Millennium & Copthorne Hotels today warned that political and economic challenges in Asia are likely to impact on its performance.
The caution came as the company, which relies on Asia for more than 40% of group revenues, reported a £9 million drop in first quarter pre-tax profits to £16.9 million on revenue down by £3.3 million to £169.2 million.
M&C suffered from travel disruption due to severe winter weather in Europe and the US in the three months to March 31 while regional tensions hit business at its property in Seoul in Korea.
Chairman Kwek Leng Beng said: “Although group RevPAR [revenue per available room] increased by 1.6% over the three months ended 31 March 2013, revenue declined due to a number of factors, which are unlikely to abate in the foreseeable future.
“Asia, which accounted for over 40% of group revenues last year and has led our revenue and profit growth in recent years, is facing a number of political, economic and other challenges that are likely to impact performance.
“Europe also continues to face challenges as a result of austerity programmes and the ongoing fallout from the financial crisis.
“In addition, our ongoing refurbishment programme will reduce group revenue and profits as rooms are taken out of the network over the course of the programme.”
However, he added: “Against this challenging backdrop, the group’s strong financial position equips us to overcome the ongoing economic headwinds and gives us flexibility, both to act quickly on attractive acquisition opportunities and to support our asset investment activities.”
The group plans to refurbish and reposition the Millennium Hotel London Mayfair and revamp the interior of Millennium Hotel London Knightsbridge.