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Igreet you on the occasion of the publication of our annual report that presents the results of the business operations of an extraordinarily difficult year. 1999 has been a difficult year indeed, both the managers and the employees met with a long series of hard tests. Being fully aware of the above circumstances, I am pleased to report that we succeeded in surmounting the obstacles in such a manner that we finally attained or at least approached the goals set.
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Dear Shareholders,
The radical transformation and the series of reorganizations carried out early in the year were soon followed by the Kosovo war accompanied by its unpredictable and by all means unfavourable and damaging impact. Despite the rapid measures taken by us in the interest of maintaining the turnover, the revenues diminished, many guests stayed away and we had to reckon with a reduced rate of occupancy. Our total revenues show an increase in excess of 4 per cent, which is a reduction at real value. The continuous weakness of the German currency has also had a negative impact on the revenues that were mostly realized in marks.
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Our hotels work in strong competition, and new high-class buildings provided with the most modern equipment will open nationwide in the near future. Our employees are reporting the refurbishment and renovation needs of the Danubius buildings - and they are right. If we consider it more closely, the HUF 2.2 billion spent by the Company on refurbishment and revenue-increasing projects this year is not an inconsiderable amount. We can, however, still not be satisfied with the pace and the programme of the renovation activity. I would be pleased if the joint will concentrated on attaining the common goal was enforced in a more pronounced way than what had been experienced until now.
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The profit generated from the operation of hotels was less in 1999 than in the previous year. Nevertheless, to arrive at a realistic assessment, we have to take into account that the rate of depreciation of the real properties let on lease was amended from 2.5 to six per cent, and this reduced the profit by HUF 580 million. Although, the above measure has a cost-increasing effect, it really represents tax saving for us. We can use the amount saved this way to cover the costs of the current and planned renovation works.
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Iam pleased to mention that we took possession of Hotel Villa Butterfly located at Mariánské Lázne in the Czech Republic, which meets the expectations felt towards Danubius from the respect of both its profile and quality. The hotel, built with attentive care and in good taste, stands in a wonderful natural environment which, according to our plans, can also operate successfully as an especially beautiful conference hotel.
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Difficult years burdened by the impacts of war and interspersed with reorganizations will also come to an end at last. Our employees worked honestly, it did not depend on them that 1999 brought less than we expected. It is said that those who lose heart cannot see the possibilities under their very nose. A time-tested professional team like ours has much creative force. We hope that after high mountains now we will have to climb low hills, and we shall succeed if we want and support each other. I wish all of you good health, love of work and success for the next two thousandth year.
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Sándor Betegh
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