Opposite Impacts

In 1999, the business operations of Danubius Hotels Rt. were defined by the practical implementation of the reorganization of the Company, the operation of the former two hotel chains (Danubius Hotels and HungarHotels) as an integral whole, considerable changes in the depreciation policy, the negative impact of the Kosovo crisis on the main season and a lower-than-expected change in the exchange rate of the German mark. Despite all this, our Company improved to -0.6 percentage points the reduction in occupancy which had amounted to more than 3% at the lowest point, produced sales receipts and a balance sheet net profit figure exceeding the base, effected developments through the purchase of new hotels (Hotel Nádor Pécs, Hotel Villa Butterfly at Mariánské Lázne and through an increase in profit-sharing (Hullám Kv.) and laid careful emphasis on the standard-raising reno-vation of the existing network and on expansion promoting the introduction of new services.

Changed Organizational Structure

The Danubius Hotels Group has, since January 12, 1999, been operating on the basis of the resolutions of the Extraordinary Shareholders´ Meetings held on December 18, 1998, in a changed organizational structure, with a change in the names and activities carried out at its two subsidiaries. Of its two subsidiaries specialized in two different activities, Hungária Szálloda-Ingatlankezelő Rt. (formerly: Hungária Szálloda Rt.) is engaged in the management, development and letting of real properties, while Danubius Szállodaüzemeltető és Szolgáltató Rt. (formerly: Helia Szálloda Rt.) is engaged in the operation of leased hotels. For the establishment of the new organizational structure, the real properties have been regrouped as contribution in kind (Danubius Rt. and Helia Rt. brought assets into Hungária Rt.), while the assets and the inventories, at market value (from Danubius Rt. and Hungária Rt. to Helia Hotel Rt.).