Second hotel group signals difficult times for the industry

MILLENNIUM & Copthorne has become the second major hotelier in two days to report a sharp downturn in business, sending its shares 17 per cent lower.

The group yesterday halved its 2008 dividend and warned it expected the next few quarters to present challenging trading conditions.

M&C operates 103 upmarket hotels around the world, including two in Scotland, in Aberdeen and Glasgow.

Its gloomy outlook came just 24 hours after Holiday Inn owner InterContinental hotels warned that a slump in fourth-quarter bookings had continued into 2009 with "no signs of improvement" on the horizon.

M&C said revenues per available room (revpar) – a key measure of performance for the industry – plummeted 21.2 per cent in the first five weeks of 2009, with New York suffering a 41 per cent decline and London recording a 4 per cent fall.

The hotelier blamed the cut in dividend on the difficult trading climate, triggering a recruitment freeze and a halt on virtually all new capital expenditure.

Headline pre-tax profit for 2008 was up 6.4 per cent to 125.9 million, towards the lower end of market forecasts.

Group chairman, Kwek Leng Beng, said the firm had a strong balance sheet.

"I believe that with a continued policy of tough, prudent and analytical management we can steer our ship through the roughest of waters," he added.

The drop in M&C's global revpar at the beginning of this year represents a sharpening of the 7.6 per cent decline seen in the last quarter of 2008.

On Tuesday, InterContinental posted a 12.2 per cent dive in revpar for January, from a 6.5 per cent slide over the fourth quarter of 2008.