Uncertainty leads to decline in revpar at Millennium & Copthorne Hotels
Group revpar fell by 4.2% in the first half of 2016 at Millennium & Copthorne Hotels compared with the same period last year, according to its half year report for 2016.
The fall was driven by decreases in both occupancy and average room rate of 1.4% points and 2.2% respectively, including New York, London and Singapore.
The group reported a revpar decline of 2.6% in the first quarter of 2016 in May due to political and economic uncertainty.
Total revenue for the first six months, however, grew by 3.5% to £418m, in part reflecting higher land sales in New Zealand and an increased contribution from Millennium Mitsui Garden Hotel Tokyo, as well as an increase in REIT revenue following the acquisition of the Hilton Cambridge City Centre in 2015.
Hotel revenue declined by 1.4% to £360m during the first six months of 2016. In constant currency, hotel revenue declined by 4.3% during the same period, while hotel operating profit fell by 21.7% to £47m.
Europe revpar for the first half of 2016 dropped by 4.1% to £71.24, in part due to the effects of recent terrorist attacks. London revpar fell by 5.3% with a 1.6% point drop in occupancy and 3.3% reduction in average room rate. Similar to Q1 2016, the main exception for the group's London properties was the Bailey's Hotel London where, following refurbishment in 2015, higher room rates drove a 21.8% increase in revpar for the period.
Millennium & Copthorne is also reviewing the timing and scope of the Millennium Hotel London Mayfair and Millennium Hotel London Knightsbridge refurbishment programmes.
Chairman Kwek Leng Beng said: "We are disappointed by our hotel operating performance during the first half of 2016, particularly in New York and Singapore, which remain areas of focus for the group. The UK Referendum vote to leave the European Union, together with recent terrorist activity, has further intensified uncertainty over the direction of the global economy.
"The group has a history of successfully navigating difficult economic environments given its broad geographic exposure and strong balance sheet. Against a backdrop of economic uncertainty, we are adopting a prudent strategy to protect the group's strong financial position, including a review of capital expenditure, while taking appropriate steps to strengthen areas of operating weakness."
Political and economic uncertainty leads to decline in revpar at Millennium & Copthorne Hotels >>
