Slowdown in Europe eats into profits at hotel group

The company also warned that the slowdown in Asia and Europe was unlikely to ease soon.

M&C, which operates more than 100 hotels globally through brands including Millennium, Grand Millennium, Copthorne and Kingsgate, said pre-tax profit for the three months to March 31 was £16.9m, down 34.7 per cent on a year ago.

Despite a 1.6 per cent rise in global revenue per available room (RevPAR) – a key hotel measure – revenue fell 3.6 per cent to £169.2m as a slowing economy, poor weather and austerity measures in Europe combined to affect its trading performance.

The company’s performance was also affected by the closure of a number of hotels for refurbishment work.

In a statement, M&C said yesterday: “The ongoing refurbishment programme removed over 100,000 room nights over the period, with the revenue and profit impact felt particularly at Grand Hyatt Taipei, where 461 rooms were closed, and Millennium Minneapolis, which was closed completely during the quarter.

“The Singapore performance was down, reflecting a slowing economy, continuing restraint in corporate travel budgets, an increasing supply of competitor hotel rooms and a reduction in foreign labour quotas, which is putting pressure on costs.”

In Asia, which accounts for more than 40 per cent of group revenue, the firm said that trading at its Seoul hotel in South Korea had also been affected by “geo-political tensions”.

Last month, the United States and Japan offered new talks with North Korea to resolve a dangerous stand-off over its nuclear and missile programmes, but said the reclusive Communist government had to lower tensions and honour previous agreements.

The turmoil caused by North Korea’s strained relationships with its neighbours is believed to be reducing the number of visitors to South Korea.

“Revenue declined due to a number of factors, which are unlikely to abate in the foreseeable future,” M&C chairman Kwek Leng Beng said, adding that the firm was well placed to ride it out.

“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,” he said.

M&C said its improved RevPAR performance had come from improved trading in regional markets in the United States and Australasia.