On Monday Arena presented its results and here we bring you key takeaways from the event.
Prior to the presentation we wrote a blog on Arena Hospitality Group which you can check here link. The company has announced that it plans to spend 55% of HRK 788m obtained during public offering on existing developments in Croatia and Germany while the rest will be spent on expansion on potential opportunities in Croatia and CEE markets. The share is currently traded at 22% discount to its IPO share price of HRK 425 that occurred in May 2017. Planned investments in 2019 amount to HRK 240.5m while one of its biggest asset’s hotel Brioni, that will make a strong addition to it upscale Park Plaza portfolio, will be developed for the season 2022. The app. amount of investment for hotel Brioni is estimated at HRK 190 mil. while the exact room number to be developed is not yet certain.
Arena Hospitality Announced Investments (HRK m)
For 2019 results positive impact on sales will be led by increase in Croatian portfolio via camp capacity in of 152 mobile homes while the rest of the capacity in Croatian portfolio will be the same as in 2018. Therefore boost to sales in 2019 is expected to come from increase in capacity and premium rates in camping that will be charged for Arena Kažela Kamp premium mobile homes complex. We do not expect ADR to increase on hotel capacity in Croatia as demand for Croatia is decreasing due to strong growth of demand for competitive markets like Turkey and Greece.
The potential upside for revenue and profitability in 2019 can come from adding new hotels to its portfolio in the region where the company has management contact for Park Plaza brand. As company is looking to expand its city hotel portfolio, it will be aiming potential acquisitions in Germany or in CEE region. Adding hotels under management is very competitive segment so we expect to see company doing more fully-fledged acquisitions. The company announced that is it keen on curbing growth of labour costs in German business by importing skilled work force under more favourable rates and restructuring of Food and Beverage department where more hotel services will be outsourced. Growth of expenses for distribution channel is expected to be partially counterweighed by reduction in marketing costs as online channels are taking over part of the marketing. The company didn’t give any guidance for 2019 but we expect German portfolio to continue its positive development and increase its share in total revenue of the company. Further increase in occupancy rate in 2019 is expected while ADR is not expected to grow higher than in 2018 (1%).
