(Reuters) - Millennium & Copthorne Hotels MLC.L reported a 28 percent rise in third-quarter profits on Wednesday, boosted by the slump in sterling after Britain voted to leave the European Union which had also attracted more tourists to its London hotels.
M&C said the pound's slide GBP= had made London more attractive over the summer, especially for Middle East tourists keen to escape during the hottest months in their countries, although the company also cautioned that the uncertain outlook for the UK economy might also cause a drop in business travellers visiting London this winter.
“London was up because it was the summer months and people came because it was affordable ... but we’re looking at the corporate sector from October onwards and that’s down,” Angela Ong, senior vice president for finance, told Reuters.
However, Ong said it was too early to say whether that drop was due to Brexit or whether the trend would continue.
M&C, which has over 100 luxury hotels, said for its eight London hotels revenue per available room (RevPar) increased by 2.4 percent at constant currency rates over the quarter ended Sept. 30. It reversed course with the end of the holiday season to fall 15 percent over the three weeks that followed.
Earlier this year industry data provider STR cut its London 2016 RevPar forecast to a 4 percent fall, while Premier Inn owner Whitbread WTB.L noted a decline in London like-for-like RevPar over the six-months ended Sept. 30.
Majority owned by Singaporean businessman Kwek Leng Beng’s property company, M&C operates under the Millennium, Grand Millennium, Copthorne and Kingsgate brands and has focused on expansion into “gateway cities” such as London, Singapore and New York.
Weak trading in New York and Singapore, due to “significant” increases in new hotel supply, pulled M&C’s third-quarter RevPar down 1.7 percent year-on-year, from a first-half fall of 4.2 percent.
M&C’s third-quarter pretax profit rose to 46 million pounds, up from 36 million pounds in the same quarter last year, on revenue up 17 percent at 247 million pounds.
Sterling’s fall added 43 million pounds to M&C’s nine-month revenue, which was up 8 percent at 665 million pounds, while pretax profit was up just 4.1 percent at 102 million pounds.
Ong said it was too early to say whether the pound’s slide would increase M&C’s overall costs.
London accounted for 15 percent of group revenues last year.
Reporting by Esha Vaish in Bengaluru; Editing by Louise Heavens, Greg Mahlich
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