Mantra happy with Coast resort bounce
A SLUGGISH corporate sector took some shine off the bottom line for Gold Coast hotels and resorts operator Mantra.
But a booming resort market, and the Gold Coast in particular, lifted Mantra’s results.
Asia will be a growing focus for the group, with the opening of an office in Singapore, and a new hotel about to open in the island state.
Mantra boss Bob East also revealed he has just signed a deal to open a new five-star hotel in Thailand as the Surfers Paradise-based operator looks to add to its growing portfolio. Mantra chalked up a slight full-year profit hike in 2016 of $37.1 million, up 2.7 per cent, compared with $36.2 million the previous year.
Mantra added 11 new properties and more than 3000 rooms, making it Australia’s fastest-growing hotel group in FY2016.
It raised $113.4 million to buy the Ala Moana Hotel in Hawaii, its biggest acquisition to date.
Mantra said earnings were hit by the capital raising and transaction costs but it noted a strong lift in consumer sentiment, with an increase in inbound travellers and domestic and international airline capacity.
Mr East said the “pleasing” result was boosted by a strong inbound tourism sector, particularly from China.
But its CBD market was hurt by a struggling corporate sector and Mantra investors were unimpressed, sending its share price down 12¢ to close at $3.30.
Earnings from CBD hotels fell 2.9 per cent as its Perth, Darwin and Brisbane hotels were hit by a declining resources sector and economic slowdown.
“The corporate market was middling and Brisbane and Darwin were soft,” Mr East said. “Brisbane in particular is a very hard market because it is not benefiting from the in- bound Chinese market and not many new projects are being built.
“The corporate market will only lift when the economy gets back on its feet.”
The resorts sector, with earnings up 48.2 per cent, was the standout, with north Queensland and the Gold Coast in particular the best markets.
“The Gold Coast is going incredibly well. Our earnings there are up 20 per cent, it is our best performer domestically,” Mr East said.
“Hollywood and the movie production under way has helped, as has extra airline capacity and the inbound Asian tourism market.”
He said Mantra planned to put on up to 11 new hotels in FY2017 “or at least one a month”.
Asia will be a growing market.
“I have just signed another hotel in Thailand, a beautiful five-star property, but we will be selective and only do topend tourism destinations in Asia,” Mr East said.
He said Australia remained Mantra’s core sector, “and at least 80 per cent of our market for the next few years”.
Mantra will pay a full-year dividend of 10.5¢. It is tipping earnings in FY2017 of between $101 million and $107 million and net profit of between $51 million and $55 million.