Tourist Hotel Corporation Expects Profit This Year

Press, Volume XCVIII, Issue 28986, 29 August 1959, Page 14

Tourist Hotel Corporation Expects Profit This Year

(New Zeaiuofl Press Association)

WELLINGTON, August 28.

It is hoped in the third financial year of the Tourist Hotel Corporation, with no major disasters such as the Hermitage fire, that the corporation will be able to show a trading profit, says the corporation’s annual report, tabled in Parliament.

IIIU ivpuiv, VVUIVII year ended September 30, 1958 discloses a loss for the year of £201.860, of which £41.876 is a hotel operating loss. The loss for the previous year was £106,113.

The year was dominated by a number of special difficulties which are unlikely to recur with the same degree of intensity, says the report. The first was the Hermitage fire on September 16, 1957. Added to this, the South Island summer was one of the worst on record for cold and wet conditions. On top of these specific problems the general economic conditions worsened during the winter months, and there were severe restrictions on capital expenditure which retarded tourist tirffic.

The effect of the Hermitage fire in disorganising the whole of the corporation’s tourist chain, combined with the weather in the South Island, had a very serious effect on the corporation's income and earnings. The turne

over of South Island hotels dropped by about £27000. compared with an increase of about £56.000 in the North Island.

In consequence, a small operating profit in the South Island for 1957 was turned into an operating loss. The North Island showed a decreased operating profit of some £9OOO. Against these problems, however, a great deal of constructive work was carried out in the year notably the rebuilding of the Hermitage. This was accomplished in the record time of 26 weeks, of which 22 were more or less continuously wet. The report notes that it costs the corporation roughly £1 a day a person in a remote area like Milford or the Hermitage merely for the service amenities and site costs, without the normal costs of hotel building. Before tariffs at such hotels can be compared with those of city hotels it is necessary to add at least £1 to city hotel tariffs.

The report says that till the Government is in a position to provide the corporation with additional funds the directors have no option but to consolidate the operation of the corporation’s existing hotels. As a long-term policy, consideration will be given to new hotel projects at Franz Josef and Queenstown when capital is made available.