The boss of Millennium & Copthorne Hotels warned of another “challenging year” in 2019 after reporting an annual profit fall of £41 million.

The company took a £12 million hit to operating profits due to the closure of its Mayfair hotel in London for refurbishment.

M&C’s overall pre-tax profits dropped to £106 million as total revenue for 2018 fell by £11 million to £997 million.

Concerns about Brexit have affected the group’s UK hotels especially in London, where they started to face difficulties in recruiting EU workers who currently comprise more than half of its workforce in the capital.

The minimum wage increase that came into force in 2018 further added pressures to the group’s increasing labour costs.

The company is still searching for a new chief executive following the departure of former Fairmont Hotels president Jennifer Fox in September after just three months in the top job.

“We remain open to either hiring an external candidate or promoting talent from within the group,” M&C said.

Chairman Kwek Leng Beng said:”The hospitality industry faced a range of geo-political 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.”

The firm’s priority is to evaluate and develop new and innovative strategic plans “to meet the challenges facing our fast-changing operating environment”.

He added: “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.

“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.

“Meanwhile, we continue to invest in and reposition our hotels.  We look forward to our Mayfair hotel being rebranded and opened as The Biltmore, Mayfair in the second quarter of this year. This is the first opening under Hilton’s new LXR Hotels & Resorts collection in Europe.

“This also will mark the group’s debut in the London five-star deluxe market and it is our aim to fast track our lost earnings growth at this hotel after it re-opens.

“2019 will be another challenging year for the group, with significant capital projects underway and several large hotels earmarked for major renovations.

“These investments will be carefully managed and phased to deliver the right returns to shareholders and underline the group’s intention to maintain strict control of costs throughout the business.”