M&C profits nosedive sparks sales speculation
A 70% decline in profits at hotel group Millennium & Copthorne (M&C) has led chairman and majority shareholder Kwek Leng Beng to signal the possible sale of some of its properties.
As the group published its preliminary results for the 12 months to 31 December 2003 last week, Kwek revealed that the group had launched a review of its assets that could lead to the sale of some of its underperforming hotels.
London's Copthorne Tara, in Kensington, could be one of those properties. Chief executive John Wilson singled out the 832-bedroom hotel as having a direct negative effect on performance last year.
He explained that a decline in inbound and outbound flights to the UK had lost the hotel 16,000 aircrew room nights in the first half of the year, hitting occupancy and room rates.
For London as a whole, occupancy dropped by 2.2 percentage points to 80.9% during the year. Average room rate was down by 7.5% to £73.85, leading to a revenue per available room (revpar) decline of 10% to £59.74.
Across the group as a whole, occupancy dipped by 2.1 percentage points to 65.1%, with average room rate down by 6.3% to £61.60 and revpar down by 9% to £40.10.
Turnover fell by 7.8% during the period to £523.1m, while pre-tax profit plummeted to £18.7m, compared with £60.2m in 2002.
Despite "a year of very difficult trading", Kwek said that the outlook for 2004 was positive. "We are confident that our performance in the current year will improve significantly as we take advantage of the more stable economic environment," he said.
