Queensgate foresees earnings surge helped by World Cup

The group operates several hotels, largely in the Western Cape, and the One Wellness spa chain.

In a detailed profit forecast published yesterday, the group said it expected to report headline earnings per share of 1,63c in the year to August this year and 3,88c next year.

This will be sharply higher than the headline earnings per share of 0,61c achieved in the year to August last year.

The group showed a greatly improved performance in the six months to the end of February this year, with headline earnings per share of 0,78c.

This increase was driven largely by the acquisition last year of Queensgate Business Development (QBD), the group's development arm.

However, the hospitality arm is likely to eclipse earnings from QBD as hospitality revenue surges in the next 18 months.

The group says it believes that improved profitability at its newest hotels, The Alphen Hotel and The Rockwell, and the construction of two other hotels ahead of the World Cup next year will drive revenue.

The two hotels being built include a 176-room property in Cape Town's Upper East Side and a 200-room establishment in the Cape Town city centre.

Both are expected to be completed in March or April next year. The World Cup is expected to give the hospitality division a boost, with 40% of the group's hotel rooms already booked up.

CEO Andrew Hubbard said the group had not contracted its rooms to Fifa agency Match because it believed that it would do better on its own.

“So far we have achieved rates for the World Cup period that are 2,5 times higher than our current rack rate.

“We have a different approach from Match in that we have to serve shareholders who seek a return on their investment,” said Hubbard.

However, Hubbard says that the group's rates are not unfairly priced.

Source: Business Day

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