Inflation costs IHI double its energy bill, but hotels sustain recovery

After COVID, the inflation bugbear: IHI says energy costs rose by 96% across its hotels group over the last year

IHI chairman Alfred Pisani
IHI chairman Alfred Pisani

The Maltese hotel chain International Hotel Investments, which own the Corinthia brand, has reported a massive doubling in energy costs across its entire hotel chain.

Hit by the effects of pandemic lockdowns and soon after the onset of rising inflation, IHI executive chairman and founder Alfred Pisani said his hotel group had been hit by rising costs of wages, fuels and a wide variety of goods. Energy alone, Pisani said, had grown by 93.48% year on year in costs, together with an increase in borrowing costs with the rise in interest rates that resulted in response to inflation.

Additionally the war in Ukraine had negatively impacted the Corinthia Hotel and Commercial Centre in St Petersburg, in Russia, while its project in Moscow, in which IHI has a 10% shareholding, has been put on hold.

“IHI’s interest in St Petersburg represents approximately 5.6% of the Group’s total revenue and 8% assets. It is pertinent to point out that due to the uncertainties brought about by the situation in Russia we took the immediate initiative to repay in advance and in full the €40 million loan that was on balance for the Hotel and Commercial centre in St Petersburg,” Pisani said.

Pisani said that in the face of these challenges, Corinthia had sustained a healthy recovery with a reduction in costs, and to have staffing levels reduced by 15% below 2019. “We have asked management to keep constant watch and active control of our energy consumption, which combined efforts have had a very positive result,” Pisani said.

Operating profit before depreciation and fair value adjustments EBITDA for 2022 amounted to €51.7 million, an improvement of €25.2 million. In 2019 EBITDA hit €69.8 million.

2022 revenue was at €238.2 million, with the hotels segment increasing by 95% year on year. The overall revenue level stood at 89% of 2019.

Pisani said IHI was forecasting a further improvement in our performance, which should bring the group closer to 2019 results.

IHI, with its globally recognised Corinthia brand, now expects to be operating seven new properties by 2024, including Brussels, Rome, New York, Doha, and Bucharest, as well as having signed a management agreement for a hotel in Riyad, Saudi Arabia.

In addition, plans on the Corinthia Oasis, formerly known as Hal Ferh in Malta, incorporating a hotel of 162 keys and 25 hotel-serviced villas, are well advanced as works on the detailed designs have progressed significantly whilst works on the road widening are currently underway.

Pisani also said IHI held several meetings with distinguished personalities in Oman, UAE, Qatar and Saudi Arabia where his group is planning three to four new hotel management agreements in the next 12 months, particularly in Saudi Arabia, Oman and possibly Dubai.

In Jeddah, Pisani said IHI had signed an MOU with Jeddah Central Development Company, a wholly-owned company of Saudi Arabia’s Public Investment Fund (PIF) for its hotel management company CHL, and its project managers QP, to develop and operate assets within the Marina District.