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Millennium & Copthorne Hotels blames challenging trading for slump in profits

Millennium & Copthorne Hotels said it is taking action to improve its competitiveness and cut costs

 Millennium & Copthorne
M&C is searching for a new chief executive after Jennifer Fox's abrupt departure

Millennium & Copthorne Hotels PLC (LON:MLC) said higher costs and challenging trading conditions led to a 38.2% plunge in third-quarter profits.

Pre-tax profit in the three months to September 30 totalled £34mln on a reported basis, down from £55mln a year ago.

Total reported revenue declined 3.8% to £253mln with hotel revenue down 3.5% to £223mln and revenue per available room (RevPAR) down 2.8% to £87.23.

M&C said the decrease in RevPAR was driven by an 11.5% fall in London due to the closure of its Mayfair hotel, which is being refurbished to become a five-star hotel.

READ: Millennium & Copthorne Hotels CEO steps down after just three months

 “The hospitality sector is facing challenging trading conditions, including significant supply growth, technological ‘disruption’, industry consolidation and rising minimum wage requirements and labour costs in key jurisdictions,” said chairman Kwek Leng Beng.

“These challenges, which are impacting the availability of talent and reducing margins, are exacerbated by geopolitical headwinds, such as the uncertainty surrounding Brexit and global trade tensions. “

Leng Beng said the hotel operator would address its issues through product innovation, tighter cost control and flattening the management structure to improve its competitiveness.

He added that the group would also focus on delivering value from capital expenditure projects, including the Mayfair refurbishment and the development of a new hotel and residential apartment complex in Sunnyvale California, which broke ground in October.

M&C is searching for a new chief executive after Jennifer Fox stepped down from the role in September after just three months in the top job, providing no reason for her abrupt departure.

The company has appointment Tan Kian Seng as the interim chief executive until it finds a permanent replacement. 

Quick facts: Millennium & Copthorne

Price: 687 GBX

Market: LSE
Market Cap: £2.23 billion

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