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COVID-19 hurts Ayala’s hotel, mall businesses

Ayala Land Inc. said mall and hotel businesses suffered a 10-percent decline in the first six weeks of 2020 following the eruption of Taal Volcano and the outbreak of the novel coronavirus disease 2019 in China.

ALI president Bernard Vincent Dy said during a recent analyst briefing that while demand for residential projects remained strong, the group’s mall and hotel businesses faced challenges because of COVID-19 and the recent volcano eruption.

Dy said foot traffic at shopping malls declined by up to 10 percent in the first one and a half months of 2020, as people avoided crowded places. The hotel business also fell by up to 10 percent, he said.

Dy said given these factors, it would be “quite challenging” for the company to hit its target of P40 billion in net income for 2020. He said to meet the target, net income for this year should grow by at least 20 percent.

“We will continue to push really hard to achieve the P40-billion target. We are still working on trying on to push our core businesses to be able to grow the business still at fairly healthy pace,” Dy said.

“We came in at P33.2 billion [in 2019]. To be able to reach P40 billion without the balance sheet adjustment, we need to grow by about 20 percent which could be quite challenging particularly with one [month] to one-and-a-half months of the year, with Taal explosion and COVID-19 being the major challenges,” Dy said.

The P40-billion net income target for 2020 is a part of the five-year masterplan set by ALI in 2015. 

ALI registered a 13-percent increase in net income in 2019 to P33.2 billion from P29.4 billion  in 2018.

ALI plans to launch P125 billion worth of residential projects this year as demand across all market segments remains robust.

Dy said the company earmarked P110 billion for 2020 capital expenditures, or the same level it spent last year.

Consolidated revenues climbed 2 percent in 2019 to P168.8 billion, driven by office, commercial and industrial lot sales and supported by higher contributions from new leasing formats.

Revenues from property development went up by 3 percent to P117.6 billion, boosted by sales of office, commercial and industrial lots.

Residential sales fell 8 percent to P93.2 billion from P101 billion in 2018 even as reservation sales rose 3 percent to P145.9 billion. 

Commercial leasing revenue increased by 13 percent last year to P39.3 billion, fueled by strong contributions from newly opened malls, office and hotels.

Topics: novel coronavirus disease 2019 , COVID-19 , Taal Volcano eruption , Ayala Land Inc. , hotel , mall businesses
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