Reduced occupancies in business hotels hits Cresta’s topline
Pauline Dikuelo | Tuesday July 1, 2025 10:53
The company’s 2024 annual report showed that it recorded revenue of P384.7 million for the year under review, reflecting a year-on-year decline of P15.5 million or four percent compared to 2023. It blamed the decline to reduced occupancies in the group’s business hotels, which constitute 77% of the total room inventory. As a result, the group’s profit after tax fell significantly to P2.4 million, down from P26.9 million reported in the same period last year.
Directors attributed the decline in profitability to slowing economic growth and the high operating leverage that characterise the hospitality industry.
“The results highlight the fixed-cost nature of the sector and the structural shifts affecting traditional markets, particularly the government and mining sectors,” officials said.
The group’s top-line performance may be subdued, but its operational fundamentals remained resilient.
Cresta’s 2024 annual report showed that cash generated from operations reached P94.2 million, enabling the company to meet its capital commitments and lease obligations.
During the period under review, 27% or P25.5 million of the cash generated from operations went towards lease payments for the group’s five leased properties, compared to 20% in 2023.
According to the annual report, capital structure obligations accounted for 80% or P75.7 million of the operating cash flow, comprising capital repayments and finance costs on borrowings, up from 43% in the previous year.
These payments reflect the group’s ongoing financial obligations related to maintaining its leased assets and servicing its debt.
Equally, the hotelier managed to reduce its interest-bearing borrowings from P203 million to P176.7 million, even after drawing down P34.5 million in new debt to support expansion projects.
The report also showed that debt service obligations increased by 52% to P75.7 million, which were fully met using internally generated funds.
Lease liabilities also rose in line with the expansion of the lease portfolio, particularly at Cresta Jwaneng and Cresta Mahalapye, it added.
The group’s liquidity position remains adequate, despite the P6.6 million cash and cash equivalents decline due to dividend payouts and debt servicing.
As things stands, the group retains access to a P10 million overdraft facility, with only P0.95 million utilised at year-end.
According to the annual report, the board and management implemented cost optimisation initiatives aligned with the current revenue environment and actively pursued market diversification strategies.
At the same time, the group intensified its digital marketing campaigns to attract both corporate and international travellers, and these efforts have already begun to yield positive results, with an increase in foreign business reported.
Looking ahead to 2025, Cresta said it remained focused on enhancing cash generation efficiencies and returning to its previous levels of profitability.
The company added it was exploring regional expansion opportunities, strengthening its leisure portfolio, and leveraging its newly refurbished and expanded properties to drive revenue growth.
Additionally, it is adopting artificial intelligence-driven innovations to optimise internal processes, improve productivity, and deliver enhanced service excellence.