Weak sterling helps Millennium & Copthorne weather tough year

International accommodation operator Millennium & Copthorne posted its final results for the 2016 calendar year on Friday, with group revenue per available room (RevPAR) increasing 6.6% to £76.71.

The FTSE 250 firm said that in constant currency, however, RevPAR fell by 2.3%, and in the fourth quarter of the year, RevPAR in constant currency fell marginally.

Total revenue in reported currency for 2016 grew by £79m or 9.3% to £926m.

In constant currency, revenue was flat, indicating that exchange translation contributed £79m to total reported revenue.

Millennium & Copthorne said the fall in the value of sterling against major currencies during the year following the 23 June 2016 EU referendum had a significant impact on the group's results.

Hotel revenue in constant currency declined by 2.3% to £814m, as a result of lower contributions from the group's hotels in New York and Singapore, while the company recognised £44m of net revaluation deficit and impairment losses, widening from the £43m recognised in 2015.

Of that £44m, £27m related to properties held by CDL Hospitality Trusts and the balance primarily to several group properties located in New York and Rest of Europe.

Reported profit before tax for the year decreased slightly by 0.9% to £108m, while in constant currency, pre-tax profit dropped by 12.9% or £16m.

“Our trading performance in 2016 declined with group RevPAR in constant currency falling in each quarter of the year,” said chairman Kwek Leng Beng.

“Pressure on revenue and profit was intense in all of our key gateway cities.

“In London, leisure business in the first quarter was impacted by the November 2015 Paris terror attacks and in the second half of the year trading was affected by reduced corporate business.”

Kwek said the group’s New York results were affected by significant underperformance at Millennium Broadway as well as the refurbishment of ONE UN's east tower, which was now complete.

In Singapore he said there was an overall increase in visitor numbers, but a reduction in the average length of visitor stay.

“Our rate strategy was not suited to Singapore market conditions.

“This resulted in less corporate business, compounding the effect of the recent increase in available hotel rooms and further reducing average room rates and occupancy.

“However, New Zealand performed very well.”

Kwek explained that the group was taking steps to increase revenue and profit across the estate, particularly in New York and Singapore.

“This includes an ongoing restructuring of our sales function and strategy, and continuing improvement of our e-commerce capability.

“We have also announced separately today the appointment of Mr Tan Kian Seng as interim chief executive officer and other board changes."

The board recommended a final ordinary dividend of 5.66p per share, giving a total ordinary dividend for the year of 7.74p per share.