Millennium & Copthorne Hotels suffered a £19 million plunge in profits in the first nine months of the year amid “challenging” trading conditions for the hospitality sector.
The hotel group, which saw former CEO Jennifer Cox stand down in September after just three months in the job, reported mixed trading results exacerbated by Brexit uncertainty and global trade tensions.
Pre-tax profit for the nine months to September 30 fell to £99 million from £118 million in the same period last year.
Reported hotel revenue was down by £22 million or 3.4%, reflecting a stronger pound against the group’s main trading currencies.
Total revenue fell by £18 million or 2.4% to £730 million as group revenue per available room (revpar) declined by 3.8% to £79.26.
Like-for-like group revpar was up by 7.3% for the first 21 days of October.
Chairman Kwek Leng Beng said the company “will take time to consider and search carefully” for the next CEO, “who must not only have relevant experience, but must also embrace and drive forward the group’s business model as a niche owner-operator”.
In the meantime, Tan Kian Seng has been reappointed as the interim group CEO. He has more than 30 years of business experience and previously served as finacne chief and president of one of the largest electronic manufacturing companies listed on the Singapore stock exchange.
“His overall management skills and strong financial background will contribute positively to the group,” Kwek said.
Reviewing the period, he said: “The group experienced mixed trading results for the first nine months of the year, with hotel revenues flat for the period on a like-for-like basis and lower profit due to continuing cost pressures.
“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.
“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.
“The group will address these issues through product innovation, tighter cost control and by flattening the management structure to enhance our competitiveness.
“The group also continues to focus on delivering value from significant capital expenditure projects in addition to the repositioning of the Mayfair property as a five-star deluxe hotel and the development of our new hotel and residential apartment complex in Sunnyvale California, which broke ground in October 2018.”
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