Dear Shareholders,
Welcome to your company’s 16th annual meeting for the ordinary general assembly of the shareholders.
In 2009, your company demonstrated resilience and flexibility in dealing with the repercussions of the global recession manifested in rapid shifts in demand at source markets in addition to volatile market conditions at home and abroad.
In a period, considered by many, to be one of the toughest and most challenging in the history of tourism, Zara Investment (Holding) earned JD 7.0 million, registering the second highest net earnings in its history. Thanks to our carefully positioned properties, we were able to capitalize on our diversified portfolio through offering exceptional value and service to a broad business base.
Consolidated operating revenues reached JD 76.7 million compared with JD 77.8 million, a drop of 1.44% over 2008
Consolidated profit from operations reached JD 22.5 million compared with JD 27.0 million, a drop of 16.95% over 2008, and consolidated profit for the year attributable to shareholders reached JD 7.0 million compared with JD 9.8 million, a drop of 28.65% over 2008.
Revenue per available room (RevPAR) reached JD 71, up by 9.2% over 2008.
Consolidated assets reached JD 272.6 million up by 6.65% over 2008
In 2008 the performance of the global tourism industry reached historic highs, however, 2009 was not able to sustain these achievements. In the case of your company, it is worth noting that we debuted the year with the temporary closing of 40% of our room inventory due to extensive renovations at the InterContinental Jordan Hotel.
Moreover, new best practice accounting standards pertaining to the opening of new properties mandated the full write-off of the pre-opening expenses of the Mövenpick Resort Tala Bay Aqaba, a one-time expense that had a direct negative impact on the hotel’s income statement. In addition, Aqaba witnessed a dropdown in business due to a drop in inbound tour operations and corporate business. Once such factors are taken into consideration, the 2009 results clearly demonstrate the strength of our portfolio.
On a macro level and against the backdrop of the global economic crisis coupled with the uncertainty triggered by the A(H1N1) virus that negatively impacted travel worldwide, Jordan once again reaffirmed the strength of its tourism product. Tourism receipts in 2009 are reported at JD 2,064 million compared with JD 2,089 million in 2008, a drop of 1.2%, well below the global average of 6% drop reported by the World Tourism Organization (UNWTO). A significant milestone was also reported insofar the length of stay for group tourism is concerned; the average length of stay grew by 16% from 4.3 nights in 2008 to 5 nights in 2009.
In 2009, Zara Investment Holding Company maintained its leadership position in terms of its market share of 5-star hotels and 5-star room inventory in Jordan. Our leadership was also evident in the number of staff employed vis-à-vis the total number of persons employed in the hospitality sector. Employment in the 5-star hotels segment in Jordan reached 9,055 persons of which 30% are employed by Zara Investment; while employment in the hospitality sector reached 39,896 of which approximately 7% are employed by Zara.
During the last quarter of 2009, Zara was busy amidst a flurry of celebratory activities that culminated with the grand opening of the 5-star 306-room Mövenpick Resort Tala Bay Aqaba. We were deeply honored and elated to have His Majesty King Abdullah II patronize the opening of our latest Aqaba endeavor. Zara was also happy to be part of the opening of the Kempinski Aqaba in which we are proud investors. This particular quarter also witnessed an upturn in our business compared with the three previous quarters of the year.
Over the course of 2009, we embarked on key strategic projects that are aimed at improving our operating efficiency and increasing our profitability while also in line with our vision to set the standard as a benchmark model for green tourism. Clean production projects went underway with an investment of JD 1.8 million that was partially financed through a loan from the International Finance Corporation (IFC). These initiatives included the switch from use of diesel fuel to clean-burning liquefied petroleum gas (LPG), installation of new solar heating systems partially replacing the use of electricity as well as diesel fuel, and the upgrade of water management and water usage reduction measures through eliminating leakages and introducing water reducer aerator controls. The decrease in our electricity and fuel consumption will not only reduce our annual operational expenses, but will also result in a substantial reductions in emissions of carbon dioxide (CO2). Our aggressive pursuit of clean production measures throughout our properties has put us on the regional map as one of the first companies in the area to apply and pioneer on such a wide scale a series of environmentally friendly initiatives with cost savings on our energy bills expected to reach around 10%.
Our continuous and adamant strive to always adapt and apply best practices in all of our operations has not gone unnoticed. In 2009 our properties were singled out and recognized for excellence in various polls targeting our most discerning critics namely our guests. Two of our properties, Mövenpick Resort & Spa Dead Sea and Mövenpick Resort Petra, were voted by Condé Nast, one of the most reputable and rigorous travel polls in our industry, among the top 10 best places to stay at in the Middle East for 2009. Moreover, Zara Spa at the Mövenpick Resort & Spa Dead Sea was voted by Condé Nast as the number one Spa in the Middle East for 2009. In addition, the Grand Hyatt Amman has been consistently maintaining its ranking as one of the top business hotels locally and regionally.
Our focus in 2009 continued on the extensive renovations at some of our properties. The bulk of these renovations are relegated to InterContinental Jordan Hotel and Mövenpick Resort Petra, in addition to smaller scale projects at the remaining properties.
In 2009 and in our relentless efforts to maximize our shareholders’ value, we actively pursued streamlining and leveraging the financial portfolio of Zara, which in turn safeguarded the company’s financial structure. We fully realize that this is an ongoing pursuit, and we are continuously seeking and monitoring opportunities to always ensure the efficient and effective management of our business.
Key financial indicators witnessed positive growth in 2009. Company’s assets reached JD 272.6 million up by 6.65% over 2008; shareholders’ equity reached JD 139.9 million up by 6.30% over 2008; while total liabilities reached JD 115.8 million up by a lower base of 5.48% over 2008.
Another important development has been the increase of the registered capital of two of our subsidiaries. We raised the registered capital of Zara South Coast Development Company, owner of Mövenpick Resort Tala Bay Aqaba by JD 12 million to reach JD 15 million; we also raised the registered capital of Oasis Hotels Company by JD 1.2 million to reach JD 1.6 million.
Our outlook for 2010 is grounded by the realities surrounding us regionally and globally. Although there are reported signs of an improvement in international tourism figures in the last quarter of 2009, we remain cautious and realistic in our expectations. Our overall outlook is positive given the signs that confidence is returning and that demand is improving for both business and leisure travel. However, we believe that it might be still premature to entertain talk of beginnings of recovery despite growing optimism. We are embarking on 2010 with the prospect that a gradual global economic recovery might be around the corner; while at the same time we are mindful of the fact that a second dip into recession cannot yet be ruled out. It is against this scenario that we have based our plans for 2010.
The key areas that we will focus on during 2010, will be the completion of projects that were resumed in 2009, such as the complete renovation at Mövenpick Resort Petra, the entrance building at the Grand Hyatt Amman, the completion of rooms renovation and the entrance at InterContinental Jordan Hotel, and other smaller projects throughout our properties. We will also focus on enhancing and building on the clean production projects that we initiated in 2009. Another area of great importance to us will be to build our social media capacity in order to connect and to enhance awareness about our properties and the constructive role that we, as a market leader, can assert within our industry. We will also proceed with various initiatives to highlight and enhance our role as responsible corporate citizens within the communities where we operate.
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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