Political and economic uncertainty leads to decline in revpar at Millennium & Copthorne Hotels

Group revpar fell by 2.6% in the first quarter of 2016 at Millennium & Copthorne Hotels compared to the same period last year, according to its first quarter results for 2016.

The fall was driven by lower occupancy and room rates in most regions, including New York, London and Singapore.

Chairman Kwek Leng Being commented: "Our hotel trading performance in the first quarter of 2016 was weaker than last year, with disappointing results from a number of hotels in major gateway cities. The decline in performance reflects challenging conditions facing some hospitality markets as a result of political and economic uncertainty, structural change within the industry including the growth of ‘sharing economy' lodging, online travel agencies and industry consolidation."

Revenue for the period, however, increased by £3m (or 1.6%) as a result of the sale of land in Christchurch, New Zealand, an increased contribution from Millennium Mitsui Garden Hotel Tokyo, foreign exchange movements, as well as an increase in REIT revenue following the acquisition of the Hilton Cambridge City Centre in October 2015. These higher incomes were partially offset by lower hotel revenue, which fell by 2.9% in the first quarter of 2016.

Profit before tax fell by £1m (or 5.3%) for the period, reflecting lower hotel revenue offset by the property gains.

Kwek concluded: "The group has responded to conditions with a number of key senior executive appointments below board level, including a global head of branding and marketing, regional heads in Asia and the US and a chief financial officer, who will be joining in July. Once they have familiarised themselves with the group's business, these senior executives will implement our core strategy of driving revenue and profit from owning and operating hospitality assets over the long-term. This includes sharpening the brand offering through a recently relaunched online sales platform and loyalty programme as well as seeking ways to increase revenue from food and beverage and meetings and events, which are not included in revpar measurement and represent a substantial portion of the group's hotel revenue. The trading outlook however remains uncertain."

In February, Millennium & Copthorne Hotels reported a 42% drop in profits in 2015 following a raft of challenges to the global hotel market, including terrorism, health alerts and a fall in commodity.

Total revenue at the group, which has more than 20 hotels in the UK, and operates globally in countries including America, France, Italy, across Asia, and the Middle East, stood at £847m for the full year to 31 December 2015, up 2.5%. Pre-tax profit was down 42% to £109m, and revpar was broadly flat at £71.98 (up 0.6% on the year before).

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Revpar decline pulls down profit by 9.3% at Millennium & Copthorne Hotels >>