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Millennium & Copthorne cuts dividend as it braces for another challenging year

In constant currency, group RevPAR for 2018 increased by 0.7% to £81.57 (2017: £80.97). Like-for-like group RevPAR for 2018 increased by 2.4% from 2017

Hotel on Mayfair
During 2018, the closure of the Mayfair hotel resulted in the reduction of the Group's revenue and operating profit of £20m and £12m respectively.

International hotels group Millennium & Copthorne Hotels PLC (LON:MLC) cut its dividend and said 2019 would be another challenging year for the group.

Results for the fourth quarter of 2018 showed revenue per available room (revPAR) rose to £88.49 from £85.15 (on a constancy currency, or CC, basis) in the corresponding quarter of 2017.

READ Millennium & Copthorne Hotels blames challenging trading for slump in profits

For the first 28 days of January 2019, group revPAR in constant currency was up by 1.2% year-on-year.

Total revenue rose to £267mln from £265mln (CC basis) the year before but profit before tax slumped to £7mln from £30mln, dragging profit for the whole year down to £106mln from £147mln in 2017.

The hotels operator said profits took a hit of £36mln in 2018 (2017: £29mln) reflecting net revaluation and impairment charges.

A final dividend of 2.15p has been recommended, down from 4.42p the year before, making the full-year pay-out 4.23p, down from 6.5p in 2017. The company said the dividend cut reflected the group’s current cash position and future capital expenditure requirements.

The consensus forecast for the full-year dividend was 7.16p.

"The hospitality industry faced a range of geopolitical and global economic headwinds in 2018, many of which look set to continue in the current year, including US/China trade relations, Brexit and increasing minimum wage levels in many jurisdictions,” said Kwek Leng Beng, the chairman of M&C.

“The board's priority is to evaluate and develop new and innovative strategic plans to meet the challenges facing our fast-changing operating environment. The shortage of talent-from rank and file to senior management-is intensifying with many new hotels being built around the world, not to mention the growth of Airbnb and serviced apartments,” he added.

“Any hospitality business that wants to progress will need to evolve and embrace these changes to stay relevant and profitable in the immediate and medium term. Restoring profitability in our New York hotels also remains at the top of the board's objectives,” he declared.

Shares in M&C opened 4p higher at 461p.

Quick facts: Millennium & Copthorne

Price: 687 GBX

LSE:MLC
Market: LSE
Market Cap: £2.23 billion
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