Travel

Stock Review:

Pegasus Hotel net profits soar 195 percent

K.A.S. Perera

Pegasus Hotel, the first five Star Hotel to be established in the early seventies, according to the recently released financial report, has recorded a net profit of Rs. 2 m for the June quarter compared to a loss of Rs. 2.19 m for the corresponding period in 2008.

This is remarkable considering the fact net losses have been recorded by the hotel for at least six years since 2004. Net assets value jumped 60 per cent to Rs. 30 from Rs. 18.50. The company has recorded these profits during the quarter where the number of tourist arrivals declined sharply specially in April and May with the anti-terrorist operations at the peak level and this is a remarkable achievement.

The real value of the hotel is far in excess of recorded data due to the following factors.

A) A Sum of Rs. 189 m as recorded under the current assets of the balance sheet represents approximate compensation receivable from the Government for the acquisition of 10 acres of unutilized land in May 2008, of which 2.2 acres were reserved for green cover to retain the beauty of the hotel surroundings. The company has 13.2 acres enough for further expansion. On receipt of compensation the company would be in a position to repay the total debt of Rs. 139 m and the excess sum approximately Rs. 50 m could be invested for a reasonable return.

It is estimated around Rs. 15 m could be saved from this investment and saving on finance cost of Rs. 6.6 m as recorded in 2008/2009. Since the land had been acquired nearly 14 months back the compensation is long overdue and would make the company of the very few debt free companies in the stock market soon.

B) The land has been acquired for a massive ultra modern harbour project with Dutch funding for 44 m (Rs. 7040 m) mainly for local and foreign trawlers and multiday boats which would lead to a massive infrastructure development and increased economic activity in the surrounding areas.

The fisheries harbour is considered one of the largest in South Asia stretching over one kilometre coastal line which has been already cleared for development.

The project is scheduled for completion in two years. The harbour is huge and can accommodate 30 large trawlers and 300 multiday boats and almost full production is intended for export to up-markets such as Japan and the EU. It is proposed to construct a wide bridge under the project connecting the Channel Road in close proximity to the hotel so that the present long road use could be discontinued ensuring easy access from the main road 150 metres away.

These factors would enhance property values very substantially.

C) At present, access from Colombo is via Wattala to the hotel. It is expected that the new road connecting Fort to the newly built Mattakkuliya bridge would be completed in two months.

This would again tremendously increase the land values due to easy direct access to Colombo City and would also increase business activities for the hotel.

D) With the defeat of terrorism, IMF approval, proposed massive developments in the North and the East and substantial increase in other foreign funding would result in overall increased economic activity in the country which would lead to substantial increases in land values specially in Colombo city and its suburbs. The research division of lanka Securities (Pvt) Ltd in their report of September 2008 has valued the net assets value per share at Rs. 70 on the basis of replacement cost.

The Cabinet recently approved 170-bed new hotel on a three acre leasehold land costing US25 M at Katunayake and on a rough valuation having considered proportionate rooms of 107 at Pegasus on freehold land the net assets value per share may even jump around Rs. 80 on the basis of replacement cost.

Having considered the potential for huge profits during the third and fourth quarters considered the winter season and the very positive sentiment for the hotel shares, Pegasus shares may rise even above Rs. 70 during the current financial year.

Discounted German rail travel for Emirates passengers

Sri Lankans travelling to Germany with Emirates can now experience travel on German Rail at discounted rates with the launch of an enhanced 'German fly rail' product by the Dubai-based airline together with German Rail company Deutsche Bahn (DB AG).

Emirates passengers arriving in Frankfurt, Munich, Dusseldorf or Hamburg airports can travel to any point in Germany, a spokesman for the airline said. Children below 11 years of age are allowed to travel free of charge.

The offer will be valid till December 31. Tickets for train travel can be booked from Emirates offices or from any IATA Travel Agent worldwide. Emirates E-Tickets are issued with an integrated German rail journey in conjunction with the international air passage.

"Emirates periodically renews and enhances its partnership with Deutsche Bahn as it brings additional benefits for those who travel to Germany with Emirates," Emirates Sales Manager Devika Ellepola said.

The discounted rail tickets are valid on the entire DB rail network to and from any German airport and on all DB trains except Thalys, DB-Car-shipment-train and special trains.

City Night Line and ICE Sprinter trains are subject to compulsory reservation and passengers can buy tickets at any DB sales outlet paying a supplementary charge.

Emirates' 'Fly Rail' offer is valid on the day of arrival in Germany, on the following day and on the day of departure in Germany. Journeys in the direction of the respective destination and timetable related detours are permitted under this offer.

Transfers will be allowed free from Frankfurt, Munich, Dusseldorf and Hamburg airports to the main train stations and vice versa. Passengers may change their coach class on the train subject to payment of the difference in fare. DB AG is the second-largest transport company in the world after Deutsche Post AG and is the largest railway operator and infrastructure owner in Europe.

It came in 1994 as the successor to the former state railways of Germany, the Deutsche Bundesbahn of West Germany and the Deutsche Reichsbahn of East Germany. About two billion passengers are carried by DB AG each year.

Air Asia direct flights from Kuala Lumpur to Chengdu launched

AirAsia, a low cost airline continues to expand its China network by launching a new route connecting Kuala Lumpur to Chengdu, further strengthening its already vast network to China. The new service will be operated by AirAsia, the low cost long-haul airline affiliate of AirAsia.

AirAsia is the only airline to offer direct flights from Kuala Lumpur to Chengdu, which will begin on October 20 with four direct flights weekly. Regional Head of Commercial of AirAsia Ms. Kathleen Tan, said, "Air Asia has worked hard at building and crafting a strong China route network spanning the four corners and winds of China. Strongholds in the Pearl Delta of the southern region covering popular destination choices of Macau, Hong Kong, Shenzhen, Guangzhou, Guilin, Haikou and by positioning Hangzhou as our Eastern gateway into the Yangtze Delta region. "
 

CSR and sustainability in tourism supply chain

The role of corporate social responsibility and sustainability in the tourism supply chain: a trend-setting symposium from GATE e.V. in cooperation with ITB Berlin will be held from November 20 and 21 in Hamburg.

A major new development took place during this year's ITB Berlin Convention at the world's leading travel show, in the form of the first comprehensive study into corporate social responsibility (CSR) in the tourism sector.

ITB Berlin is again exploring the subject of CSR in the travel industry. As the partner of GATE e.V. in this undertaking ITB Berlin is lending its support to the symposium taking place in November, which is entitled "Sustainability all along the line? CSR in tourism supply chains". "Increasingly, the subject of sustainability is becoming a quality factor for the socially aware traveller.

This makes it even more important for tourism companies to face up to their responsibilities and not just to use CSR as a marketing instrument," according to Director of the Competence Centre Travel and Logistics at Messe Berlin, Dr. Martin Buck in explaining his organization's commitment to this subject.

The two-day conference will examine the importance of tourism supply chains, the verifiability of CSR criteria, and transparency in the implementation of CSR tourism destinations. The aim is to present the subject of sustainability and CSR in tourism supply chains from a number of different perspectives - for the benefit of representatives of the tourism industry, academics, those employed in development cooperation and anyone else with an interest in these subjects.

The discussions will focus on the ways in which CSR can be implemented in the tourism supply chain, the role played in this context at the particular location by cultural factors in the organisational structure of tourism.