REVAL HOTELLIGRUPP

COMMENTARY TO FINANCIAL RESULTS



COMMENTARY TO THE FINANCIAL RESULTS, Q1 2000



FINANCIAL RESULTS



In Q1 2000 Reval Hotelligrupi AS consolidated net sales were EEK 48.0 

mln (EEK 39.9 mln in 1999), divided between the companies in the 

group as follows:



- turnover of Reval Hotelligrupi AS was EEK 10.5 mln, incl. EEK 0.4 

mln from sale of management and consultation services and EEK 10.1 

mln from sale of accommodation and other hotel services in Central 

hotel (in 1999 EEK 1 mln from sale of management and consultation 

services);

- AS Hotell Olümpia turnover: EEK 37.5 mln from sale of accommodation 

and other hotel services (in 1999 EEK 38.9 mln).



Increased consolidated turnover and changes in structure compared 

with last year's first quarter are due to addition of turnover from 

Central hotel and decreased sale of management services resulting 

from changes in Central hotel's operating model.



Reval Hotelligrupi AS consolidated and unaudited net profit in Q1 

2000 was EEK 3.4 mln (in 1999 EEK 3.5 mln loss). The group's net 

profit was on expected level, in light of relatively small share of 

Q1 profit and turnover in the annual results due to seasonal factors.



Compared with last year the increase in net profit is due to addition 

of the results of Central hotel (increase in operating profit from 

EEK 3.7 mln in Q1 1999 up to EEK 6.4 mln in Q1 2000) and lower 

financial expenses (EEK 3.0 mln in Q1 2000 compared to EEK 7.2 mln in 

Q1 1999) due to changes in capital structure.



The financing agreements made between Reval Hotelligrupi AS and 

International Finance Corporation (IFC) on 20.12.1999 became 

effective. Income from share issue directed to IFC (EEK 15.8 mln) and 

proceeds from loan from IFC (EUR 2.5 mln) were used to fully settle 

the company's liabilities from privatization of hotel Olümpia estate 

(EEK 66 mln). As of result of capital restructuring the group's loan 

servicing koormus will decrease substantially.





RESULTS OF REVAL HOTELLIGRUPP SYSTEM



Compared to Q1 1999 the number of available rooms on Tallinn hotel 

market has increased by ca 390 rooms. Supply of rooms per night has 

increased by ca 17%.



The estimated increase in demand on Tallinn accommodation services 

market is 15-17% annually (Q1 2000 compared to Q1 1999) (based on 

data from ESA). The average length of stay and sale of double rooms 

has remained unchanged from the last year.



Number of rooms per night sold by Reval Hotels has increased annually 

(Q1 2000 compared to Q1 1999) by 5215 rooms per night or 17.9%.



 

Accommodation services provided by the Reval HG System in Q1 2000:



                 Accommodation    Rooms per night Average price of

 		 turnover		sold		room

               Q1 2000  Q1 1999  Q1 2000  Q1 1999  Q1 2000  Q1 1999

Olümpia hotel   18,623   18,240   17,872   16,970    1,042    1,075

Central hotel    5,450    6,060    8,393    8,295      649      731

Park hotel       2,679    3,142    3,650    3,931      734      799

and casino

Expresshotell    2,249       --    4,496       --      500       --

Reval system    29,000   27,442   34,411   29,196      843      940





In Q1 Reval's net turnover from accommodation services increased on y-o-y 

basis by 5.7%. Decline in average room price in Reval 

Hotelligrupp System was mainly due to:

· structural changes after addition of lower price-class rooms 

(opening of ExpressHotell);

· change in the structure of guests (increased share of holiday

tourists and groups);

· increased competition and pressure on prices of hotel rooms.





Feliks Mägus

Management Board chairman

+372 627 44 44