This announcement contains inside information
14 October 2016
Elegant Hotels Group plc
New Management Contract in Antigua agreed in principle
Elegant Hotels Group plc ("Elegant Hotels", the "Company" or the "Group"), the owner and operator of six upscale freehold hotels and a beachfront restaurant on the island of Barbados, issues the following trading update in relation to the year ended 30 September 2016.
Year to 30 September 2016
The Board is pleased to report that it expects that the Group's full year results for FY16 will be in line with market expectations.
Elegant Hotels announced in August that its recent acquisition, Waves Hotel and Spa ("Waves"), is now open for business, having been extensively redesigned and refurbished after it was bought by the Group for US$18.0 million in March 2016. Early feedback from both customers and travel agents has been positive and, as expected, the property is already proving to be highly complementary to the existing portfolio. The Board expects Waves to be earnings enhancing for the Group in FY17, with excellent potential for further improvement in FY18 and beyond as the property develops its reputation.
The Company is also pleased to announce today that it has reached an agreement in principle to bring a 123-room luxury hotel in Antigua into Elegant Hotels' portfolio under a management contract (the "New Management Contract"). The hotel is currently under construction and is expected to open its doors in mid to late 2017. This will be Elegant Hotels' first property outside Barbados and its first management contract, and it is expected to be earnings enhancing in FY18. The Board believes that management contracts of this kind represent a compelling opportunity to expand beyond Barbados, given they require far less capital investment than full ownership, and is therefore considering a number of other similar targets.
The 193 rooms that will be added to Elegant Hotels' portfolio as a result of the Waves acquisition and the New Management Contract represent a 40% increase (from 483 to 676) since the Company's admission to AIM in May 2015. The Board believes that the longer-term benefits from these and future additions to the portfolio justify the extra cost base that has been required to gear the Company for growth. In order to support this continued expansion, the head office team has been strengthened across the areas of finance, operational management and marketing, which has increased central costs in advance of revenues.
During the year, Elegant Hotels' continued focus on quality and service has been reflected in the numerous awards that each of its hotels has received. Most recently, Elegant won the best practices of Sales and Marketing Award at the Caribbean Hotel Information Exchange Forum. In addition, all of its properties apart from Waves (which has only recently come under the Group's ownership) were awarded TripAdvisor's coveted Certificate of Excellence for 2016, as well as the prestigious Green Globe Certificate.
As previously announced, the Board has declared - and the Company has paid - an interim dividend for the period to 30 September 2016 of 3.5 pence per ordinary share. The Board intends to follow this with a second dividend of 3.5 pence in February 2017, representing a total of 7.0 pence per ordinary share for the year ended 30 September 2016.
The Group is only 14 days into its new financial year and, whilst it appears UK consumer confidence is returning, the political uncertainties in the UK over the summer months are, it believes, responsible for bookings for the current financial year tracking slightly behind the same period last year. Given these recent booking trends, the Board believes it is prudent to have a cautious outlook, with Group revenue for the current year currently expected to be broadly flat in comparison with FY16.
However, management believes that the Company's core strategy remains robust and is taking action to respond to tighter market forces, with further sales and marketing campaigns underway, and a new website due to be launched in January 2017. In addition, the continuing strength of Colony Club's performance after its recent refurbishment illustrates the validity of the Group's core strategy of refurbishing, repositioning and re-pricing its properties.
The overall level of net debt, supported by the Group's high quality freehold assets, continues to be at a comfortable level. This allows for a full capital expenditure programme in the current year as part of the ongoing refurbishment strategy which, as has proven to be the case at Colony Club, is expected to improve bookings in the longer term.
The Company remains adequately resourced in the short to medium term and, with the additions of Waves and the New Management Contract and the anticipated delivery of these recent growth measures, as well as the gradual return of UK consumer confidence in the longer term, the Board believes it is well positioned to be able to maintain the dividend in the future based on its current estimates.
Sunil Chatrani, CEO of Elegant Hotels, said:
"While the underlying market conditions of the last few months have undoubtedly been challenging, we are delighted to have successfully launched Waves Hotel and Spa, our first acquisition since IPO, and are looking forward to finalising the management contract for our first hotel outside Barbados. Barbados remains a beautiful place to visit, and we continue to be extremely fortunate to have a peaceful, politically stable and exceptionally tourist-friendly island on which to provide a high quality luxury offering to our guests. As a result, and notwithstanding the immediate headwinds that we face, we remain confident in the long term growth prospects for Elegant Hotels."
For further information:
Elegant Hotels Group plc
Sunil Chatrani, Chief Executive Officer
Richard Jones, Chief Financial Officer
+1 246 432 6414
Zeus Capital Limited (NOMAD and Broker)
Dan Bate / Andrew Jones
+44 (0) 203 829 5000
Rob Greening / Lisa Kavanagh
Email: [email protected]
+44 (0) 207 250 1446
NOTES TO EDITORS:
Elegant Hotels owns and operates six luxury hotels and a beachfront restaurant, Daphne's, on the island of Barbados. The Group's portfolio comprises 553 rooms, which represents around 29% of Barbados' quality leisure tourist room stock. Five of the six Group hotels, including the recent acquisition Waves Hotel & Spa, are situated along the prestigious west coast of Barbados commonly known as the "Platinum Coast". The properties are all freehold, with a total aggregate plot size of approximately 22 acres and an aggregate beachfront of 2,500 feet. In the year ended 30 September 2015, the Group achieved revenues of $60.1 million and EBITDA before non-recurring items of $22.2 million.
The Group's shares were admitted to trading on the London Stock Exchange's AIM in May 2015. Its objective now is to leverage its position as a leading hotel operator in Barbados and to expand both on Barbados and further into the Caribbean.
Together, the Group's six hotels - Colony Club, Tamarind, The House, Crystal Cove, Turtle Beach and Waves Hotel & Spa - offer styles encompassing classic and contemporary, family-friendly and adults-only.
Investor website: http://www.eleganthotelsgroup.com/
Commercial website: http://www.eleganthotels.com/
This information is provided by RNS