Millennium & Copthorne Hotels PLC (LON:MLC) has warned that it will take around a £20mln hit to profits after deciding to close the Millennium Hotel London Mayfair entirely during the remainder of its refurbishment programme so as to accelerate the works to reposition the property within a new luxury competitive set.
The FTSE 250-listed group said the refurbishment started in November 2017 as a phased process and the hotel was closed entirely at the beginning of July 2018.
It added that the hotel, which had 336 rooms prior to the refurbishment, is scheduled to reopen in the first quarter of 2019 with 315 rooms.
The hotels operator pointed out: “The impact of the project on Group revenue for 2018 is estimated to be approximately £2mln, with a consequent impact on hotel operating profit. As a result, Group profit for the current financial year is anticipated to be commensurately lower.”
The group noted that the overall performance at its other London hotels for the second quarter of 2018 also continued to be weaker than last year due to lower revenue and continuing cost pressures.
The firm said interim trading results are currently scheduled to be released on 3 August 2018.
Despite the profit hit, Millennium & Copthorne shares were up 1.1% at 524p.
At the start of this year, Millennium & Copthorne saw a takeover bid by its majority shareholder City Developments Ltd fall flat after shareholders rejected its final offer of 620p a share in cash.
City Development's £2bn offer was conditional on it securing more than 50% in valid acceptances. The offer received valid acceptances in respect of 47.14% of Millennium & Copthorne's issued share capital not already owned by City Development.