Millennium & Copthorne Hotels was today braced for another challenging year after cost-cutting measures helped profits to rise 11% in 2002.
The company, which runs upmarket hotels around the world, said any boost to its revenue per available room figure – a key hotel business indicator – would only be slight during the current year.
Hotel operators have suffered from the global economic downturn which has forced companies to cut business travel expenditure.
The fallout from the September 11 terrorist attacks has also kept tourists at home.
Millennium & Copthorne (M&C), based in Horley, Surrey, said the prospect of war in Iraq made it hard to predict if profits would grow this year.
After a confident start to 2002, which saw the spark of a recovery, M&C said its first half performance had been better than expected.
But following the escalation of the Iraq crisis from mid-November onwards, business volumes deteriorated and forced the hotel operator to cut rates in Asia and Europe in an effort to tempt customers.
Pre-tax profits were £60.2m compared with £54.2m in 2001 on turnover which fell 4.5% to £567.5m in 2002.
Profits were aided by tight cost controls, aggressive marketing and the sale of some non-core assets.
The geographic spread of the group’s 91 hotels helped limit the impact of the downturn in the hotel sector which M&C said had been particularly severe in the western hemisphere.
M&C is now much less exposed to the London and New York markets
which account for 25% of revenues compared with 69% in 1998.
The downturn also prompted M&C to offload its Millennium Hotel in Sydney, Australia, which has subsequently been converted into apartments.
A staff hostel in London was sold for £4.2m, making a profit of £4m which the group said would be recognised in its 2003 accounts.
Another partly-completed hotel in Suzhou, China, was sold with M&C
taking a £2.1m share of the profits.
Chairman Kwek Leng Beng added: “Our focus on maintaining market
share coupled with tight cost control has enabled us to achieve a
very creditable set of results in challenging conditions.”
The total dividend was maintained at 12.5p per share.
References: EGi News 05/03/03
