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Global RevPAR declines by 18.2%; NY, S’pore hotels worst hit

MILLENNIUM & Copthorne Hotels (M&C), the London-listed hotel subsidiary of Singapore property group City Developments, has posted a 47.2 per cent drop in net profit to £8.6 million (S$19 million) for the first quarter ended March 31, 2009 compared with Q1 2008.

The net profit attributable to equity-holders of the parent is £6.9 million, a drop of 51 per cent compared with the year-ago period.

Revenue dipped 2.2 per cent to £157.1 million.

M&C’s global revenue per available room declined by 18.2 per cent in Q1 2009 over the same year-ago period, on constant currency basis, with near commensurate declines in revenue.

The group’s hotels in New York and Singapore were worst hit, with RevPAR sliding 37.8 per cent and 30.6 per cent respectively in Q1 2009, in constant currency terms.

Performance in London, the group’s other key gateway city, was more resilient, with a marginal 0.2 per cent dip in RevPAR in Q1.

Three of the group’s hotels in Asia saw improvements in RevPAR, namely the Grand Millennium Kuala Lumpur, Copthorne Penang and Millennium Seoul Hilton. The Seoul property has been benefiting from an influx of foreign visitors, especially Japanese, as a result of the weak Korean won.

In November last year, M&C announced its agreement for the disposal of the Seoul hotel to Kangho AMC Co was terminated as the buyer was unable to finalise its financing arrangements by the extended completion date amid the global financial turmoil. But on the flip side, M&C got to keep the 59 billion won (S$68 million) non-refundable deposits that it had collected from Kangho.

In M&C’s Q1 2009 results statement yesterday, chairman Kwek Leng Beng said: ‘Under current market conditions, our focus is on achieving at least fair-market share within each hotel’s pre-defined competitive set and maintaining a tight control over all operating costs.’

He said that the Q1 2009 trading environment was ‘predictably challenging’ in light of generally worsening global economic conditions.

On a positive note, he said: ‘We have strong cash generation from operations of £13.6 million, have continued to control tightly capital expenditure and maintain a strong balance sheet and low gearing of 15.9 per cent.’

M&C’s gearing as at end-Q1 2008 was 17.7 per cent.

Earnings per share slid from 4.8 pence in Q1 2008 to 2.3 pence in Q1 2009

‘At constant rates of exchange and on a like-for-like basis (that is, excluding the refurbishment of Boston and Chicago), hotel gross operating profit decreased by £18.8 million compared to a fall in revenue of £34.4 million, resulting in a satisfactory conversion ratio of 45.3 per cent. This was due in part to the continued focus on cost control and our profit protection plans,’ Mr Kwek said.

Source : Business Times – 7 May 2009