Dowutaurn felts Scenic Circle

Press, 20 February 1988, Page 27

Dowutaurn felts Scenic Circle

Scenic Circle Corporation, the Dunedin-based hotel owner, has not escaped the effects of the tourist downturn, said a spokesman for the company.

A Dunedin sharebroker, Mr Brian Kreft, in the absence of Scenic Circle’s chairman and managing director, said the announcement of the preliminary result was “imminent and would indicate that Scenic Circle has not escaped problems common to the industry.” The company announced on Thursday that it has laid off three of its senior executives in a cost-cutting measure, which it said reflected the difficult state of the tourist industry. Mr David Walker, the company’s general manager, said the over-all hotel manager, the group training officer, and the manager of the Lakeland Regency in Queenstown, have been made redundant. Another senior employee has been transferred to the Lakeland

from the Westland Motor Inn, which is operating on a reduced staffing level.

There are seven hotels in the Scenic Circle chain: the Lakeland, the Westland, the Southern Cross Hotel in Dunedin, the Golden Glacier Motor Inn, the Fox Glacier, the Franz Josef, and the Whalers Inn, Picton. Mr Walker said the expanded Southern Cross Hotel in Dunedin has so far escaped the difficulties with tourist numbers in the rest of the chain.

“Thirty-six new rooms have just opened, increasing accommodation by 50 per cent to 109 rooms, and we are fully booked for the next two months,” he said. Scenic Circle’s chairman, Mr Ralph Brown, and finance committee chairman, Mr Earl Hagaman, had earlier issued a statement saying the company planned to hire a new overseas marketing organisation. “In this tourist downturn, which I consider to be temporary, we are looking at a marketing

arm to do the job for us,” Mr Hagaman said.

Scenic Circle was floated in December, 1986. Using the failed Otago Development Corporation as a listing vehicle, whose shareholders provided the necessary spread of ownership, the company issued 41,265,766 25c shares.

The company forecast a maiden profit of $1,080,000 on sales of $8.7 million. However, the company reported a “disappointing” half-year profit of $106,000 to April 30.

Mr Brown said at the time that, “the deterioration of trading conditions and the- adverse effects upon occupancy levels will coincide this year with non-recurring extraordinary items, with the likely combined effect of a group trading loss.”

Scenic Circle shares were changing hands yesterday at 4c each, after trading around 15c before the October sharemarket crash and as high as 35c post-float.