Dear Shareholders,
Welcome to your Company’s 15th annual meeting for the ordinary general assembly of the shareholders.
In 2008, your Company had a great year – a record-breaking performance:
- Operating consolidated revenue rose to JD 77.8 million, up by 34% over 2007
- Profit from operations rose to JD 27 million, up by 48% over 2007 and Net profit rose to JD 9.8 million, up by 111% over 2007
- Revenue per available room (RevPAR) reached JD 65, up by 30% over 2007
- Consolidated assets rose to JD 255.6 million up by 15% compared with 2007
- Cash rose to JD 15.4 million up by 215% compared with 2007
This year’s outstanding performance is the product of your Company’s powerful and varied portfolio of premium five-star properties spread all over the Kingdom of Jordan. The strategy of Zara to invest in geographically diverse areas while catering to a wide range of tourists, from leisure to business, has paid off well.
The strength and quality of the product that your Company offers is further enhanced by Jordan’s strategic central location in the Middle East, its stability and security, in addition to its wonderful climate. Jordan has indeed reaffirmed its place on the global tourism map as a safe, unique and first class destination.
The growth witnessed in the tourism sector’s key indicators reaffirms the high confidence in which tourists and travelers regard Jordan. Tourism receipts for 2008 are estimated at JD 2,097 million compared with JD 1,639 million for 2007, an increase of 28%; Tourism contribution to GDP amounted to 15.4% in 2008 compared to 15% in 2007.
Group tourism reached 468,326 tourists for 2008 compared with 326,773 tourists for 2007, an increase of 43%.
Employment in this sector reached 39,624 employees in 2008 compared with 34,455 employees in 2007 an increase of 15%; of this employment figure, I am proud to point out that almost 6% of this workforce is employed by your Company.
The issue of human resources development is an integral part of Zara’s overall strategy. In order to maintain our position at the forefront of Jordan’s tourism sector, we are adamant in employing the best of the best. We are proud to boast a network of highly professional individuals that are of a caliber that continuously strives towards excellence and self improvement. It is due to their efforts that we maintain a strong market leadership presence. With this in mind, and a as a strategic imperative, in 2008, we focused on boosting human resource capacities on the holding company level as well as on that of the hotel operations. We have introduced a new management team at the holding company that is capable of building upon the successes of the previous one while ensuring your Company’s smooth transition to a new level of efficiency and excellence. This team’s essential duty is to enhance shareholders’ equity through careful management of your Company’s assets.
Year 2008 also witnessed the completion of your Company’s seventh 5-star property at Tala Bay located on Aqaba’s South Beach slated to be opened in 2009 and to be managed by the Mövenpick Hotels and Resorts. In view of the rapid growth and flurry of real estate development projects that Aqaba is witnessing, this property compliments the diversity of Zara’s property portfolio. Other successful achievements witnessed during 2008 are the complete overhaul and renovation of the all-day dining restaurant, The Palm Court, at the Mövenpick Resort and Residence in Aqaba, the restoration and expansion of the beach area in addition to the completion of the pool side restaurant at the Mövenpick Resort and Spa Dead Sea, and various other projects at all properties aimed at improving the infrastructure as well as the back of house areas.
Furthermore, in 2008, we embarked upon and completed the design concept of key projects targeting the upgrade of the product offerings at our properties. These include the refurbishment of the meeting rooms at Grand Hyatt Amman, in addition to a comprehensive room and suites refurbishment programs at Grand Hyatt Amman, Mövenpick Resort Petra, Mövenpick Nabatean Castle, and InterContinental Jordan.
During 2008 we restructured our debt and streamlined our borrowings to avert the risk of interest and foreign exchange fluctuations. Thanks to our solid financial position we were able to procure an international long term loan of US$40 million at competitive rates through the International Finance Corporation (IFC). Key performance ratios also posted healthy and encouraging growth. Profitability ratios as return on assets, return on equity and profit margins rose by 67%, 76%, 44% to reach 4.60%, 8.05%, and 15.09% respectively compared with 2007.
The final quarter of 2008 posed a challenge to countries worldwide as the price of oil and commodities plummeted, capital markets crashed and a crisis in the financial markets brought about a global economic decelartion. As we stand witness to all of this, we are mindful of the setbacks that these events will have on the Jordanian as well as the global tourism industry. Yet, one should take note that as a company and as a country we are no strangers to challenges. Throughout the past decade we have dealt with major crises and critical events surrounding the overall investment, political and economic climates in the region. We were always quick to act and put the right measures in place to soften the impact felt all around, which enabled us to weather the repercussions of conflicts in neighboring countries. This time is no different. We will not stand idle in the face of challenges, and we will not give in to pessimistic scenarios. It has been our experience that economic difficulties create both challenges and opportunities. Business uncertainty is inevitably accompanied by opportunity. A major target for us in 2009 will be to actively seek ways of improving our profitability through leveraging our resources and restructuring our costs.
We move into 2009 filled with tempered and realistic expectations and with the confidence that we have the right investments, the right initiatives, the right culture and the right leadership teams in place. Teams that are guided by the wisdom of the members of the board of your Company, and are empowered to seize opportunities to enhance and build on the great successes of our wonderful Company.
On behalf of the board of directors and the employees of Zara, I would like to thank you all for your trust and continued support.
Sabih Taher Masri
Chairman of the Board of Directors
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