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Intosol excited about new hotel business model after making first-quarter progress

South African travel group generated €1.8mln of revenue in the three months to end-April, which it said was usually the low season for luxury travel

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Intosol opened SOUL Rainbow’s End in Knysna on South Africa's Garden Route in April

Intosol Holdings PLC (LON:INTO) shares rose on Monday as the firm said it has seen a double-digit increase in bookings to its boutique hotels in the first quarter and predicted that its new business model will deliver higher margins for the year ahead.

The South Africa-based luxury travel group, which floated in London last October, generated €1.8mln of revenue in the three months to end-April, which it said was usually the low season for luxury travel. No comparative figure was given for the comparative quarter but for the whole of last year Intosol generated €7.182mln revenue and a loss of €1.8mln.

READ: Intosol targets more acquisitions, expansion beyond South Africa

Executive chairman Rainer Spekowius said “excellent progress” was made in the group’s SOUL Private Collection portfolio of owned and managed boutique hotels in South Africa during the quarter, with a 15% increase in guest bookings compared to the first quarter last year.

More significantly, Spekowius predicted a driver of improved financial performance will be the new business model for the hotels business, where existing rental properties are being replaced by new properties on management contracts that are based on a 35% commission on bookings and a profit share, such as the opening of SOUL Rainbow’s End in Knysna in April, which he said would ensure higher margins and capture additional upside from commission on bookings.

Other revenue streams are also being developed, with discussions being held with US tour operators and with villa and estate owners within and outside South Africa regarding potential management and marketing contracts.

Ahead of the October-January high season, Spekowius has also begun tweaking the Private Travel Design division to drive increased revenues, including expanding the team and the list of travel locations as well as “progressing negotiations with potential international partners to establish global divisions” and “actively reviewing potential acquisition targets”.

“With this in mind, we believe we now have the right model in place to see continual improvements in our financial performance as we move into the high season and look forward to providing updates on progress.”

In morning trading, shares in Intosol were 8.6% higher at 38p.

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Quick facts: Intosol Holdings PLC

Price: 22.5 GBX

LSE:INTO
Market: LSE
Market Cap: £2.97 m
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