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ROK hotel hauls in $575m for PanJam

ROK Hotel earned $575 million in revenue during its initial six months of operation, with owner PanJam projecting a short path to profit.

“Both occupancy and income from food and beverage surpassed our expectations,” said PanJam Investment Limited CEO Joanna Banks.

The property and investment conglomerate owns 100 per cent of the ROK Hotel which forms part of the redevelopment of downtown Kingston. Prior to its acquisition by PanJam, the waterfront property overlooking the Kingston harbour hosted the offices of the Ministry of Health, and before that it operated as the Oceana hotel.

“We are a game changer in Kingston and our setting at ROKstone Bar & Grill overlooking the harbour is indeed providing a new vibe…,” said General Manager Jaap van Dam in response to a 5-star review of the hotel on Tripadvisor.

ROK Kingston, which is part of the Tapestry Collection by Hilton network, as part of its interior design, uses modern intuitive art to complement the hotel’s d?cor.

Art as a design motif has gained favour as a method of bringing life to modern minimalist hotels. For instance, the Issa-controlled Spanish Court uses a classic car as a prop and vibrant reggae posters to tell a Jamaican story throughout the hotel. Also, the Adam Stewart-controlled AC by Marriott Hotel features floor-to-ceiling local art that adorns the lobby. And the R Hotel developed by architect Evan Williams contains its own art gallery.

ROK Hotel earned $575.3 million in revenue between mid-July and December, with 45 per cent coming from rooms, 32 per cent from food and beverage, and the rest from other services. On the cost side, however, the hotel racked up $804 million in expenses.

But PanJam says the hotel remains on a path towards operating profit this year.

“As with all new hotels, the ROK Hotel incurred pre-opening and ramp-up costs that exceeded normalised operating expenses. We expect the hotel to at least break even in 2023,” Banks said.

PanJam also operates another business hotel in Kingston, Courtyard by Marriott, located in the business and financial district of New Kingston, but its financial performance is not disclosed by PanJam, which is a part-owner of the hotel.

“The Courtyard by Marriott Kingston continued to show improved performance post-pandemic,” said Banks. “However, we do not disclose specific financial information for non-public entities.”

PanJam holds 35 per cent of the Courtyard by Marriott through associated company Caribe Hospitality Jamaica Limited, in which it has an equivalent stake.

Due to the commissioning of the ROK Hotel, PanJam added a new revenue line – hotel management – but the additional half-billion of inflows was lost among the large fallout in the group’s financial portfolio. Market volatility erased more than $2 billion from PanJam’s holdings of investment securities, and produced negative revenue of $759 million for that segment.

That in turn pushed total revenue down from $4.3 billion in FY2021 to $2.35 billion for FY2022, PanJam’s newly released annual results show.

During the financial year, the conglomerate recorded a dip of nine per cent in returns from the associated companies in which it is invested. The decline was due primarily to a fall in profit at Sagicor Group, an insurance conglomerate in which PanJam has a 30.2 per cent stake.

PanJam also sold its one-third stake in sauce maker New Castle Company Limited, which produces seasonings under the brands Walkerswood, Busha Browne’s and Jamaica Joe. The $2.26-billion deal resulted in a gain of $1.38 billion for the conglomerate.

Overall, PanJam recorded a steep decline in yearly profit, which plummeted from $7.2 billion to $4.7 billion at year ending December 2022. The compression reflected a dip in asset prices on its equities portfolio, the company said.

The group’s bottom line profit is often larger than its top line revenue, as most of its earnings come from its share of profit in associated companies. Last year, for example, it earned $4.96 billion from associates. In 2021, those earnings totalled $5.45 billion.

However, that will change once its pending merger with Jamaica Producers Group is effected, which will create a more diversified conglomerate with food manufacturing, and shipping and logistics added to the mix.

As of now, PanJam operates three main business segments: investments, which earned net profit of $4.2 billion; property management and rental, $420 million; and the new hotel management category, which recorded a loss of $229 million.

In 2021, the company earned $6.5 billion from investments; and $533 million profit from property management and rental.

The transaction to merge Jamaica Producers and PanJam is expected to close in a few weeks, by the end of March, paving the way for the amalgamation. It will create a new entity called Pan Jamaica Group Limited, and nearly double the $67 billion of assets that PanJam now has on its books.

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