Millennium & Copthorne Hotels hit by stronger pound and London weakness

Millennium & Copthorne Hotels had a mixed first quarter, with stronger underlying revenue growth and profits despite weaker trading in London, but currency swings hampering top-line growth.

The FTSE 250 group reported revenue per available room of £68.48 for the first three months of the year, a 3.1% worsening compared to last year but at constant currencies RevPAR increased 3.2%.

Total revenue for the quarter of £217m was down 2.7% but up 3.3% if excluding currency swings, including hotel revenue of £187m that was down 2.1% or up 3.9% underlying. Sterling's rebound earlier in the year resulted in an £11m exchange hit to turnover in the quarter.

London saw slower trading in most hotels, with RevPAR down 9% and occupancy 7%, and was affected by the partial closure of the Mayfair hotel, normally a significant revenue contributor.

However, there were higher contributions from New York's One UN Plaza after moving operations to Hilton, helping New York lift RevPAR 7% and occupancy 3%.

New Zealand hotels continued to perform well, boosted by the opening of M Social Auckland last October.

"Performance over the first three months of the year was mixed," said chairman Kwek Leng Beng, who last month appointed the highly experience Jennifer Fox as his new chief executive.

"London declined and Europe is showing indications of weakness, whilst our Millennium Broadway New York hotel continues to hold back overall trading performance in New York. More positively, Asia showed some signs of a recovery and New Zealand continued to perform well.

"We are on track to move forward on a number of significant capital investment projects this year, designed to improve returns on Group assets. We also remain alert to acquisition opportunities."

Capital investment was flagged at the full year results in February for the "needed transformation to the repositioning of our hotels so as to keep pace with guest expectations", requiring increased expenditure on both maintenance and product improvement.

Profit before tax doubled to £26m, helped by a £3m gain from the disposal of two Australian hotels owned by CDL Hospitality Trusts and higher profit contributions of another £3m from CDL and First Sponsor Group, an associated company..