Grand Plaza Hotel earnings nearly halved

MANILA, Philippines - Listed Grand Plaza Hotel Corp., the owner of Heritage Hotel Manila, reported a hefty decline in profits last year due to lower revenues and strong competition from new hotels.

In a regulatory filing, Grand Plaza said its net income dropped to P85.57 million last year from P165.36 million in 2012. It was also significantly lower than the P176.06-million income in 2011.

Revenues, derived from rooms, food and beverage, and other services, dropped 15 percent to P582.65 million from P687.31 million.

For instance, room revenue decreased to P336 million or four percent from P353 million.

“The hotel managed to increase its occupancy to 66 percent from 64 percent. However, average room rate was lowered to P3,101 from P3,317 in order to compete,” Grand Plaza said.

“There are more new hotels in the market and the hotel has to reduce its average room rate in order to attract guests,” it added.

Food and beverage revenue slipped 13 percent to P158 million from P183 million.

“The negative variance is mainly due to the closure of Philippine Amusement and Gaming Corp. (Pagcor) operated casino in the hotel in July 2013,” Grand Plaza said.

Others revenue, sourced mainly from rental income, sank 42 percent to P60 million due to the closure of the Pagcor-operated casino.

“The management of the corporation is in the process of exploring various options on how to develop and utilize the area covered by the leased premises,” Grand Plaza earlier said.

The previously-leased Pagcor casino covered 4,745 square meters with a monthly rental of P10.72 million. Pagcor is winding down its operations south of Metro Manila as megacasinos start operations in the Entertainment City, the Philippines’ answer to gaming hubs in Macau and Singapore.

Grand Plaza said cost of sales and services eased 15 percent to P522.9 million from P622.18 million while total expenses rose more than three percent to P414.06 million from P399.35 million.

The company owns the 18-year-old Heritage Hotel Manila, a deluxe class hotel that offers 467 rooms and facilities.