Millennium & Copthorne Hotels doubles Q1 profit

Gains from sale of Aussie assets boost pre-tax profit to $47m

The gain from selling Australian assets helped Millennium & Copthorne Hotels (M&C) double profit before tax in the first quarter in constant currency terms.

Profit came in at £26 million (S$47 million) for the three months to March 31, it reported yesterday.

The increase was helped by a gain of £3 million from the disposal of two Australian hotels owned by CDL Hospitality Trust (CDLHT).

Another boost came from profit contributions from CDLHT and associated company First Sponsor Group, which were £3 million higher than the previous year.

Hotel revenue rose 3.9 per cent, helped by higher contributions from Millennium Hilton New York One UN Plaza, which was rebranded in August last yea, and M Social Auckland, which opened in October.

Revenue rose 3.3 per cent to £217 million in constant currency terms. However, cost pressures continue to impact profitability at its New York hotels, said M&C, the hotel arm of City Developments.

In constant currency terms, group revenue per available room (RevPAR) grew by 3.2 per cent to £68.48. RevPAR for Europe fell 4.2 per cent, but rose 4.7 per cent for United States hotels, 3 per cent in Asia and 11.1 per cent at the Australasian outlets.

The £40 million refurbishments at Millennium Hotel London Mayfair that began last November are proceeding as a phased project, where rooms are taken out from the inventory in stages.

M&C expects completion in the fourth quarter, which will be followed by refurbishment of the lobby and public areas.

Refurbishment plans for Millennium Hotel London Knightsbridge are under review.

It also plans to spend about US$80 million (S$106.5 million) to upgrade its New York properties over the next two years.

The group added that it had subscribed for its full entitlement of First Sponsor's rights issue of new perpetual convertible capital securities for a total of $58.2 million. The securities were allotted on April 19. M&C has an effective interest of 36 per cent in Singapore mainboard-listed First Sponsor.

M&C chairman Kwek Leng Beng noted the "mixed" performance over the first three months of the year.

"London declined and Europe is showing indications of weakness, while our Millennium Broadway New York hotel continues to hold back overall trading performance in New York," Mr Kwek said.

On a brighter note, he added that Asia had shown signs of recovery and its New Zealand properties continue to "perform well".

"We are on track to move forward on a number of significant capital investment projects this year, designed to improve returns on group assets. We also remain alert to acquisition opportunities," added Mr Kwek.

M&C announced last month that it had appointed ex-Fairmont Hotels & Resorts president Jennifer Fox as group chief executive and a director with effect from June 19.

She takes over from interim CEO Tan Kian Seng, who has held the role since February last year and will remain with the group as chief of staff and assume other executive responsibilities.

A version of this article appeared in the print edition of The Straits Times on May 05, 2018, with the headline 'Millennium & Copthorne Hotels doubles Q1 profit'. Print Edition | Subscribe