28/02/2011 - 09:39

Compass to revamp its hotels after loss

28/02/2011 - 09:39

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Compass Hotel Group says it will refurbish its 12 Perth hotels to gain back market share after lodging an interim loss of $3.4 million.

Compass to revamp its hotels after loss

Compass Hotel Group says it will refurbish its 12 Perth hotels to gain back market share after lodging an interim loss of $3.4 million.

The group said the loss was mainly due to writing off $5.1 million in asset values due to falling prices in Perth's property market and included fair value profit on financial instruments of $3.3 million.

In the previous half year, Compass lodged a net profit of $1.77 million.

Compass owns the Carine Glades Tavern, the Albion Hotel, The Peninsula Tavern and the Peel Alehouse, among its portfolio of 12 Western Australian hotels.

Compass' revenue for the half year to December 31 was down nine per cent to $29.9 million, from $32.8 million in the previous corresponding period.

The company said it expected revenue to contract further over the next six months, in line with seasonal trends, resulting in FY2011 revenue to be around 8 per cent lower than the previous financial year.

"All operating venues require extensive refurbishment and this investment is considered critical to improve revenues and operating performance," the company said.

"Over the last 12 months, competitive supply markets have also increased and a number of venues are showing patrons shifting to newer and more modern establishments."

Compass also said it had been in discussions with St. George Bank to reduce its debt, which it described as "high relative to operating performance."

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