Acesite eyes schemes to fund renovation of Manila Pavillion

Acesite Philippines Hotel Corp., publicly-listed hotel operator controlled by the Gatchalian family’s Waterfront Philippines Inc., is planning to undertake a stock rights offering or raise its capitalization to fund the ongoing refurbishment of Manila Pavillion Hotel along United Nations Ave. in Ermita, Manila.

At the sidelines of the company’s stockholders meeting yesterday, Acesite chairman Arthur Lopez told reporters they would need an additional P60 million to P80 million over the next three years to complete the renovation of Manila Pavillion.

Lopez said among the company’s options to raise cash is either to conduct a rights issue or increase its authorized capital stock to as much as P500 million from the current P100 million. Acesite also plans to use internally-generated cash to fund the renovation program.

“Nothing is definite yet but we definitely need additional funds to give Manila Pavillion a new look to be able to compete effectively with other hotels within the area,” Lopez said.

Some of the direct competitors of the hotel in the area are Century Park Hotel of tobacco and airlines tycoon Lucio Tan, Manila Hotel of publishing magnate Emilio Yap and Bayview Park.

Lopez said the company has already spent P50 million for the renovation of the hotel’s first four floors and public areas which include the lobby and some food and beverage outlets.

Manila Pavillion has 538 rooms and suites that have individually-controlled central air-conditioning, private bathrooms with bathtub and shower, multi-channel radio, color television with cable channels and telecommunications facilities. The hotel has approximately 2,200 square meters of meeting/banquet/conference facilities, and also houses several restaurants, such as Seasons Cafe (coffee shop), the Rotisserie (grill room), the Peony Garden (Chinese restaurant), the Boulvar (bar and lounge) and the Patisserie (bakeshop and deli items).

Room occupancy of Manila Pavillion increased from 62.64 percent in 2006 to 64.69 percent last year.

Lopez said the upgrade is being done to take advantage of the prevailing low occupancy rate of hotels given a difficult business environment marked by rising prices of oil and commodities.

He noted that the occupancy rate of hotels in Metro Manila has dropped by 15 percent and could even get worse towards the end of the year.

Lopez, however, said the group remains bullish on the tourism or lodging sector as it scouts for opportunities in other major cities in the country, particularly in the south.

He said the Waterfront group would rather take over existing properties rather than build from scratch.

 “Our strategic plan is to be able to strengthen our presence in Metro Manila and establish a presence in Makati and Fort Bonifacio,” Lopez said.

In 2004, Waterfront established ownership and majority control over Manila Pavillion, which has become part of the group’s chain of hotel facilities which include the Waterfront Hotels in Cebu City, Mactan and Davao.

Acesite swung back to profitability in 2007 with net earnings reaching P87.9 million as against a net loss of P19.6 million the prior year. Total revenues amounted to P706.2 million, P240.3 million of which came from room revenues, P243.9 million from food and beverage, and P211.7 million from rental income.

The biggest revenue contribution came from the travel trade accounts with the hotel’s corporate and FIT accounts followed by promotion packages. Strong showing came mostly from Japanese, Hong Kong, Korean individual travelers and groups, although the domestic market contributed to the bulk of rooms sold.