The strong recovery of tourism has helped businesses in the industry prosper. However, risks such as economic recession, high interest rates and interest expenses still affect corporate profits.
The oldest hotel operator in Hoi An – Hoi An Tourism and Service Joint Stock Company (HOT) - recorded a sharp increase in revenue and profit. In the second quarter, HOT achieved revenue of 23.3 billion VND, 2.7 times higher than last year. Profit after tax reached 720 million VND in the first half of the year while in the same period last year, it lost 11.69 billion VND.
HOT's business activities recovered strongly after three years of losses (2020-2022). It suffered consecutive net losses of more than 61.3 billion VND. At the end of 2022, the company's short-term debt exceeded current assets by 22.8 billion VND.
HOT stock was forced to cancel listing by the HCM Stock Exchange, because of losses for three consecutive years. On April 27 this year, eight million HOT shares left the HoSE. On May 12, this stock was traded again on the UPCoM, but liquidity plunged.
Owning the most luxurious resorts in the market, Ninh Van Bay Tourism Real Estate Joint Stock Company (NVT) also announced its profit in the first six months of this year, with profit after tax of 7.2 billion VND, while last year's loss was 12.9 billion VND. NVT said that in 2023, domestic tourism had shown many signs of recovery.
Profit erosion
Thanh Thanh Cong Tourism Joint Stock Company - TTC Hospitality (VNG) recorded a 31% decrease in profit after tax compared to the same period last year, to 7.79 billion VND. In the same period last year, the business made a profit of more than 11.3 billion VND.
This enterprise explained that in the context of the global economic recession, sharply increased interest rates and corporate income tax expenses were the main factors that reduced profits.
VNG has a hotel system with the brands TTC Hotel, Imperial Hotel and three resorts, including TTC Resort - Ke Ga, TTC Resort - Ninh Thuan and TTC Resort – Doc Let. In addition, the system also includes two conference centres, two amusement parks and six large restaurants.
In the first six months of this year, the business achieved a profit of 1.1 billion VND, just equal to nearly 50% of last year. The sharp increase in interest expenses has affected TTC Hospitality's profit. In six months, the business paid 72.5 billion VND of loan interests, 20 billion VND higher than last year. The short-term interest of loans that businesses are paying fluctuates between 8.5 - 12.7% per year, interest rate of long-term is 8.5 - 15.78% per year.
Liabilities also increased by more than 256 billion VND compared to the beginning of the year, mainly due to increased long-term debt./.
