SunCity expects 50pc revenue jump from hospitality ops

By New Straits Times

For July 1 2008 to June 30 2009 period, the developer expects hospitality to bring in RM253 million in revenue

SUNWAY City Bhd (SunCity), a developer that also owns and operates hotels, expects revenue from its hospitality business to jump 50 per cent by the end of fiscal 2009 as it lures more visitors and raises rates.

It now owns and operates five Sunway hotels and manages four Allson hotels. However, the revenue growth does not take into account four new hotel management contracts that start in 2008 and 2009.

"For the July 1 2007 to June 30 2008 period, we are expecting revenue to be RM210 million and for the June 30 2009, we expect hospitality to bring in RM253 million in revenue. This is about a 19 per cent growth," managing director of Allson International Hotels & Resorts, Jean-Jacques Kiefer said.

SunCity's hospitality segment made RM166.73 million in revenue in fiscal 2007, which is about 15 per cent of the group's total.

The Sunway Resort Hotel & Spa is leader of the pack, making up half of the division' revenue. It is due to provide better quality after completing an ongoing RM80 million upgrade.

This hotel, which has an average room rate (ARR) of RM285 a night and an occupancy of 80 per cent, expects ARR to touch RM330 a night and average occupancy of 85 per cent in June 2008.

"On average, all our hotels deliver a gross operating profit (GOP) of 40 per cent," SunCity's managing director of property investment Ngeow Voon Yean said.

GOP is the cost of doing business or gross revenue (from rooms, food and beverage, laundry or business centre) minus the cost of operations (wages, electricity and amenities).

Other hotels under the group are Sunway Hotel Georgetown in Penang, Sunway Hotel Seberang Jaya in Prai, Sunway Hotel Phnom Penh in Cambodia and Sunway Hotel Vietnam.

The hotels that SunCity manages include Allson Residence Jakarta, Allson Hotel Singapore, Klana Resort Bandar Baru Nilai and Allson Klana Resort Singapore.

Meanwhile, it is likely to win two management contracts each in Malaysia and abroad in 2008 and 2009.

"In Malaysia, we are close to signing a management contract to operate a four-star hotel in Klang and Kuala Lumpur. Both are going to be built, and each of the hotels have over 200 rooms," Ngeow said, adding that the hotels will carry the Allson brand.

Similarly, it expects to take over the management contracts of two existing hotels in Siem Reap, Cambodia.

Ngeow said it will start operating the existing hotels in 2008, while the two hotels in Malaysia will be ready in 2009.

"We are also looking for hotels where we already have a footing. We are looking aggressively in Cambodia and Vietnam," Ngeow said, adding that one of the negotiations is for a hotel in Vietnam.