Barbados hotels operator Elegant Hotels (EHG:AIM) is on the back foot as tourists chose to stay at more affordable accommodation instead of its upmarket rooms.
The average daily price that people paid to stay at one of Elegant’s hotels dropped sharply by 8% from $464 to $425 in the six months to 31 March 2017.
According to recent data from Barbados Tourism Marketing, demand for luxury accommodation dropped in the first quarter of 2017, while overall arrivals were up.
MEASURED RESPONSE FROM THE MARKET
Investors are keeping the latest results in perspective and the stock is marked just 2.9% lower to 86.4p.
Elegant blames the weaker pound for its disappointing performance as approximately 80% of its customers are from the UK.
Revenue per available room (RevPAR), a performance metric that assesses how well a hotel is able to fill its rooms, fell from $320 to $279 over the same period.
ANALYST IS CONFIDENT ON OUTLOOK
Despite the disappointing results, stockbroker Liberum analyst Wayne Brown is confident about Elegant’s outlook.
‘The business is in a stronger position now following four deals since IPO, and with investment into the existing estate rising, we see multiple reasons for optimism’ comments Brown.
The analyst also says a decline in sales by 2% is a ‘very strong outcome’ in light of the challenging environment the business was operating in.
'We see September 2017 earnings as a nadir with several macro concerns diminishing,' Brown adds.
