Belmond expects Olympic Games to drive Q3 performance
Belmond expects Olympic Games to drive Q3 performance
05 AUGUST 2016 8:43 AM

During the company's Q2 earnings call, Belmond executives said they expect the 2016 Olympic Games in Rio de Janeiro will benefit the company’s Copacabana Palace hotel and drive performance in the third quarter.

HAMILTON, Bermuda—During an earnings call with analysts to discuss second-quarter earnings, Belmond executives said the company expects to see good Q3 2016 performance driven by the 2016 Summer Olympics in Rio de Janeiro.

The company’s Belmond Copacabana Palace in Rio is in the middle of where media covering the Olympics will be positioned, and Roeland Vos, Belmond’s president and CEO, said the hotel’s location will give it publicity during the event and “build awareness of the brand.”

He said many of the broadcasting and sporting events will take place near the Belmond Copacabana Palace. Vos said the company has identified brand awareness efforts surrounding the Olympic Games to draw attention to the hotel, including “a light installation to be projected across the hotel’s façade,” and artwork created specifically for the games, which will be displayed throughout the property.

Q2 results
However, looking back on the second quarter, same-store revenue per available room decreased 4% in Q2 2016 from the prior year, down 1% on a constant currency basis, according to the company’s second-quarter earnings release. Total revenue fell 3% to $158.1 million—and was up $0.6 million on a constant currency basis—compared to the second quarter of 2015.

Belmond executives addressed how the United Kingdom’s decision to leave the European Union could have an impact on the company, and highlighted two ways in which the decision could affect the company’s results. “Translation of pound-denominations and central overheads to U.S. dollars and demand for luxury travel experiences from British guests,” could affect results, according to the earnings release.

While Vos acknowledged that 13% of Belmond’s guests are British travelers, he said, “We have not seen any changes in our guests’ behaviors … So overall, no major impact on numbers because of Brexit.”

Belmond generated $38.1 million in revenue from owned hotels in North America in the second quarter of 2016, which was down 4% from Q2 2015. The Belmond La Samanna, St. Martin, French West Indies, saw a 12% revenue decrease “primarily due to a year-over-year decrease in call volume due in part to concern over the Zika virus,” the company reported in its earnings release statement.

Driving organic growth
Belmond is working to improve its website in an effort to drive organic growth, Vos said on the earnings call.

“Improving the website is a near-term priority with an opportunity to significantly grow our revenue by increasing our conversion rate and capturing greater customer demand,” he said.

The company has started making improvements to the website, and saw a 5% increase in year-over-year traffic in Q2 2016, as well as a 16% increase in revenue generated from the site, according to Vos.

As of press time, Belmond stock was up 21.8% year to date.

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