COMPASS HOTEL GROUP REPORTS $2M LOSS

as posted here


Western Australia’s Compass Hotel Group has announced an operating loss of $2 million for the six months ended December 28 as a result of double-digit decreases in revenue from its food and liquor operations.

The company reported a 26 per cent downturn in food revenue and a 22 per cent downturn in bar revenue across its 13 hotel properties attributed to negative consumer sentiment. It also reported a 25 per cent fall in off-premise sales attributed to increased liquor discounting by major liquor retailers.

Other factors the group attributed to its under-performance include a delay in the integration of properties acquired last year, unforseen issues relating to staff development, implementation of new systems and cultural difficulties that existed in some of its hotels.

The hotel group also incurred a $1.3 million cost in the period for the upgrade the Peel Alehouse and Greenwood, Peninsula and Gosnells hotels, and a $21.3 million loss on the value of its hedging agreements associated with falling interest rates.

Compass managing director, Bryan Northcote, said the result was disappointing when compared to the original growth forecast of 10 per cent for the 2008-09 financial year.

“The group initially geared up for expansion and consequently middle management was bolstered,” he said. “The unprecedented change in world economics and subsequent cash flow on effects to WA has changed the group’s direction from expansionary to consolidation of the existing portfolio.”

Compass shares were trading at 3.5 cents at midday today (Mar 6) compared to 5.5 cents eight days ago.
as posted here