QT, Thredbo and cinema owner EVT earnings rebound as entertainment and travel spending resumes

QT, Thredbo and cinema owner EVT earnings rebound as entertainment and travel spending resumes

The company which manages a portfolio of hotels including QT, Rydges and Atura, as well as major cinemas such as the new IMAX in Darling Harbour, has today reported a rebound in earnings as Australians resume spending on travel and entertainment.

EVT Limited (ASX: EVT) - formerly known as EVENT - says earnings rebounded by 68.2 per cent in the first half, up $43.7 million to $107.7 million, leading to the normalised after-tax profit more than doubling to $39.4 million compared to the prior comparable period.

The company attributes these results, which included record results for its Thredbo and hotels operations, to strong signs of recovery in both the travel and entertainment segments.

“The record results achieved for Thredbo and Hotels and the continued success of the premiumisation strategy driving growth in yield in Entertainment, underline the benefits of the group’s strategy,” EVT CEO Jane Hastings says.

“The half-year result included a record Hotels and Resorts result on a like-for-like basis adjusting for the upgrade-related closure of Rydges Melbourne, and a record result for Thredbo, up 41.2 per cent on the previous record first-half result for 1H19.”

The rebound of the travel sector was also demonstrated by Helloworld (ASX: HLO), which today announced total transaction value tripled to $1.2 billion amid a surge in travel demand.

Hastings added that EVT’s hotels and resorts division achieved record first-half revenue, with all brands demonstrating a "strong recovery".

“Demand from key market segments improved including leisure, corporate, government, and conference and events with the international market growing,” Hastings says.

“International group business remains subdued, however, and overall international visitation into Australia remains well below pre-COVID levels”.

The CEO says EVT’s hotel strategy has now evolved to include all segments of the market from luxury (QT) all the way through to budget offerings (LyLo - which opened in December in Auckland and is ‘trading ahead of expectations’). The group’s network grew by five hotels and 345 rooms in the half year.

As for ski resort Thredbo which EVT operates, Hastings says record results were driven by a new business model.

“This result was achieved through a focus on better capacity utilisation and delivering a premium experience,” Hastings says.

“Summer has been more challenging this year purely due to unprecedented weather conditions including snowfall in both December and February. However, we are pleased with the improvements in yield.”

On EVT’s cinemas, the CEO says revenue recovery continues, but COVID-related global studio delays have resulted in revenue falling 15.9 per cent below the pre-pandemic 1H19.

“The delays in the film release slate were partially mitigated by our premiumisation strategy delivering continued strong growth in average admission price and merchandising spend per head.

“The performance of Avatar: The Way of Water has been pleasing with the film now the highest grossing title of all time in New Zealand and Germany, and the fourth-highest grossing title of all time in Australia.

“This demonstrates that when a good film is released customers are back in cinemas and spending more each visit.”

As for the remainder of the financial year, EVT highlights a number of blockbuster films that will likely continue to get cinema-goers back into its theatres, including Dungeons & Dragons, The Super Mario Bros. Movie, Guardians of the Galaxy Volume 3 and The Flash.

“The Entertainment Group’s performance will be subject, as always, to the overall appeal of the film line-up. Whilst the second half line-up appears stronger than the first half on paper, this remains subject to potential release date changes and the performance of individual film titles,” Hastings says.

During the half, the company also completed $250 million of non-core property sales, including The Miller Hotel in July and Darwin Cinema Centre in December. EVT’s portfolio has now been independently valued at $2 billion, and net debt of $219.8 million is “positioning the group for future growth”, according to Hastings.

As for priority developments for the remainder of the year, EVT says it continues to progress with upgrades at Rydges Melbourne, whilst the QT Gold Coast upgrade is ‘near completion’.

Further, Hastings highlights the expected opening of IMAX Darling Harbour in the second half as a key milestone for the group.

The CEO says the second half is expected to show a continuation of the recovery trends demonstrated in the first half of the financial year.

“Demand for the group’s hotels continues to grow despite a subdued international inbound market,” she says.

“In Thredbo, summer performance has been impacted by weather conditions and is tracking slightly below FY22 record year, whilst the 2023 winter performance is also expected to be in line with the 2022 winter, subject to snow conditions.

“Headwinds anticipated in the second half include the ongoing impact of energy cost increases and other inflationary cost increases.”

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