Underlying performance by properties comprising Millennium & Copthorne Hotels was flat last year despite group pre-tax profits rising by 36% to £147 million.
The group suffered from political instability in Korea, “unabated” growing demand for online travel agents and alternative accommodation options plus rising costs impacted by Brexit.
A bid for the M&C from its majority shareholder, Singapore-based City Developments Limited (CDL), lapsed last month after minority shareholders rejected the offer.
M&C chairman Kwek Leng Beng said today: “We respect the decision by shareholders in the recent lapsed offer by City Developments Limited.”
His comments came as M&C reported that total revenue for 2017 grew by 8.9% to top £1 billion, including foreign exchange gains of £46 million.
Hotel revenue increased by 8.1% to £880 million, mainly due to foreign exchange gains of £39 million and full-year contributions from Millennium Hilton New York One UN Plaza which re-opened in September 2016 after refurbishment, and Grand Millennium Auckland which joined the group at the same time.
Group revenue per available room rose by 7.9% year-on-year to £76.71 but fell in the fourth quarter of 2017 by 1.1%.
Kwek Leng Beng said: “Underlying hotel performance was flat last year.
“Foreign exchange gains relating to hotel revenue totalled £39 million arising from weaker sterling, which is our reporting currency, against currencies in the regions where we operate.
“The increase in 2017 hotel revenue was attributable mainly to a full year of trading at two of our hotels – Millennium Hilton New York One UN Plaza, which re-opened post-refurbishment in September 2016, and Grand Millennium Auckland, which joined the group in September 2016.
“Performance was impacted by industry-wide factors, including political instability in Korea, the unabated growth in popularity amongst customers of online travel agents and alternative lodging options; and rising costs, especially in London, where Brexit is impacting a hospitality labour market already affected by minimum wage legislation.
“Our New York business will take some time to restore profitability in light of strong union operating environment, union driven wage increases and the continuing growth in room supply.”
He added: “The group expects to make significant capital investment for a needed transformation to the repositioning of our hotels so as to keep pace with guest expectations.
“Increased expenditure on both maintenance and product improvement will therefore be necessary for the group to stay relevant and competitive. We also remain alert to opportunities to grow by acquisition.”
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