REVAL HOTELLIGRUPP

ANNOUNCEMENT

23.02.99

 

COMMENTARY TO THE FINANCIAL RESULTS 12/98

 

According to the preliminary unaudited data, the 1998 consolidated net 

sales of Reval Hotelligrupi AS amounted to 209.9 million EEK 

(consolidated 1997 net sales were 204.2 million EEK), which was 

allocated between the companies of the group as follows:

 

· Reval Hotelligrupi AS 6.4 million EEK (sale of management and 

consultation services);

· AS Hotell Olümpia 201.8 million EEK (sale of accommodation and 

catering services);

· AS Taimekt 1.7 million EEK (sale of catering services between 1.01-

31.03.98).

 

According to the preliminary unaudited data, the 1998 consolidated 

gross profit of Reval Hotelligrupi AS amounted to 25.8 million EEK, 

which exceeds the initial profit forecast by 4.8 million EEK 

(consolidated 1997 profit was 28.9 million EEK). Higher than forecasted 

profit originates primarily from the operating profit of AS Hotell 

Olümpia, which exceeded the expectations, and decreased rent expenses 

proceeding from the purchase of the building of "Olümpia".

 

The primary purpose of the commercial activities in 1998 was the 

development of the group’s R&D, sales and management structures 

supporting the achievement of the goals determined in the development 

plan of Reval Hotel Group, as well as ensuring the market position in 

Estonia, and preparing the entrance to the new markets in the target 

region. Proceeding from the goal of expanding the commercial 

activities, the growth rate of expenses in 1998 exceeded the increase 

of turnover, which has caused the decline in profit, compared with the 

results of 1997.

 

The most substantial financial transaction of the IV quarter of 1998 

was the conclusion of sales transaction on the estates of Liivalaia 33 

and Liivalaia 33a with the Privatization Agency. With the purchase of 

the estates, Reval Hotelligrupi AS ensured its managerial activities in 

operating hotel Olümpia on the basis of rent contract, and created 

better conditions for maintenance and renewal of the building 

(constructed in 1980), proceeding from the product development needs. 

The purchase of the estates was financed in 1/3 with the company’s own 

equity, and 2/3 with the privatization installment plan and long-term 

bank loan.

 

On the account of expansion of hotel Central by 105 rooms (opened in 

June 1998), Reval Hotel Group increased in 1998 the number of rooms in 

System* hotels by 15.6% (in 1997, increase in the number of rooms 

22.7%). As of the end of 1998, the share of Reval Hotel Group System 

rooms in the total supply of hotel rooms in Tallinn was 31% (the 

respective figure of the end of 1997 was 33%). 

 

In 1998, the number of available rooms per night of Reval Hotel Group 

System hotels increased by 19.9%, and the number of rooms per night sold 

by 16%; turnover of the system hotels from the sale of the 

accommodation services increased by 12.2%, and 52% from the sale of 

catering services.

 

According to the preliminary data, the results of the sale of 

accommodation services of the hotels of Reval Hotelligrupi System were 

the following:

 

Olümpia		Central1	Park2		System

1998	1997	1998	1997	1998	1997	1998	1997

								

Turnover from accommodation 

(thousand EEK)			104,910	106,227	28,546	21,184	20,592	9,936	154,048	137,347

rooms per night sold		  99400	  97339	 44239	 35635	 26162	13425	 169801	 146399

Average price of rooms (EEK)	   1055	   1091	   645	   594	   787	  740	    907	     93	

	 

 

1 The 1998 and 1997 turnovers and number of rooms per night sold are not 

comparable since in course of expansion of the hotel in June 1998, 105 

additional rooms were opened; 

2 The 1998 and 1997 turnovers and number of rooms per night sold are not 

comparable since the hotel began operations in June 1997.

 

A slight decrease in the average price for rooms and lower 

accommodation services turnover of hotel "Olümpia" related to this, 

proceeds from the increasing competition on the Tallinn hotel market 

and changes in the client structure for the benefit of the holiday 

tourists. 

 

In 1998, the total number of available rooms per night in the hotels, 

which have presented their financial results to the Estonian 

Association of Hotels and Restaurants, increased by 12%, and number of 

rooms per night sold by 10%.

 

* The Reval Hotel Group system included hotels operated by Reval 

Hotelligrupi AS under different managing models (management contract, 

rent contract, ownership). As of 31.12.1998, Reval Hotel Group system 

included hotels "Olümpia" and "Central", and Park Hotel & Casino.

 

 

Katrin Rasmann

Financial Manager

Tel. +372 627 4444