M&C says its revenue slide easing

But it warns that trading could take more than two years to recover

Hotelier Millennium & Copthorne said the worst of the recession may be over as its rate of revenue decline slowed but warned that it could take more than two years for trading to recover to the levels seen in 2007.

M&C, which operates 120 hotels across the world, said yesterday that revenue per available room (RevPAR), a key industry measure, dropped by 17.7 per cent in the third quarter compared with a fall of 21.3 per cent in the second quarter.

That trend continued into October, with RevPAR down by 12.8 per cent last year, M&C said. London saw growth of 0.6 per cent during the month, with New York RevPAR falling 17.9 per cent and Singapore down 26.5 per cent.

‘I believe that the industry is moving in the right direction. The rate of decline of our global RevPAR has slowed quarter-on-quarter and this trend has continued into October,’ said chairman Kwek Leng Beng.

‘While it is too early to predict with accuracy how markets will behave in 2010, we are encouraged by these improving trends which suggest that the worst may be behind us,’ he added.

The comments provide further evidence of an upturn in consumer confidence.

On Wednesday, retailers Marks & Spencer and Next beat profit and sales forecasts, while builders Taylor Wimpey and Redrow highlighted a pick up in the housing market.

However, M&C’s chief executive Richard Hartman said it could take more than two years for the hotel industry to make a full recovery, backing up comments by the CEO of the world’s biggest hotel group, Intercontinental in August.

‘I probably would have to agree that it’s going to take two or more years because the pricing across the world in this industry has been significantly reset,’ Mr Hartman said.

Mr Hartman also told reporters on a conference call that the group had no current plans to dispose of assets. ‘I don’t believe that now is the time to sell anything. There’s too much blue water between buyers’ and sellers’ expectations,’ he said.

Shares in M&C, which have outperformed the FTSE All Share Travel & Leisure Index by 35 per cent since the start of 2009, were down 1.8 per cent to 345.8 pence at 1140 GMT.

‘The potential for asset disposals has long been the value driver for MLC. However, despite considerable pressure, they sold little in the bull market and so now in a bear market there is even less likelihood,’ said Seymour Pierce analyst Mark Reed.

For the nine months to Sept 30, the group reported pretax profit of £52.4 million (S$86.31 million), down 41 per cent.

Source: Business Times, 6 Nov 2009