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M&C reviews earnings profile to develop strategic plan as room revenue drops
MILLENNIUM & Copthorne Hotels Plc's (M&C) new chief executive officer Jennifer Fox said on Friday that she was reviewing the company's "earnings profile" and would develop a strategic plan after the hotelier was hit by lower room revenue.
The company also expressed caution over the negative effects of Britain's planned departure from the European Union and escalating trade tensions between the United States, China and Europe.
"In the past six weeks I have been reviewing the earnings profile and potential of our most important properties. A strategic plan currently is being developed," said Ms Fox, who took over as CEO in April.
However, M&C said this will not affect its plan to step up investment at its hotels.
In addition to intense competition from holiday home rental startups such as Airbnb, traditional hotel operators such as M&C face sluggish demand stemming from Brexit, while rising labour costs add to the pressure.
Like-for-like revenue per available room (RevPAR) dropped one per cent in the first 21 days of trading in July, but it rose 8.9 per cent in London, the company said. RevPAR, on a constant currency basis, fell 3.5 per cent in the period.
Profit before tax rose 3.2 per cent, on a reported currency basis, to £65 million (S$115.6 million) in the six months ended June 30, while total revenue fell 1.6 per cent to £477 million.
RevPAR fell 4.3 per cent to £75.29 million in the half year, with a steeper 5.3 per cent fall in the second quarter.
M&C was the target of an unsuccessful £2 billion buyout offer by its chairman and Singaporean billionaire Kwek Leng Beng, which was blocked by minority shareholders in January.
Shares of the company were little changed in early trading on Friday on the London Stock Exchange.
The company warned last week that its annual operating profit would be lower than expected as its London Mayfair hotel was closed for refurbishment.
M&C had also flagged weaker performance at its other London hotels in the second quarter due to lower revenue and continuing cost pressures. REUTERS