Mandarin Oriental International profits down due to closure of flagship Hong Kong hotel

Mandarin Oriental International has reported a 6% drop in underlying profitability for 2006 due to the nine-month closure of its flagship property in Hong Kong.

EBITDA (earnings before interest, tax, depreciation and amortisation) dropped to US$116.4m (£60.3m) from $124m (£64.2m) in 2005 due to the nine-month refurbishment of the Mandarin Oriental Hong Kong.

The company said lost earnings from the closed site had been partially offset by improvements in other subsidiary hotels, with the Excelsior, Hong Kong and the group's European properties having benefited from higher room rates and rising occupancy rates.

Since reopening in September 2006, the Mandarin Oriental Hong Kong has achieved a 50% increase in its average room rate compared with the same period in 2005, the company claimed.

Mandarin Oriental said its development strategy for 2007 was inline with expectations, with 14 hotels currently under way.

Chairman Simon Keswick said: "Overall market demand is expected to remain strong in 2007 with limited new hotel supply in most destinations."

Mandarin Oriental recently completed the sale of the Mark hotel in New York for $35m (£18m). Earlier this month, the company sold half of its 50% investment in Mandarin Oriental New York for $16m (£8.3m).

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By Kerstin KÁ¼hn

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