also dealt another major behind the low season.

The company recently sold its Dusit Laguna Phuket hotel to Dusit Thani Public Company for around S$110 million. The company will also going to sell its Dusit Laguna Phuket hotel and looking forward to make a gain of S$68.4 million

Due to its economic growth, the burgeoning upper middle class group makes it a great market for Banyan Tree. The company received good response for the Banyan Tree Hospitality Fund valued at US $150 million.

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