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Steigenberger Hotel Group Completes Reorganization
in 2004;  Hotel Portfolio Reduced by One in the
Past Year to 77 Properties within Two Brands

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Frankfurt am Main, 19 April 2005 - The Steigenberger Hotel Group can look back on a satisfactory past financial year, having laid the foundations for the corporate future in 2004. The consistent reorganization of the company has borne fruit, ensuring the Frankfurt-based company has posted a positive result. The number of room nights has risen by 6.9 per cent to 2.9 million. The average occupancy rate increased from 60.2 per cent (2003) to 61.3 per cent (2004), and thus reached its highest level since 1992.
 
2004 was a year of reorientation for the Steigenberger Hotel Group. The extensive re-structuring of the company was implemented, and was concluded much earlier than originally planned. Far-reaching measures affected the reorganization of the business areas, the organizational structure, as well as the brand policy. Thus the streamlining of the portfolio from four to two brands � Steigenberger Hotels & Resorts in the four- and five-star segment and the middle-class concept InterCityHotels � as well as the introduction of three operating divisions in a short period of time proved to be a 
Left to Right: Hanns-Georg Scheibe, Chief
Financial Officer of the Steigenberger Hotels AG
and Karl Anton Schattmaier, Chief Executive
Officer of the Steigenberger Hotels AG
successful strategy, leading to more transparency and greater market orientation.

�We have consistently oriented the company towards our core business of hotel operation and management. The positive results in the past year are confirmation that we are on the right path,� said Karl Anton Schattmaier, Chairman of the Board of Directors of Steigenberger Hotels AG, at this year�s balance-sheet press conference in Frankfurt am Main.

The hotel portfolio of the Steigenberger Group was reduced by one hotel in the past year to 77. New in the portfolio are the hotel Fürst Leopold in Dessau, the InterCityHotel Halle-Neustadt, the InterCityHotel Hamburg Hauptbahnhof and the InterCityHotel Düsseldorf. Five hotels have left the portfolio, three of which were in the holiday hotels business division: the Steigenberger Avance Hotel Bad Tatzmannsdorf, the Steigenberger golf and thermal hotel Bad Tatzmannsdorf, the Steigenberger La Canaria on Gran Canaria, the Esprix Hotel in Göttingen and the InterCityHotel Weimar.

Despite the reduction in the portfolio by one hotel, within the group (group, management and franchise operations) it was possible to clearly increase the room nights by 6.9 per cent, from 2.7 million to 2.9 million.

In the year under review the group�s sales revenues decreased by 6.6 million euros to 434.7 million euros (previous year: € 441.3 million). This downturn is primarily attributable to the invoicing in the previous year of the general contractor agreement of 26.1 million euros for the conversion and extension of the Steigenberger Airport Hotel in Frankfurt. On an adjusted basis the sales revenues rose by 19.5 million euros.

In their core business the hotel operations of the group posted an increase of 7.5 million euros in sales to 328.7 million euros, a rise of 2.3 per cent therefore. A major contribution to this was made by the city hotels with an increase of 23.2 million euros in sales and by the InterCityHotels with an increase of 4.7 million euros. The holiday hotels had to contend with a downturn in sales of 20.3 million euros, exclusively due to the hotels in Bad Tatzmannsdorf and on Gran Canaria leaving the group. The three hotels had a total of some 600 rooms.

In the wake of this positive development the GOP (Gross Operating Profit) of the hotel operations � the key ratio for the operating success of the group � increased from 27.9 per cent to 28.6 per cent of sales. This corresponds to an increase in GOP from 89.6 million euros to 93.9 million euros, a growth of 4.8 per cent. The city hotels improved by 9.4 million euros (+21 %), the InterCityHotels by 0.7 million euros (+3.3 %), while the holiday hotels saw a downturn of 5.8 million euros (-24.9 %) in GOP.

Compared to the previous year Steigenberger Hotels AG posted a consolidated profit of 4.2 million euros before taxes on income. Following the consolidated net loss of 11.0 million euros in the previous year, this corresponds to an increase of 15.2 million euros in the operating result.

The average occupancy rate rose from 60.2 per cent (2003) to 61.3 per cent (2004). While the city and holiday hotels were able to raise their occupancy rates by 2.2 per cent and 2.4 per cent, respectively, the capacity utilization of the InterCityHotels was 64.6 per cent, and thus slightly lower than the record figure seen in 2003.

Given the current economic situation the pressure on room prices is still considerable. Nevertheless the Steigenberger Hotel Group was able to increase the average room rate � adjusted for changes in the portfolio � slightly in the year under review to 77.88 euros per room night.

The room yield scarcely changed over the previous year. Although the yield at the InterCityHotels fell by 1 euro, it was possible to compensate for this downturn thanks to the excellent result of the city hotels, with the effect that the yield was 47.28 euros.

A glance at the figures for the first quarter of 2005 shows that the positive development of the Steigenberger Hotel Group is continuing. Adjusted for the hotels La Canaria and InterCityHotel Weimar, sales revenues at the group have risen by 2.5 million euros in a year-on-year comparison to 80.9 million euros. The rate has increased by 10 cents to 79.80 euros, the yield by 40 cents to 44.60 euros. The room nights have increased by 8,600 to 523,600, and the occupancy ratio has improved by 0.4 per cent to 55.9 per cent.

The Steigenberger Hotel Group believes it is well-equipped for the future with a strategy that has been amended in line with the new market conditions. The new sales and marketing structure is oriented to the rapid implementation of customer- and market-relevant activities. Permanent guest monitoring ensures the standard of services, serving to improve the service quality and to develop the requisite sales channels.

Moreover, locations with a promising future are being systematically developed and secured for the long term. It is planned to open one new hotel this year. At the end of the year the holiday, wellness and conference hotel Steigenberger Hotel Therme Meran in South Tyrol is to go into operation. This is to be followed in the spring of 2006 by the opening of the business hotel Steigenberger Hotel de Saxe in Dresden. Mid-2006 will then see the opening of the Steigenberger resort hotel in Zingst, of the Steigenberger Al Dau Resort Red Sea in Egypt, as well as that of the InterCityHotel in Dresden. A Steigenberger holiday hotel on the North Sea island of Norderney is to follow in 2008.

In total Steigenberger Hotels AG will invest ca. 100 million euros in existing and new operations through to and including 2008. These funds will be provided by the liquidity of the company and by Steigenberger�s majority shareholder.

Contact:

Steigenberger Hotels AG
Angelika Heyer 
Tel.: +49/69/6 65 64 422 
E-mail: [email protected]
www.steigenberger.de

Also See: Steigenberger Hotel Group Repositions Company to Focus on Two Brands - Steigenberger Hotels & Resorts and InterCityHotels; Restructures Sales Department / March 2005
Tom Griffiths, Former Carlson Hotels Executive, Brings New Vision, Infrastructure to SRS-WORLDHOTELS / January 2004


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