Royal Palm Beach Hotels PLC has been able to attract visitors from the Russian market during the year ended March 31, 2008, although occupancy of this five-star beach resort property belonging to the Mercantile Investments group was down to 64% from the previous year’s 67%.

The company’s Chairman, Mr. George Ondaatjie, said that the ongoing conflict was draining the tourism industry of patronage on top of hotels having to contend with higher operational cost due to adverse economic conditions.

"The net result of this scenario is an unprecedented pressure upon the profitability of the institutions involved in the tourism and related services industries. Our company has not been an exception to this situation," he said.

The year had seen Royal Palms successfully growing revenue 10.7% to Rs.284.7 million and posting a profit of Rs.26.3 million, up from Rs.19.9 million the previous year.

Ondaatjie said revenue growth was overtaken by a 14.5% increase in the cost of sales despite doing their best to control operational cost. These have been contained at Rs.153.8 million.

Turnover growth had been possible due to timely marketing strategies that had been pursued taking the country and the industrial situation into account. In addition to the Russian visitors, they had also been able to attract local guests to the hotel.

The cost of food, energy and human resources had risen sharply due to current global and local economic conditions. This explained the increased cost of sales in comparison to revenue. They have however been able to mitigate this and conserve profitability, Ondaatjie said.

Royal Palms has a stated capital of Rs.521.6 million, a revaluation reserve of Rs.306.6 million and retained earnings of Rs.120.7 million in its books. Interest bearing borrowings were running at Rs.15 million.

Net assets per share had grown to Rs.18.28 during the year from the previous year’s Rs.17.84 and the company’s share traded at a high of Rs.41.75 and a low of Rs.25 during the year. This compared to a trading range of Rs.47 to Rs.37 the previous year.

Tangerine Beach Hotels with 30.01% of the company followed by Mercantile Investments (17.08%) and Mr. Merrill J. Fernando (7.3%) are the major shareholders. Well known Maldivian tourism personality, Mr. M.U. Maniku, also has 5.11% of the company which is controlled by the Mercantile Investments group and the Ondaatjie family.