AGI expecting bigger profit contribution from Travellers

Travellers International Hotel Group Inc. may dislodge residential developer Megaworld Corp. as the most profitable unit of tycoon Andrew Tan-led Alliance Global Group Inc. next year, as the tourism estate developer unlocks more values out of its flagship development, the Resorts World in Newport City.

A joint venture between AGI and Genting group of Malaysia, Travellers is seen doubling its net profit this year from year-ago level, putting AGI on track to meeting its 35-percent targeted year-on-year profit growth, AGI president Kingson Sian told reporters in a briefing yesterday.

In the first nine months, AGI’s share in the net profit of Travellers amounted to P2.1 billion.

AGI owns 60 percent of Travellers while Genting controls 40 percent but the two evenly split economic interest in the project.

Travellers reported a higher net income of P4.2 billion in the first nine months of this year, up from P2.5 billion a year ago. Revenues nearly doubled to P20.8 billion year-on-year due to earnings from gaming, hotel, food and beverage, theater, cinema operations and retail shopping mall and commercial office space rentals in Resorts World Manila, which opened in August 2009.

“Both the foreign and local markets contributed to the success of Travellers,” Sian said, noting that it was possible that this unit would outpace Megaworld’s performance by next year.

Resorts World in Newport City across Naia Terminal 3 is for now the flagship project of Travellers but more investments in tourism are planned in the coming years, including an integrated tourism estate in Pagcor City where Traveller’s lot area for development is thrice bigger than that of Resorts World.

“We might look at other areas outside Metro Manila. We believe in this industry,” he said.

AGI is seen growing its profit this year even excluding nonrecurring gains from the consolidation of newly acquired tourism unit Global Estate Resorts Inc. (Geri), formerly Fil-Estate Land Inc.

By next year, Sian added that Geri might start contributing to AGI.

Geri, which has a vast land bank in Boracay, has started selling residential lots in a beachfront horizontal development on the island, Sian said.

The higher bottom line for AGI this year is driven by the success of each business, which also includes beverage maker Emperador and the local McDonald’s fast-food network.

In the case of McDonald’s, he said the quick-service restaurant business would likely end the year with profit at par or slightly lower than last year’s performance. But considering that 2011 was an election year marked by extraordinary consumer spending, he said McDonald Philippines’ performance this year was still good.

AGI grew its nine-month net profit attributable to parent equity holders by 83.8 percent year on year to P9.9 billion on robust real estate and consumer businesses as well as one-time gains from the consolidation of Geri.