Ashford Meikle, Staff Reporter
Chairman John Issa (right) addresses the 38th annual general meeting of the Jamaica Pegasus Hotel on Monday. Also in the picture, from left, are general manager, Eldon Bremner and directors, B.Tony Lindo and Dr. Vin Lawrence. - JUNIOR DOWIE/STAFF PHOTOGRAPHER
FOUR YEARS after they dispensed with an international marquee and handed the hotel to local managers, the board of the Jamaica Pegasus have declared themselves satisfied with the decision. They say they are in for the long-haul.
"We haven't sought out a management company [and] we plan to continue that way because the results under the company-managed period have been actually quite better than the performance when it was being managed by Meridien and Forte," the hotel's chairman, John Issa, told shareholders at their annual general meeting on Monday.
The 310-room Pegasus is owned by the Government's Urban Development Corporation, through its subsidiary, National Hotels and Properties.
UNPROFITABLE
For years, the hotel was managed by Trust House Forte but came under the control of Le Meredien when the French group acquired Forte.
But under foreign management Pegasus hardly made a profit. In fact, in the five years under Le Meridien the hotel lost money, including 2002 when it reported a net loss of $12.7 million.
That year, the Pegasus ended its management agreement with Le Meridien and gave day-to-day operations to a local team headed by long-time financial controller, Eldon Bremner. Guyana-born Bremner was named general manager.
Almost immediately, under a regime of tight cost control, there was a turn-around.
In financial year to March 31, 2003, the hotel recorded net profit of $19.664 million, followed by $20.11 million (2004) and $30.69 million in 2005.
For the year ending March 2006, profitability declined, but the company remained in the black, with net earnings of $17.4 million.
LAGGING OCCUPANCY
In the period between 2002 and 2006, Pegasus' revenues increased 56 per cent to $658.433 million, but according to Issa occupancy has lagged below a level to ensure sustained profits and profitability.
"Our occupancy level is between 55-60 per cent, which is very inadequate right now," he told shareholders. "We really need to get it up between 65-70 [but] the weekends fall off, which is the opposite of the resort hotels."
Part of the reason for this, he said has to do with the lack of suitable personnel to head its marketing department.
"We are making every effort to strengthen our sales and marketing [but] we still need to do more," said Issa. " We are trying to find the right people to do it ... the person who will bring results because we are still averaging lower occupancies than we need."
ENERGY COSTS
Of immediate concern to the hotel is the rising fuel cost which has eroded its profitability.
In his report to the shareholders Issa pointed to the increase in energy and utility costs as one of the main factors which contributed to the 46 per cent decline in the hotel's operating revenue in 2005, which fell to $16.6 million, compared to the $30.7 million posted in the previous year.
He noted that energy and utility costs had doubled in two years, to $41 million.
That figure is likely to be even higher this year given the fact that the hotel presently faces a monthly electricity bill of $6 million while its water bill amounts to about $2 million.
Issa acknowledged that because of recent capital expenditure improve-ment, the company had not been effective with managing its energy costs.
"It's one of the items we spent quite a bit of time on at board meetings," Issa said. " We are definitely not anywhere near the forefront of the technological advance and now that we have digested a number of the heavier capital improvements we needed to do ... it's probably the time to focus."
