Saturday, June 09, 2007

TPSEA (Serena) 2007 AGM

TPSEA aka Serena Hotels held their first ever (public) AGM, as the company was listed after the last AGM was held.

The company with with 15 properties (11 owned, 4 managed) is enjoying the ongoing tourist boom. (Sarova should hurry up and take advantage with an IPO while the sector is doing well). 64% of income is earned in Kenya, with improved returns from Tanzania and other properties recorded. But, though Kenya recorded an increase in tourists visiting, a significant number were conference tourists – whose and gains are only felt by Nairobi (not coast or safari) hotels

In a keynote speech, the MD mentioned that they have maintained profitability despite the appreciating shilling, noting that a weakening or the SA rand had provided significant benefits to the south African tourism sector.

He also mentioned that the expansion into the region would cushion the company from company specific risk. Through managing properties (they don't own) in Rwanda and Uganda, they were able to increase awareness of the Serena brand at lower cost – and once those hotels are established and profitable then the group may bid for equity in them.

Future growth plans include Lake Nakuru, Laikipia, and southern Tanzania. The company has also invested in an energy efficiency program that will be completed this year.

The MD called on government to improve on infrastructure (roads) and security while he at the same time lamented that the environmental authorities (NEMA) had approved some lodge expansions that could harm environment and ecosystem.

Shareholders asked:
why company has high retained earnings & low dividend and, increased property investment costs: MD response was that tourism is a high risk business and it is important to keep reinvesting in hotels to maintain premier status and visitor preference. He noted that Kenya used to have four major hotel chains – and that block hotel and AT&H went out of business because they did not make such crucial investments to keep up. Serena must continually refurbish facilities, and must have ready cash since a lot of opportunities come up at short notice. Still, they were able to contain other costs (only 1% increase from the year before)
Serena a market leader? hotels in Nairobi do share information and this confirms Serena's leadership in terms of (revenue per available room), while coast and safari circuit hotel statistics are not easily available - but going by the packages that tour operators put together confirm that Serena properties are marketed as premier packages
corporate social responsibility can shareholders recommend CSR projects to the company? Management said yes as long as projects are in areas where the company has properties. Shareholders can also get discount rates if they book through the Serena offices.

goodies: bonus share, dividend, and a lunch box (with roast beef slice, bottled water, apple & banana, yogurt, boiled egg, cake). I noticed some other shareholders boxes had juice & hamburger as opposed to my water & roast) and I gave my offered my boiled egg (can't eat that) to a lady seated neat to me, who surprised me by giving me her yogurt – fair trade?

See: another past Serena AGM report.


Michael said...

you my friend had the better end of the bargain.Boiled eggs are not good.
Cheers for the update.

MainaT said...

Banks-appreciate the AGM updates. Wonder what sort of discount they give the shareolders? Ksh86 for every 100 shares held?

irena said...

Interesting perspective on Serena's shareholder's queries on why the co, has high retained earnings and low dividend. Speaking of shareholders, there is an interesting article on this week's economist about the shareholders getting tough with boards and managers in corporate America e.g the shareholders of verizon are now calling for an advisory shareholder vote on executive pay
I wonder to what extent are Kenyan shareholders involved in corporate governance ?

bankelele said...

Michael: I agree, but i coudn't take the yoghurt either

MainaT: They only have about 9,000 shareholders (unlike KQ's 80,000+ who ask for free/dicounted tickets each year). The catch is you have to book though Serena office and identify yourself as a shareholder (I'm sure it's 10 - 20%)

irena: I'm seeing a few more activists (as shareholders) questioning a firm's HIV and environmental policies. But beside asking questions on the floor, no one has organized themselves on other fronts. (But do read up on Kakuzi (2007) where minority shareholders tried to stop the company from selling a prime asset

Irena said...

Thanks Bankelele and hopefully the "investor activism" will catch on in Kenya soon.Ahsante, I shall look up the Kakuzi.

irena said...

Oh another Hit plus on the budget which to me was very signigicant was the reduction of licensing regulations. That is major in increasing the number of biz ventures and the heavy regulations that has been place was such a hindrance. This was definitely a hit on this years budget.


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