KHI delivered strong results in 2008 despite the global economic challenges. We continued to implement our value-enhancing and diversification strategies to deliver financial and operational growth across the group.
Consolidated hotel revenues were up 36% to US$230.9 million while adjusted EBITDA increased 39% to US$94.1 million. We saw robust profit performance from most Middle East North Africa and Sub-Saharan African hotels despite a significant slowdown in the second half of the year. We are proud to have delivered the Four Seasons Mauritius during the year, one of the most exciting additions to our portfolio.
Our ancillary real estate business had another significant year and met its ambitious objectives. We delivered 32 villas at the Four Seasons Mauritius whilst the Four Seasons Nile Plaza and Sharm El Sheikh had consistent residential sales. In Manila, we had a very successful first phase launch in which we sold 111 Raffles Residences (47% of units).
Portfolio rationalization and capital allocation strategy
We pursued our portfolio rationalization strategy by disposing of minority interests in development projects in Dubai and Zanzibar whilst increasing control of our operating hotels in Kenya and Egypt. Secondly, we put on hold or canceled four early stage development projects and reduced our capital requirements by US$300 million.
We have an active capital allocation strategy to safeguard our balance sheet and position KHI as one of the better capitalized players in the sector.
Developments
Following the rationalization exercise, our development pipeline comprises five subsidiary investments that have advanced during the year and are largely funded. We started construction on the Mövenpick Accra, Fairmont and Raffles hotels in Manila as well as the Raffles resort in the Seychelles. We advanced construction at the Four Seasons Beirut and Marrakech.
Well capitalized
I have great confidence in the financial stability of KHI. The Company has a US$256 million cash reserve and has had access to debt funding throughout the year. In addition to the project finance obtained for the Accra, Manila and Seychelles developments, KHI also raised US$158 million in debt commitment at the asset and corporate level, of which US$94 million was drawn down. Despite our confidence, we will not be complacent and are fully aware of the challenges that await us in 2009.
Outlook
The crisis in the credit markets, which unfolded in the summer of 2007, has led to a global economic slowdown. The current climate has reduced visibility on hotel trading and we do not foresee any change in 2009. As Companies have increased their focus on cash and profit protection, we are partnering with our strategic operators to execute a series of profit protection plans. At KHI, we took decisive and early actions to conserve cash, reallocate capital with a view to maintain a strong balance sheet. We have minimized discretionary capital expenditures at all properties as well as real estate sales and marketing spend. Lastly, we have restructured the Company's cost base to a more affordable level whilst we continue to strengthen our capabilities and invest in systems.
Construction of our hotels in Marrakech, Seychelles, Accra and Manila is advancing in earnest. In 2009, we look forward to the opening of the Four Seasons Beirut and remain on track to complete the remaining Four Seasons Private Residences in Mauritius and Marrakech.
