Transmetro targets four-star hotels

Ben Wilmot
Australian Financial Review
September 2, 2004

Listed tourism minnow Transmetro, whose operating arm, Metro Hospitality Group runs 800 rooms, has turned around its performance as it looks to expand its hotel portfolio in larger, four-star city locations.

Group general manager Rajeev Dani said that in the past year, Transmetro has also released properties that had leases that did not reflect their true market value, such as the Metro Darwin.

Group general manager Rajeev Dani said that in the past year, Transmetro has also released properties that had leases that did not reflect their true market value, such as the Metro Darwin.

Transmetro racked up losses of $7.4 million over the past few years as it took on leases on poor terms but its phasing out smaller leases and hopes to wipe out past losses over the next two years.

Mr. Dani said Transmetro was now operating profitably because of good returns from its pubs and hotels in Sydney and Perth.

"Our objective over the next year is to consolidate our portfolio of four-star properties and be represented in key cities, including Hobart and Adelaide" he said. The company is also looking at expanding in Brisbane.

Transmetro has entered a joint venture to take over the Pentura Hotel on a management contract and renamed it the Metro Hotel Sydney. Under the arrangement, it took 28 per cent interest in the Hudson Hotel Group, which owns and operates the hotel. The management contract generated an almost 15 per cent return.

Transmetro reported an annual profit of $2.27 million in the year ended June 30, including a $1.13 million profit from the sale of the lease of the Paddy Maguire.s Kent Street theme pub. Excluding one-off gains, it turned around from a pretax loss of $530,000 to a $1.3 million profit.