China's Wanda Hotel to Open up to 35 Hotels in 2023 Despite Profit Drop

(Yicai Global) March 30 -- Wanda Hotel Development, a listed hotel design and construction arm of Chinese conglomerate Dalian Wanda Group, will open up to 35 hotels this year to continue expanding its network despite a profit decline in 2022.

The Hong Kong-based company will start operating from 30 to 35 new hotels in 2023, it said in its earnings report issued yesterday. Wanda Hotel's net profit fell 7 percent to HKD232 million (USD29.6 million) in 2022 from 2021 while its revenue dropped 7 percent to about HKD816.7 million, mainly due to the Covid-19 pandemic, per the report.

Revenue streams from hotel management narrowed by 5 percent to around HKD536 million as occupancy rates as well as average income per room slipped amid the pandemic. However, sales of products and dining services jumped by 16 percent.

New projects were slowed due to Covid-19 outbreaks so revenue coming from hotel design and construction decreased by 9 percent to HKD182 million. Another business segment, property leasing, was also sluggish as short-term rental rates were relatively low and resulted in an income of HKD98.2 million (USD12.5 million), down 9 percent.

Meanwhile, costs surged. Sales expenses rose by 15 percent to HKD473.5 million because of widening product and catering service sales and increases in labor costs and rising investments in property leasing. Hence, the gross profit margin slumped by 10 percentage points to 42 percent.

Wanda Hotel managed more than 120 hotels and nearly 28,660 guest rooms as of Dec. 31, 2022. But more than 230 hotels were still under development then. Its [HKG: 0169] shares suspended trading in Hong Kong today.