Monday, March 12, 2007

Reliance all Excited to Expand its Travel & Hotel Development

EXCITEMENT is brewing at diversified travel group Reliance Pacific Bhd as it puts in place plans to expand its travel, hotel and resort development divisions.

Executive director (travel division) Tan Sin Chong expects the current year to be an evenful one for the group.

“Our low gearing and net cash of RM70mil from the sale of Avillion Sydney will provide us with an opportunity for expansion. We will not rule out non-organic growth if an opportunity presents itself,” he told Starbiz.

The group together with IJM Corp Bhd announced the disposal of Avillion Hotel in Sydney for A$115mil (RM322mil) in January.

Gricia Gan
The sale which is expected to be completed in March will result in a gain of RM14mil for Reliance for the financial year (FY) ending March 31, 2007.

Tan, who is also special assistant to Reliance's chief executive officer Datin Irene Tan, said part of the proceeds would be used to offset the group’s RM45mil collaterised loan obligation (medium term loan) due in November 2007.

Finance cost is forecast to reduce to RM10mil for FY2008 from RM26.8mil in FY2007 thus lowering the group’s gearing ratio to 50% from 122% and improving balance sheet and cash flow.

“The proceeds will also be used for business expansion especially in the travel and hotel divisions,” Tan said.

He said Reliance planned to expand its product range and distribution network for the travel division.

One of the initiatives was the launch of Malaysia World, the group’s online shop, specially designed to promote Malaysia as a preferred tourist destination.

It has over 300 domestic gateway products targeting Malaysians, expatriates and Singaporeans. The online website is expected to generate a profit of about RM4mil on revenue of RM40mil this year.

“We are also focusing on expanding our distribution network overseas while for the local market we are moving towards opening more franchises. We currently have 18 franchise offices and target another six in FY2008,” Tan said.

Tan Sin Chong
According to Tan, an area of growth for the group’s travel division is the meetings, incentives, conventions and exhibitions (MICE) logistic planning business.

“The MICE business has been experiencing growth of 10% in revenue in the last five years.

“We have contracts for about 6,000 passengers worth US$12mil to be fulfilled by FY2008. The year-on-year growth trend should continue to exceed 10% per annum.

“We are also planning to penetrate the Indonesian market in FY2008,” he said, adding that China and India were big markets for Reliance.

Another income stream is the travel wholesale business, where the group sub-sells or distribute its travel products and services to agents in their respective countries.

Tan said the group was going all out to grow its wholesale business in Indonesia, India and China.

Reliance started the wholesale business in Indonesia in FY2006 and in India about three years ago.

“We are going to be very aggressive in India and Indonesia not only for travel into Malaysia but to places such as Australia, China and Hong Kong.

“We have always been a regional player for the travel business but we are upping our efforts in these markets,” Tan said.

In December, Reliance was also awarded the sole distributor for Globus and Cosmos in China effective April 1.

“This will give us some time to set up our network in China. We aim to target the more niche upmarket segment in the country.

“The revenue in the first year is estimated to be about US$1.32mil but we expect very high growth in the following years once the products gain a foothold in the market,” Tan said.

Reliance has been the exclusive distributor for Globus and Cosmos in Malaysia and Brunei for the past eight years.

Part of the proceeds will also be used to create a Klang Valley Southern Corridor hub by developing Reliance’s Port Dickson and Malacca properties.

Avillion Hotel Group Sdn Bhd executive director Gricia Gan said the group planned to utilise KL International Airport and Changi Airport to bring in the international traffic.

“We want to use these gateways to attract more people to Port Dickson, where we have the Avillion and Emerald Cove and Malacca where we manage the Legacy Hotel,” she said.

Source : STAR
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