INVESTIGATION: Sunborn faces challenging market conditions

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 Wednesday, December 5, 2018 - 11:34

In its interim report 1 January to 30 September 2018, Sunborn Gibraltar Ltd says its income and operating costs were in line with budget and forecast. On the operating side challenging market conditions continue to prevail in Q3 2018 with lower flight arrivals and Brexit anticipation.

"Many client companies seem to be holding spending decisions in anticipation of various Brexit related decisions forthcoming still this year," it says. 

Local gaming companies have also reduced business travel and the blockchain industry related events have slowed down.

Business outlook remains stable and improving but clarity of Brexit is anticipated to help market conditions return to normality.

The exceptional circumstance in Q4 2017, bankruptcy of a major airline, Monarch, continues to have an effect throughout 2018. Flight arrivals have improved but are still down approximately 30%.

RUNNING COSTS REDUCED

Hotel management has been following a multilevel strategy to adapt to the market changes and reduce running costs to maintain operating profit.

The official report adds:

1) This quarter we modified pricing strategy to allow pressure on ADR to increase occupancy as inbound flight seats are increasing albeit slowly

2) we continue negotiations with corporations to increase MICE business resulting in a substantial increase

3) Continue efforts in generating new agreements with FIT companies which use the Malaga International airport in order to attract supplementary business as well as re-marketing efforts with OTA’s booking through Malaga airport and hotels in the costa del sol region. 4) Re-opened negotiations with Spanish MICE agencies which have resulted in bookings for Q1 2019.

The report refers to the new 120 room hotel - Holiday Inn Express - opened in May 2018 nearby, and goes on to refer to the continued lobbying with the Gibraltar Tourist Board and airlines in the attempt to increase flights.

Looking ahead, the company estimates that its financial performance and debt service capacity will remain stable.

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