ADNH profits decline on hotel write-down

Abu Dhabi National Hotels lost Dh34 million in the third quarter of the year because of an asset impairment loss on one of its hotels under development.

One of the biggest hotel owners in the capital has posted a multimillion-dirham loss in the third quarter after a write-down on one of its hotels under development.

Abu Dhabi National Hotels (ADNH) is developing two major hotels in the capital: the Park Hyatt on Saadiyat Island and the Ritz-Carlton Abu Dhabi Grand Canal resort.

The company said its net profit in the third quarter fell by Dh48 million (US$13m) compared with the same period last year, pushing the company to a loss of Dh34m "due to a provision for asset impairment loss of Dh50m charged to write down … the cost of a hotel project under development to its recoverable amount as the result of the deteriorating market conditions, together with project delays and escalation in construction costs".

The Park Hyatt is scheduled to open shortly, while the Ritz-Carlton is expected to open by early next year, according to the management companies operating the hotels.

The company owns hotels in the capital including the Hilton, Sheraton and Le Meridien, as well as the Sofitel property in Jumeirah Beach Residence in Dubai.

ADNH operates a catering division through a joint venture with the Compass Group of the UK, and owns and manages Al Ghazal Transport. The company also manages hotels under Al Diar brand.

The provision "will not affect the company's operations, cash flow or cash position but will impact the net income and earnings per share figures for 2011". The Dh50m write-down was "attributable to the change in forecast market conditions", said Salem Mohamed Athaith Al Ameri, the chairman of ADNH.

Analysts and hoteliers expect a flood of hotel openings in Abu Dhabi in the coming weeks to put pressure on occupancy and room rates as the new properties increase competition for business.

Abu Dhabi is expecting to attract 2 million hotel guests this year, up from 1.81 million last year.

In the first nine months of the year, ADNH's net profit totalled Dh105.79m compared with Dh237m for the same period last year.