Ashford W. Meikle, Business Reporter
The Jamaica Pegasus: Its land and bulding are valued at $3.1 billion. - Junior Dowie/Staff Photographer
Even though its occupancy level, estimated at 55-60 per cent, lags behind its major competitors, Pegasus Hotels of Jamaica Limited is reporting a healthy 26 per cent increase in its half-yearly net profit, which management is attributing to a tight lid on expenses.
For the six months to September 30, Pegaus Hotels, the operator of the New Kingston-based Jamaica Pegasus, saw its net profit climb to $20.3 million - less than half of which, $8.2 million, was generated in the July-September quarter - earned on a 12 per cent increase in its revenue.
Its earnings per share of just under 17 cents reflected better performance than the 13 cents recorded in the second quarter of 2005.
Revenues totalled $355 million, or $37 million above the $317 million posted in the comparative 2005 six-month period.
Cost of sales also grew 12 per cent, but the hotel still emerged with an 11 per cent increase in gross profit relative to the year prior period.
Pegasus' financial controller (FC), Marvin Falconer, said the hotel - which is 59 per cent owned by the Government of Jamaica through a subsidiary company of the Urban Development Corporation called National Hotels and Properties Limited - has reaped savings in its food costs from which it has slashed just over one per cent.
"In our food purchasing, we have a larger base of persons to choose from locally and we are getting good prices, so our actual food costs in percentage terms have come down from 34.5 per cent last year to 33.1 per cent this year," he told Wednesday Business.
The hotel also reclaimed the job of laundering some of its linen, including napkins and pillow cases.
"Over the last couple of months we have installed washers and dryers, which has taken away a lot of the costs which we used to pay to outside contractors who increased their prices," said Falconer.
"We have seen some consider-able savings there."
Costly
The FC estimates that the hotel is saving about $300,000 to $400,000 monthly in its decision to launder small items and has contemplated expanding this area, but the hotel says it would be costly.
"It's under consideration; it's a heavy investment. We are actually doing the feasibility on that at the moment," said General Manager Eldon Bremner.
Bremmer declined to put a price tab on the current capital expenditure for installing the machines.
"We have the engineers checking on the equipment and there was some construction involved so we haven't got the final cost yet," he said.
Still, the hotel did access a $30 million loan in April from the Development Bank of Jamaica, used for capital expenditure, said Falconer.
"Suffice to say, as a result of our improved cash flow we have prepaid the loan up to the end of our [2006] financial year to March 31 next year," he said.
Operating and administrative expenses also showed tight control, reflecting an eight per cent increase to $192 million, up from $178 last year.
The hotel plans to spend $8-10 million this quarter upgrading information technology for its back-office operations.
Bremner expects the Jamaica Pegasus to have a robust 2006 financial year.
"We hope to finish the year on a high note because as you know Cricket World Cup is March/April. We are already booked out at a healthy rate - which I won't disclose," he said.
Pegasus, whose stock closed at $15 on Monday, has been one of the better-performing stocks on the Jamaica Stock Exchange this year - experiencing a year-to-date price appreciation of 67 per cent - against the overall index, which has tumbled by 16 per cent.
ashford.meikle@gleanerjm.com
