Buoyed by a strong performance at its New Zealand operations, Honolulu-based hotel operator The Castle Group Inc. swung to a profit in the first quarter from a loss in the same period a year earlier.

The Castle Group said it earned $57,414 for the January-through-March quarter, compared to a loss of $47,623 a year earlier.

Revenue increased 8 percent to $4.3 million from $4 million in the first quarter of 2009.

That was driven by a 52 percent rise in revenue to $2 million from $1.3 million at Castle's 249-room Spencer on Byron Hotel in Auckland. Both increased demand and a strengthening of the New Zealand dollar contributed to the revenue increase.

The rise in revenue generated by the New Zealand operations more than offset a 12 percent revenue decline to $2.5 million from $2.9 million at Castle's 22 Hawai'i properties.

Both its domestic and international operations were affected by declining room rates, Castle said in a filing with the Security and Exchange Commission. Castle's international business consists of the Auckland hotel and one in Saipan.

"In response to the worldwide economic recession of 2009 the hospitality business experienced severe discounting as travel companies compete to recapture market share that was substantially reduced due to the worldwide financial crisis," the company said in the filing.

Although the trend of declining visitors has subsided, hotel companies are still being forced to discount rates as part of a "volume strategy to entice travelers to book rooms," Castle said.