Sun of Mauritius Expects to Return to Profitability in 2017by
Hotel chain posted a 567-million rupee full-year loss
Plans to issue 3 billion-rupee bonds to convert debt
Sun Ltd, Mauritius’ third-biggest hotel group by market value, expects to swing back into the black in 2017 after posting a 567 million-rupee ($16 million) loss in the year through June, Chief Executive David Anderson said.
The loss followed higher finance costs related to acquisitions and renovation work, Anderson told analysts near the capital, Port Louis, on Thursday. Sun’s net debt increased by 2.35 billion rupees to 9.8 billion rupees in the year.
“We have a fully renovated asset base to drive up revenue and thus the ability to drive new rates as from the third quarter,” he said. “We must make sure to capture the right client at the right time.”
Sun has approved a debt swap worth 3 billion rupee in a multi-currency note program to cut financing costs, Chief Finance Officer Tommy Wong said.
“We are not adding to debt,” Wong said. “This issue should help us in achieving savings of 1 percent.”
In 2015, Sun became the sole owner of Anahita Hotel Ltd through the acquisition of the remaining 50 percent that it didn’t own. Another property, Le Shagri-La Touessrok, was opened in November 2015 after renovation. Upgrades costing $32 million at The Kanuhura in the Maldives are taking longer than anticipated and the hotel will reopen in December 2016, Wong said.
Two out of the seven properties owned by Sun, Le Touessrok and Anahita, are managed by international brands.
“With all resorts fully operational in 2017, we are now able to drive revenue by building on our credibility as a leading resort operator,” Anderson said.
Tourist arrivals in Mauritius jumped to 789,296 in the first eight months of 2016, 10 percent from a year ago. Sun’s occupancy improved to 78.6 percent from 76.3 percent.
“It has been a tough two years, but the company is on the right track,” said Jean-Pierre Dalais, chief executive officer of CIEL Limited, a conglomerate that owns a 59.79 percent shareholding in Sun.
Following Britain’s vote to leave the European Union, Sun is now focusing on markets such as France and Germany, Anderson said. The company’s earnings in pounds represent as much as 30 percent of revenue, he said.