Cash for Copthornes

07 April 2005 by
Cash for Copthornes

The changing fortunes of hotel brand Copthorne took another turn recently when its parent company revealed plans to re-energise and expand the brand after group profits before tax and exceptionals more than doubled in 2004 to £55m.

Despite having been a hit in the 1980s, the Copthorne brand became somewhat of an also-ran following its acquisition by CDL Hotels International in 1995. After CDL formed Millennium & Copthorne (M&C) as a subsidiary and floated it on the London Stock Exchange in 1996, in essence Copthorne became a motor that was starved of fuel. But now the foot is back on the gas and the company has been given its own management team, headed by Grant Wilkins, formerly operations director of M&C's London hotels.

Wilkins, who as managing director of Copthorne Hotels UK has taken control of the 11 Copthorne properties in Britain along with the two regional Millenniums, admits that the brand has not been much in the group's thoughts in recent years. However, in defence he says it enjoyed some "extremely good" profit and share-price growth after the flotation.

The current focus on Copthorne was born of an asset review begun 18 months ago, which resulted in the decision to remove the brand from the shadow of its stablemate, Millennium. Wilkins has been charged with expanding Copthorne, and management contracts are his weapon of choice - somewhat of a departure for a company which trumpets the merits of bricks and mortar and owns all but one of its 17 UK hotels.

M&C aims to open as many as 25 new Copthorne properties in Britain in the next five years, either new-builds or rebrandings, and all in the 150-bedroom range. One management contract is close to being finalised, with another in Ireland scheduled for completion by the end of year. "But that's not to say that if we found something particularly attractive we wouldn't do an equity partnership deal," Wilkins adds.

Franchises are another option, and Wilkins is passionate about his "man-chise" concept, an extension of the franchise model aimed at hotel owners who want to operate a property under the Copthorne brand but who require a degree of management guidance. "We'll manage the managers of the hotels, rather than deliver full-blown management," Wilkins explains.

Other focuses include plans to "reinvigorate" the food and beverage in underperforming properties by rolling out existing concepts such as CafŽ Express, Brian Turner Grill and the Singapore-style buffet offering, Bugis Street, along with new offerings such as Tangerine. While Wilkins has yet to come up with a detailed refurbishment programme, capital expenditure is back on the cards. A meetings package is planned for later this year, the ageing leisure facilities are being assessed and he is also looking at items such as new beds.

All 13 of Wilkins's general managers have been tasked with heading a separate Copthorne initiative as the company goes back to basics but, as Wilkins readily admits: "None of this is rocket science."

Such activity, after relative dormancy, often suggests that a company is being primed for a sale, and some commentators have been busy putting two and two together. But Wilkins stresses this is "separation with a little ‘s'", adding that M&C has no plans for opportunistic sales of its UK assets at present. And a sell-off would certainly be out of step with chairman and majority shareholder Kwek Leng Beng's usual policy of hanging on to assets.

There is little pressure on the company to sell, either. Having bought Copthorne for a keen £219m in 1995, the flotation of M&C the following year more than paid for the purchase and, with Kwek retaining a 52% share, M&C is essentially bid-proof. The rest of the shareholders received a sweetener in the shape of a 12.5p dividend following the release of the latest figures.

The focus for Copthorne - "us and everyone else," laughs Wilkins - remains the mid-range corporate market. "The UK market is not congested and the economy is improving - there's plenty of opportunity for us to grow Copthorne in the midmarket," he says. "The main challenge is to get out there and widen the knowledge of our brand, and improve our products and services."

He concludes: "It's basically about focus - bringing focus to all levels. In the past few years, dare I say, it has been there but not to the extent I intend to bring to the table. Copthorne hasn't gone to sleep - I see this as a huge opportunity."

Source: Caterer & Hotelkeeper magazine, 07 April 2005

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