INDUSTRIES

Businesses benefit from tourism recovery, but risks remain

The strong recovery of tourism has helped businesses in the industry prosper. However, risks such as economic recession, high interest rates and interest expenses still affect corporate profits.

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Six Senses Ninh Vân Bay resort developed by Ninh Vân Bay Tourism Real Estate Joint Stock Company (NVT) — Photo sixsenses.com

HÀ NỘI – The strong recovery of tourism has helped businesses in the industry prosper. However, risks such as economic recession, high interest rates and interest expenses still affect corporate profits.

The oldest hotel operator in Hội An – Hội An Tourism and Service Joint Stock Company (HOT) – recorded a sharp increase in revenue and profit. In the second quarter, HOT achieved revenue of VNĐ23.3 billion, 2.7 times higher than last year. Profit after tax reached VNĐ720 million in the first half of the year while in the same period last year, it lost VNĐ11.69 billion.

HOT’s business activities recovered strongly after three years of losses (2020-2022). It suffered consecutive net losses of more than VNĐ61.3 billion. At the end of 2022, the company’s short-term debt exceeded current assets by VNĐ22.8 billion.

HOT stock was forced to cancel listing by the HCM Stock Exchange, because of losses for three consecutive years. On April 27 this year, eight million HOT shares left the HoSE. On May 12, this stock was traded again on the UPCoM, but liquidity plunged.

Owning the most luxurious resorts in the market, Ninh Van Bay Tourism Real Estate Joint Stock Company (NVT) also announced its profit in the first six months of this year, with profit after tax of VNĐ7.2 billion, while last year’s loss was VNĐ12.9 billion. NVT said that in 2023, domestic tourism had shown many signs of recovery.

Profit erosion

Thành Thành Công Tourism Joint Stock Company – TTC Hospitality (VNG) recorded a 31 per cent decrease in profit after tax compared to the same period last year, to VNĐ7.79 billion. In the same period last year, the business made a profit of more than VNĐ11.3 billion.

This enterprise explained that in the context of the global economic recession, sharply increased interest rates and corporate income tax expenses were the main factors that reduced profits.

VNG has a hotel system with the brands TTC Hotel, Imperial Hotel and three resorts, including TTC Resort – Kê Gà, TTC Resort – Ninh Thuận and TTC Resort – Dốc Lết. In addition, the system also includes two conference centres, two amusement parks and six large restaurants.

In the first six months of this year, the business achieved a profit of VNĐ1.1 billion, just equal to nearly 50 per cent of last year. The sharp increase in interest expenses has affected TTC Hospitality’s profit. In six months, the business paid VNĐ72.5 billion of loan interests, VNĐ20 billion higher than last year. The short-term interest of loans that businesses are paying fluctuates between 8.5 – 12.7 per cent per year, interest rate of long-term is 8.5 – 15.78 per cent per year.

Liabilities also increased by more than VNĐ256 billion compared to the beginning of the year, mainly due to increased long-term debt. VNS