30 August, 2017

Mantra ups profit to $47m, hints at future acquisitions

Mantra Group revealed its 2017 financial year results, reporting a cool $47.2 million underlying net profit after tax, while hinting at possible business expansions down the track.

The figure is 14.2 per cent higher than its result in 2016, while the Group’s revenue increased by $82.9 million, or 13.7 per cent, to $689 million during the year.

The Group’s earnings (before tax, interest, etc.) were in line with expectations, hitting $101.2 million, up 12.7 per cent on 2016.

Mantra acquired the Art Series Hotel Group recently – a fresh and quirky feature for the portfolio – as well as opening the new Mantra Hotel at Sydney Airport in July this year.

Mantra’s new properties in 2017 included the 1,176 room Mantra-branded Ala Moana Hotel in Honolulu Hawaii, Mantra Residences @ Southport Central, Peppers Kings Square Hotel at Perth, Mantra the Observatory at Port Macquarie, Mantra Club Croc at Airlie Beach and Tribe Perth (Mantra Group is managing Tribe Perth as its first external brand).

Chief Executive Officer Bob East said Mantra will continue to surge ahead in 2018, hinting at further acquisitions in both local and international destinations.

“As at 30 June, the Group has 18 contracted properties in our acquisition pipeline, including the Art Series Hotel Group properties, with our expansion focus predominantly remaining in Australia and New Zealand,” he said.

East added that Mantra outperformed expectations in terms of revenue and earnings.

“The majority of this improvement was driven by six new property acquisitions during the year and was supported by strong revenue growth from the key markets of Sydney, Melbourne, ACT, and Sunshine Coast, a $4.9 million increase in revenue from our Central Revenue & Distribution segment, improved occupancy levels, higher average room rates, an increase in the total number of rooms available and improved efficiencies in key areas of the business.

“The Group is in a strong financial position with total assets of $806.3 million, an increase of $37.2 million, and a strong operating cash flow.”

The Group achieved year-on-year growth in each of its key business operating segments, with contributions as follows:

Resorts delivered revenue of $316.2 million and EBITDAI of $45.6 million representing increases on FY2016 of 29.5 per cent and 31.0 per cent respectively.
CBD revenue increased by $5.1 million representing a year-on-year increase of 1.6 per cent.
Central Revenue and Distribution revenue increased by $4.9 million to $52.3 million, an increase of 10.3 per cent.

Development pipeline remains strong for the Group with Mantra MacArthur Hotel, Canberra and the first two (of three) towers of FV by Peppers, which heralds the arrival of the Peppers brand in Brisbane, due to open in the first half of FY2018.

The Group’s new-build Mantra Southport Sharks Hotel on the Gold Coast and Mantra Albury Hotel in the Riverina district of New South Wales are scheduled to join the Group in the first half of FY2018.

“Many markets are also experiencing favourable industry fundamentals, including strong inbound and domestic leisure demand, a growing corporate travel market and low supply growth.

“The Gold Coast region is also expected to significantly benefit from the Gold Coast 2018 Commonwealth Games next year.

“By contrast, we expect the markets that have slowed down in recent years, being Perth, Brisbane and Darwin, to continue to experience difficult trading conditions in FY2018.

Mantra expects earnings of between $107 and $115 million for 2018’s financial year.

Some of Mantra’s key strategic priorities for 2018 include investing in staff and expanding their portfolio, reviewing and improving efficiency and cost controls, and promoting the Group’s three brands to “become the favourite in the market”, with the newly launched Mantra Hotels ‘My Kind of Wonderful’ brand campaign.

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