Sharp rise in value of IHI investments in Czech Republic

Shareholders in International Hotel Investments have been told by the company's chairman, Alfred Pisani, at their hotel in Prague that IHI's original investment of €80 million in the Czech Republic was today fetching values matched by offers from bona fide investors of over €200 million.

Mr Pisani, who was speaking at a dinner for shareholders at one of the company's hotels, Corinthia Towers Hotel, said the offers they had received represented a growth of over two-and-a-half times their original outlay.

But what might have gone down well with the shareholders at the end of their trip to the city was Mr Pisani's declaration that they may soon start getting a dividend on their shares. He said: "I firmly believe that we should very soon start seeing the fruit of our investments in a tangible manner, and the forthcoming period of consolidation should therefore result in profits to the company and eventual distribution of dividends".

Standing at what he described as the threshold of their next phase, Mr Pisani said they could also, in addition, consider selling some of their hotels to capitalise on the gains being made.

"On the other hand, we could also see ourselves raising more equity from strategic partners to proceed with further growth, thus resulting in further gains to our benefit. Over the coming months we will be carefully considering the route to take for our future, but our confidence is strengthened by the knowledge that one has achieved substantial value in our company, to the benefit of all shareholders."

Giving an overview of their operations and a brief account of the plans in hand, Mr Pisani said that when Corinthia first went to Prague over eight years ago, very few people in Malta looked at the destination with much knowledge, as it was then still a new city being discovered by western visitors. They had gone to Prague as investors long before the Czech Republic became a member of the European Union.

In February they will be marking the eighth anniversary as investors in the country. It was in February 1998 that Corinthia had bought the Czech company Top Spirit, which owned the hotel where they were meeting, as well as the four-star Panorama Hotel and another eight regional hotels across the country.

In total, Corinthia has 1,000 bedrooms in Prague, and a further 500 bedrooms outside the city. This makes the company the largest foreign investor in the Czech hotel industry.

Mr Pisani said that as with their investments in Prague, these early years of IHI's investments were being dedicated to repaying the bank loans that had made it possible for IHI to buy four properties, "which is more than what would have been possible if we had only used the capital raised by IHI".

In the process of repaying the banks, they were at the same time increasing their capital value. In fact, he believed that IHI's acquisitions in Budapest, Lisbon, St Petersburg and Malta would result in capital gains similar to what they had achieved in Prague.

"It is precisely with this faith in our future that we are continuing to invest in IHI's properties, and therefore further enhancing the possibility for capital gain." At the Corinthia San Gorg Hotel in Malta, they were investing €5 million over two years, starting this month, to bring the hotel at par, and possibly ahead, in design and technology, with the newer five-star hotels.

At their Grand Hotel Royal in Budapest, a world-class spa would soon add yet another upscale service to the hotel. Also at the Royal, they are inaugurating this month 26 penthouse apartments, to be used for short-term lets to expatriate executives staying in Budapest.

Mr Pisani spoke of a major project taken in hand at their hotel in St Petersburg, where they are developing two adjacent sites that had come with the acquisition of the property. The development will consist of an extension to the existing five-star Nevskij Palace Hotel by another 105 executive bedrooms, raising the number of rooms to 400 and making the hotel the largest five-star property in the city.

They will also be upgrading the hotel's lobby and restaurants and build the city's first hotel conference centre, taking 1,000 persons, and commercial areas for use as a shopping mall and office block.

"With these investments in hand, IHI will soon complete the maximisation of the potential of its four hotels." Mr Pisani is convinced that over a similar time span as that of their operations in Prague, the capital value of IHI will show increases similar to that achieved in the Czech Republic.