CNG Travel issues earnings warning

Kerry-based hotel bookings company CNG Travel, which is quoted on the alternative market in London, has said earnings for 2004 will not meet market expectations.

The company floated on the AIM in May of this year. Founder and chief executive Mr Finbarr Power said earnings for the year were likely to be at the lower end of the $7 million (€5.37 million) to $10 million after-tax profit range suggested by the market.

He said the principal reason was that the margins paid to intermediaries for hotel room bookings were being reduced as a reaction by hotels to increased occupancy in the second half of 2004.

Margins had been increased in an effort to attract custom.

Speaking after the issuing of a statement concerning this year's likely earnings, Mr Power said it was not the type of statement he would aspire to be making in the year CNG had been listed.

"However, we have a responsibility to our shareholders to be above board and to play within the regulations."

The company's share price rose following the statement, supporting Mr Power's view that the likely effect of the reduced margins on the company's earnings was well known to investors.

He said that in a response to the reducing margins the company had increased the roll-out of its proprietary TLC hotel bookings tool.

This had gone well and it was now expected that the tool would be used by 100,000 travel agents in Europe and the US by the end of 2005, he added.

The effect of the roll-out would be to increase the volume of hotel bookings for which CNG would receive a commission, but the effect would not occur in time to compensate for the effect of the margin drop on the 2004 figures, Mr Power said.

"However, we are very pleased with the market acceptance of TLC... We fully expect this momentum to continue as product enhancements are added in the course of the new year."