Esteemed Ladies and Gentlemen,
Welcome to Zara’s 17th annual meeting for the ordinary general assembly of the shareholders.
2010 has been a benchmark year for our company on a variety of different and important fronts. During this year, your Company registered the highest hotel operating revenues in its history, with impressive growth rates exceeding 20% over 2009. Moreover, our operating revenues in 2010 grew by 16% compared with those recorded during 2008, the year when we witnessed over 34% growth over the previous year. Most importantly, I am delighted to report that the net profits generated by your Company in 2010 have not only eliminated the accumulated losses but also achieved a retained earnings balance. This is a significant milestone for our Company as we move forward into 2011 following many years of investment and operations.
Our confidence in the agility and the flexibility of our operations was evident on a monthly basis during 2010 where revenues consistently exceeded those achieved during the previous year. In October 2010, our operating revenues surpassed the JD 10.2 million mark, setting a record as the highest earning month in the history of our Company.
Our key performance indicators for 2010 show the following:
Consolidated Operating Revenues reached JD 89.7 million compared with JD 76.7 million, an increase of 17% over 2009.
Consolidated Profit from Operations reached JD 29.4 million compared with JD 22.5 million, an increase of 31% over 2009, and Net Profit Attributable to Shareholders reached JD 9.0 million compared with JD 7.0 million, an increase of 28% over 2009.
Revenue Per Available Room (RevPAR) reached JD 72.0 up by 1% over 2009.
Consolidated Assets reached JD 279.9 million up by 3% over 2009.
In 2010, Jordan’s tourism sector continued bucking the trend witnessed over the past few years in international tourism as a result of the financial and economic crisis. Amid all the uncertainties witnessed over the prospects of tourism worldwide, one fact persisted: interest in Jordan as a tourism destination remains strong and unabated. Tourism receipts in 2010 are reported at JD 2,423 million compared with JD 2,067 million in 2009, an increase of 17%, well above the global average of 5%-6% increase reported for 2010 by the World Tourism Organization (UNWTO). International Tourist visits reached 4.6 million visitors, an increase of 20% over 2009 and much higher than the global average of 5%-8% increase reported for 2010 by UNWTO.
Zara Investment remained the leader in market share of 5-star hotels and 5-star room inventory in Jordan, as well as 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 a total of 8,938 persons in 2010, of which approximately 28% are employed by Zara Investment; while employment in the hospitality sector reached 42,041 in 2010 of which approximately 6% are employed by Zara.
At Zara Investment, employment of local talent and developing human resources as a means of empowering and investing in the local communities is one of our top priorities. It was an honor to have this acknowledged in a recent report issued by the Social Security Corporation, rating Mövenpick Resort & Spa Dead Sea as the top employer of Jordanians in the tourism sector. Similarly, other properties owned by Zara were also cited in this report for their contribution in employing Jordanians. This clearly demonstrates the prominent role played by the Company in the tourism sector in particular, as well as the economy in general, as a key driver in creating opportunities for growth and local employment.
Over the course of 2010, we continued developing plans aimed at improving the sustainability and efficiency of our operations. Clean production projects was one of the primary focus areas in 2010, with the successful completion of a variety of clean production projects aimed at improving our operating efficiency and increasing our profitability. These projects are intrinsic to our vision to set the standard as a benchmark model for green tourism. Moreover, during the second quarter of 2010, all of our properties were enabled and ready to receive the ISO 22000 certification, turning Zara Investment hotels into the first hotels to obtain such accreditation in Jordan. Other sustainability related certifications were achieved with the award of Mövenpick Resort & Residence Aqaba and Mövenpick Resort & Spa Tala Bay Aqaba the tourism industry’s prestigious Green Key® certificates.
On the education front, we embarked on developing plans in partnership with the Ministry of Labor to develop a center of excellence for tourism vocational training in the Jordan Valley (Ghor). Aimed at providing essential skill training for students in the Ghor area, this initiative seeks to enhance the local employment potential within the thriving hospitality sector at the shores of the Dead Sea as well as other regions within Jordan.
Year 2010 witnessed the completion of extensive renovation projects as well as product developments at several of our properties. At Hotel InterContinental Jordan, the Premium Wing was opened with its fully renovated premium and deluxe rooms and suites. Additionally, we completed the renovation and redesign of the new Club Lounge. Hotel InterContinental also celebrated the opening of its Forecourt, aimed at enhancing security while providing a pleasant arrival experience. In a similar vein, Grand Hyatt Amman Hotel completed its state-of-the-art arrival building, aimed at easing the bottleneck that existed at the entrance while also ensuring the maximum safety and security measures upon arrival and entry into the hotel. Another project which we inaugurated in 2010 was the state-of-the-art Zara Spa at Mövenpick Resort & Spa Tala Bay Aqaba. In addition to being the first truly stand-alone full fledged spa in Aqaba, Zara Spa is developed with the latest and most innovative therapy and treatment techniques in the global spa industry. The addition of Zara Spa at Mövenpick Resort & Spa Tala Bay Aqaba coupled with the internationally renowned Zara Spa at the Dead Sea puts us in the forefront of top Spa providers in Jordan. In Petra, we also finalized the full room and suite renovation and refurbishment program that had been initiated in 2009.
In our pursuit to enhance shareholders’ value and capital structure, we raised the capital of several subsidiaries during 2010. The registered capital of Zara South Coast Development Company, owner of Mövenpick Resort & Spa Tala Bay Aqaba, was raised by JD 9 million to reach JD 24 million. We also raised the registered capital for South Coast Hotels and South Coast Real Estate Development Companies by JD 1.3 and 5.8 million to reach JD 4.8 million and JD 10.05 million respectively. The registered capital of Zara Agriculture Company was also raised by JD 50 thousand to reach JD 100 thousand.
Following careful review of our non-core investments, and in order to dedicate the Company’s liquidity towards financing our core investments and operations, we divested out of our 10% shareholding in the owning companies of Kempinski Hotel Ishtar Dead Sea and Kempinski Hotel Aqaba Red Sea. This has contributed positively to our cashflows, leverage and profitability.
Our outlook for 2011 remains optimistic yet vigilant. We are energized and inspired by the momentum we witnessed throughout 2010. The resilience of our business model coupled with the strength of the tourism product in Jordan give us full confidence in our ability to overcome challenges as they arise. Given that uncertainties are still prevailing within the economic and financial markets both home and abroad, we will remain cautious in our strategic planning. The key areas that we will focus on during 2011 will be the full and comprehensive renovation project of the rooms and suites at the Grand Hyatt Amman while continuing the clean production projects initiated in 2009. In addition, we will continue working on a number of smaller projects throughout our properties aimed at ensuring their impeccable and efficient operation. Another priority for us will be to institutionalize the significant role that our Company plays in the development of the local communities in which it operates. We will continue to assert our leadership in the tourism industry through active participation in both public and private sector initiatives aimed at enhancing the tourism industry in Jordan.
None of our achievements over 2010 would have been possible without the dedication and hard work of our entire team of professionals running our operations all over Jordan. To these wonderful women and men I extend my deepest thanks and appreciation for a job well done.
In conclusion, on behalf of the board of directors, I would like to thank all of our shareholders for their trust and continued support.
Sabih Taher Masri
Chairman of the Board of Directors