Discovery World sheds crypto concern as losses shrink

Discovery World Corp. (DWC) will drop its cryptocurrency venture to focus on its core hospitality business in hopes of finally erasing the luxury hotel and resort operator’s losses that started piling up during the pandemic.

In a stock exchange filing on Friday, DWC said its board of directors had “unanimously approved” the sale of all its shares in True Ally Ventures Ltd., a cryptocurrency-focused company registered in the British Virgin Islands, for P4.2 million.

“The sale of shares will raise capital for [DWC], thereby improving its balance sheet and avoiding recognition of loss from the investment,” DWC said in its disclosure.

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DWC is selling its 70-percent stake in True Ally for the same price it paid in 2021, when the booming cryptocurrency and nonfungible token (NFT) market attracted many investors while other sectors fell.

Likewise, DWC noted that offloading its cryptocurrency investment would allow the company to “focus on its core operations and competencies” and put resources into areas “where it has a competitive advantage.”

DWC currently operates Discovery Shores, a luxury resort on Boracay Island, and the Discovery Palawan cruise ship in El Nido, another top tourist destination in the country.

The company widened its losses in the first quarter to P25.21 million from P18.86 million in the same period last year as operating expenses mounted.

Alfred Benjamin Garcia, research head at stock brokerage house AP Securities Inc., said DWC’s move to ride on the crypto trend during the pandemic was meant to “somewhat offset the losses from the company’s core resorts business.”

“Now that it’s back to business as usual, the company is offloading its crypto investment to focus back on its core competency,” he said.

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Tourism and hospitality were among the hardest hit sectors during the pandemic, as stringent health protocols prevented hotel operators from accepting guests. There were significantly fewer hotels allowed to operate, mostly to accommodate patients who needed to undergo quarantine.

Travel was likewise restricted to curb the spread of COVID-19.

These restrictions took a toll on DWC, whose revenues in 2020 plunged by 73 percent to P259.7 million.

This resulted in losses ballooning to P540.03 million from P33.82 million in 2019.

DWC’s losses gradually shrunk—P163.44 million in 2021 to P74.26 million in 2022 and P49 million last year—as tourism restrictions eased. —Meg J. Adonis