Do real luxury hotels earn money?

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May 20, 2010, 6:06 pm

#16

fly2nrt

Join Date: Mar 2009

Posts: 3,519

Quote:

Originally Posted by Shangri-La

El Bulli is a money-loser, correct?

The restaurant itself loses money. He (Adria) makes his money on books, tours, appearances, etc.

May 20, 2010, 6:38 pm

#17

Kagehitokiri

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Quote:

Originally Posted by Shangri-La

Does the MO own the property or just manage it?

owned, which is their "style"
http://www.mandarinoriental.com/images/MOIL_ar2009.pdf

edit - or not http://www.mandarinoriental.com/images/fact_sheet.pdf
8 majority owned (last = washington 2004)
2 leased (tokyo 2005, paris 2011)
2 ~50% owned

Last edited by Kagehitokiri; Jun 4, 2010 at 12:24 pm

May 20, 2010, 8:12 pm

#18

KrazeeJoe

Join Date: Apr 2008

Posts: 148

Quote:

Originally Posted by fly2nrt

The restaurant itself loses money. He (Adria) makes his money on books, tours, appearances, etc.

Interesting, I would have thought the restaurant is making money because many people are working for free in the kitchen.

May 21, 2010, 4:54 am

#19

number_6

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elBulli loses about 20% so pretty close to break-even. Having more staff than guests is a good start to losing money for a restaurant

Of course the total revenue model for elBulli is highly profitable despite losing money on the meal service, and it doesn't really have a goal of making money, that is definitely a secondary objective for Ferran Adria. Fascinating at so many levels. Of course how many hotels can create a new standard of service or product that their genre will be measured by? A bit like the invention of the elevator, such game-changing events are rare and not really part of the game in terms of investment. For hotels the much simpler property game is all that is needed, and the success of a hotel will raise the value of all real estate for a certain radius. As an aside, Le Bernardin (maybe the best restaurant in the US) was funded by a real estate developer who needed a star attraction in a new not-so-fashionable development, and of course it worked fabulously.

May 21, 2010, 5:09 am

#20

TrophyCollector

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Quote:

Originally Posted by number_6

As an aside, Le Bernardin (maybe the best restaurant in the US) was funded by a real estate developer who needed a star attraction in a new not-so-fashionable development, and of course it worked fabulously.

Good point. The same is true for the Tristan Restaurant in Port de Portals, Mallorca which was originally conceived to sell the (many) empty berths in the marina.

May 21, 2010, 6:11 am

#21

jbcarioca

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Quote:

Originally Posted by TrophyCollector

Good point. The same is true for the Tristan Restaurant in Port de Portals, Mallorca which was originally conceived to sell the (many) empty berths in the marina.

That is an excellent point. Many of the best restaurants seem to serve as embellishments for their owners/sponsors/chefs, and as such it is informative to compare total profits, not just the single luxury restaurant or hotel, assuming such data can be obtained. Luxury hotels have always had greater volatility than have lower end properties, as probably had the restaurants. The two high end restaurants I know about (both Michelin three-star) are highly profitable on their own, and have remained so for a long time. I wish I could give their names, but cannot. Unique cases, such as El Bulli, are just that, unique.

real estate developers have always had a huge incentive to embellish their properties and what could be better than, say, le Bernardin?

May 21, 2010, 8:33 am

#22

Kagehitokiri

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along those lines > http://thestrippodcast.blogspot.com/...d-beyonce.html

Quote:

Wynn: If you take the ticket price and mutliply it by 60 shows at 1500 people a show and you take $125 a ticket and you say well, 'That won't work plus the cost of a jet.'

Friess: Am I wrong?

Wynn: No, you’re right.

Friess: So, how does it work?

Wynn [Laughing]: I don’t wanna tell ya.

Friess [Sighing]: OK.

Wynn: ...When I got through with Beyonce...we made a terrific amount of money because of the casino. Remember, our only source of income is not the tickets. We have rooms, we have food, beverage and gambling

in other words the 90K+ people, rather than the $10mm

MikeE's story of a baccarat player who lost $2MM 2 nights in a row (total $4MM) pretty much sums up gambling

wynn: "[clubs] could do over $150 million for us, with a profit margin in the mid-40s."

Last edited by Kagehitokiri; Apr 17, 2016 at 7:49 pm

May 22, 2010, 2:23 pm

#23

moien

Join Date: Jun 2009

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Quote:

Originally Posted by fly2nrt

The restaurant itself loses money. He (Adria) makes his money on books, tours, appearances, etc.

In 2008 net income was some 64000 €, but he said a month ago that the restaurant is presently losing 500000 € a year. Another important source of revenues are patents.

May 24, 2010, 10:44 am

#24

mktozd

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Quote:

Originally Posted by number_6

Many high-end hotels do lose money, but obviously the ones that stay in business have a revenue stream that makes it work. Often it is from other than the hotel itself. Hardly surprising: most of the 10 best restaurants in the world lose money (despite charging hundreds for a meal). There are so many other revenue sources available that sometimes book tours are worth more

Indeed, it would seem that some of the highest end properties struggle to break-even given volatility in bookings, etc. One exception, I am guessing is Four Seasons George V. The place almost always seems to be booked full and does not offer a lot of super discounts.

May 24, 2010, 11:02 am

#25

Kagehitokiri

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i posted the financials for george v, they were as surprisingly low as most things >

Quote:

Originally Posted by tfjim

Kage quoted some financials here http://www.flyertalk.com/forum/13542264-post47.html.

Quote:

Originally Posted by Kagehitokiri

(thousands) gross / EBITDA / net / debt / occupancy / % accommodation vs other

2011 ________ / ______ / $11,872
2010 $137,476 / $42,788 / -$28 / ? / 76.5% / 63.3%
2009 $138,368 / $44,657 / $17,680 / $507,200 / 75% / 63.4%
2008 $157,114 / $56,100 / $20,118 / $503,900 / 81.2% / 62.2%
2007 $140,465 / $48,137 / $9,071 / $532,400 / 83.2% / ?
2006 $115,800 / $37,700 / $4,001 / $368,100 / 83.1% / ?
(net -$28 > $20,118)

interesting re el bulli, thanks moien ^

Quote:

Originally Posted by moien

In 2008 net income was some 64000 €, but he said a month ago that the restaurant is presently losing 500000 € a year. Another important source of revenues are patents.

Last edited by Kagehitokiri; Jun 18, 2013 at 8:59 am

May 24, 2010, 11:03 am

#26

Kagehitokiri

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more >
http://www.flyertalk.com/forum/14022631-post151.html
http://www.flyertalk.com/forum/luxur...s-trouble.html

related compilation >
http://www.flyertalk.com/forum/luxur...me-hotels.html

Last edited by Kagehitokiri; Jun 3, 2010 at 12:06 pm

Sep 18, 2011, 12:45 pm

#27

Kagehitokiri

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peninsula hotels >
http://www.hshgroup.com/en/Investor-...l-Results.aspx
Financial Review Chapter incl revenue by category for each property
Financial Statements Chapter incl Segment reporting by Business segments >
hotel (net) earnings before interest/tax in millions of HKD
2012 - 241
2011 - 256
2010 - 280
2009 - 118
2008 - 523
2007 - 678
2006 - 653
2005 - 556
2004 - 582
2003 - 336
2002 - 215
2001 - 133
(118 > 678)

monte carlo SBM, hotel operations >
(millions) gross / net / % accommodation vs catering and other
2011 €181.0 / -€8.9 / 34.0%
2010 €170.7 / -€6.5 / 34.6%
2009 €154.8 / -€4.7 / 35.7%
2008 €174.9 / €7.4 / 38.0%
2007 €185.1 / €12.8 / 37.9%
2006 €164.3 / €2.5 / 37.3%
2005 €128.1 / -€6.7 / 34.1%
2004 €113.6 / -€0.1 / 33.2%
2003 €104.0 / €0.2 / 31.8%
2002 €105.7 / €1.8 / 32.3%
2001 €109.5 / €4.1 / ?
2000 €110.0 / €6.8 / ?
1999 €99.4 / €2.6 / ?
(-€8.9 > €12.8)

casinos - http://www.flyertalk.com/forum/luxur...l#post23344971

buffets - http://www.flyertalk.com/forum/17345457-post18.html

saved - http://webcache.googleusercontent.co...t+2010&ct=clnk

http://bajan.files.wordpress.com/201...os-project.pdf

FS NY >
penthouse http://www.flyertalk.com/forum/14144848-post12.html
presidential vs floor below http://www.flyertalk.com/forum/12298559-post34.html

Quote:

Originally Posted by xracer

I know the ex-GM of the FS Langkawi and he has told me that the average occupancy rate for the villas in 2006 was just over 85%...They are big money makers for the place and apparently, there is more demand than supply...this was true when the villas were pricing out at around $1200 per night

MO BKK financials >
http://quicktake.morningstar.com/sto...tl&country=tha

Last edited by Kagehitokiri; Nov 15, 2014 at 4:40 pm

Nov 9, 2011, 8:02 pm

#28

Kagehitokiri

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most of this is probably wrong, dont remember where i got it >

Quote:

Originally Posted by Kagehitokiri

aman did better >http://www.flyertalk.com/forum/13610023-post102.html

but this should be right, i remember source articles >

Quote:

Originally Posted by Kagehitokiri

2000 - revenue $61MM ebit $30MM (ebit per room = $75K, vs $4K for FS)
1999 - revenue $50MM edit $15MM [ebit per room = $41K, vs $5.5K for FS]

Quote:

Originally Posted by jja34-1

Not sure how they manage to do it in the current market(possibly the very high rates and very dedicated following), but their economics are terrific. I know someone who has access to their balance sheet and let's just say this person is laughing all the way to the bank.

[This message has been edited by jja34-1 (edited 08-04-2003).]

http://web.archive.org/web/201012150...df?MOD=AJPERES
http://dlf.in/dlf/wcm/connect/793b31...&lmod=57769075
pages 179>189 include aman finances
1 lac/lakh inr = 100K inr = $2K

substantial rounding >

losses (seem huge

) incl >
$6mm - Bhutan Resorts Private Limited
$4mm - Societe Nouvelle de L'Hotel Bora Bora
$2mm - Tangalle Property (Private) Limted
$1mm - P.T.Jawa Express Amanda Indah (Amanjiwo) - {as per IFRS)
$1mm - Jackson Hole Holdings Limitd
$1mm - NOH (Hotel) Private Limited [amanwella]

profits incl >
$1mm - Marrakech Investments Limitd

i posted the report on amanzoe/residences (and parent development) in aman thread

source i remember for 1999 >

Quote:

Originally Posted by Kagehitokiri

http://www.forbes.com/global/2000/0320/0306046a_print.html

Quote:

1999 Amanresorts' sales $50 million. Operating profits $15 million occupancy 50%
(the five Amanresorts in troubled Indonesia dragged the chain down from its usual 65% occupancy)
$41,000 annual operating profit per room 365 rooms in 1999
16 times earnings, Amanresorts is worth $240 million. $590,000 a room.

Four Seasons 11,088 rooms operating profit per room $5,500 1999
market values it at $162,500 a room