Earnings for resort operator Banyan Tree Holdings have taken a hit from higher provisions for doubtful debts in China, and lower contributions from hotel investments in the Maldives, Phuket and China after the dive in Russia's rouble and slowdowns in China and Europe.
The firm swung into the red with a loss of $18.4 million in the fourth quarter ended Dec 31, from a net profit of $4.1 million a year earlier.
This was also due to an absence of fair value gains on investment properties and higher finance costs.
For the quarter, loss per share was 2.41 cents, compared with earnings per share of 0.54 cent. Net asset value per share was 72 cents as of Dec 31, compared with 75 cents a year earlier.
Banyan Tree executive chairman Ho Kwon Ping said: "2015 was the perfect storm for the Banyan Tree Group. We started the year with great momentum in property sales and hotel bookings.
"But due to a confluence of factors, ranging from the devaluation of the Russian rouble to problems in many of our source markets as well as stoppages in hotel design projects affecting our fee-based income, we posted the worst loss in our history," he said.
"The Russia-Ukraine crisis and the rouble's sustained weakness led to a very severe downturn in Russian outbound tourism.
"Quite a number of Russian travel agencies went bankrupt and Russians were high-paying guests. That affected our resorts in Phuket and Maldives. We also have a lot of Russian property buyers, and we're hoping those who paid advances won't walk away from their purchases."
Revenues rose 34 per cent to $123.2 million for the quarter due to property sales on the completion of Cassia Phuket and Laguna Park. But this was offset by lower hotel management fees and spa/gallery operations as well as reduced architectural and design fees owing to China's slowdown.
"A number of projects in the middle of being designed in China for hotels that were supposed to open in one or two years were completely stopped by the owners due to a shortage of cash," Mr Ho said.
For the full year, Banyan Tree suffered a net loss of $27.5 million, reversing a net profit of $1.02 million a year earlier. Revenue rose 13 per cent to $370.7 million.
Full-year allowances for doubtful debts surged to $16.3 million from $3.7 million a year earlier.
"The biggest component is hotel management fees that have been delayed for a considerable amount of time, which we hope can be recovered, but have decided to write off," Mr Ho said.
"We are still pursuing all avenues to recover debts through lawsuits, arbitrations and negotiations. But given the current economic environment, we think it's more prudent to write off as much doubtful debts as possible."
Thailand has proven to be quite resilient despite last year's bombings.
"We have close to 95 per cent occupancy in Bangkok, and Chinese outbound travel to Thailand is overwhelming," he said.
On the latest restructuring effort, Mr Ho said it was done to "de-layer" the bureaucracy, which affected its ability to quickly respond to a prolonged downturn. "We couldn't reduce prices tactically because a lot of pricing changes had to be approved centrally."
This article was first published on February 26, 2016.
Get a copy of The Straits Times or go to straitstimes.com for more stories.