MANTRA Group (ASX: MTR) has been making the most of the domestic leisure market boom as the Gold Coast and North Queensland markets helped push Australia's second-largest accommodation provider's annual profit to $37.1 million.

However, weakness in some CBD markets tarnished an otherwise robust performance by the Surfers Paradise-based company.

Disappointed investors pushed Mantra's shares more than 6 per cent lower in morning trade with the shares falling as much as 22c to $3.20.

The net result, which represented a modest 2.7 per cent increase from a year earlier, was impacted by higher tax costs and higher interest charges due to increased borrowings.

The net result also was hit by $7.3 million in transaction costs, including $5.3 million in stamp duty for acquisitions.

Mantra Group added 11 new properties to its portfolio over the past year totalling an extra 3000 rooms.

This helped drive the company's underlying EBITDAI (earnings before interest, tax depreciation, amortisation and impairments) 23 per cent higher to $89.8 million, which is in line with forecasts.

Mantra's biggest acquisition to date, the Aloa Mona group's 11 hotels which were secured last month, will be reflected in the current financial year.

Growth in earnings were largely driven by a 34.2 per cent increase in revenue to $244.1 million from Mantra's resorts division, aided by Gold Coast acquisitions including Soul and Chevron Renaissance in Surfers Paradise. Peppers Noosa also added to the result.

Mantra also reveals that higher occupancy rates and room rates on the Gold Coast and North Queensland drove its leisure division higher.

Occupancy in these markets jumped 3.6 percentage points to 76.2 per cent, while average room rates lifted $7.39 to $157.92.

Mantra CEO Bob East says the Gold Coast and North Queensland are benefitting from strong growth in both domestic and international tourist numbers.

Despite revenue from Mantra's CBD property portfolio jumping 14.4 per cent to $311.5 million, underlying profit, as measured by EDBITDAI, fell 2.9 per cent to $46 million.

The division was impacted by lower returns in Brisbane Perth and Darwin. Mantra blames the mining downturn and lower government infrastructure spending for weakness in these markets. Sydney, Melbourne, Canberra and Tasmania performed strongly in the CBD sector.

East describes FY16 as 'another landmark year' for Mantra Group.

"A strongly supported capital raising of $113.4 million was launched in late FY16 for the acquisition of Ala Moana Hotel, Hawaii, as well as providing available capital to support acquisitions aligned with the group's strategy," he says.

"Consumer sentiment and demand lifted in FY16 resulting in strong trading in CBD and leisure destinations mainly on the back of increased domestic and international airline capacity into key destinations and the increase in inbound Asian travellers."

Mantra has bolstered its permanent rental portfolio on the Gold Coast after securing the rights to manage Southport Central.

The Mantra Sydney Airport Hotel is due for completion in the second half of 2017, while Peppers Kings Square Hotel, which is Mantra's first Peppers property in Western Australia, is due to open later this year.

Mantra is paying a final dividend of 5.5c a share, bringing the full-year payout to $10.5c.

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