Hotels group signals recovery

MILLENNIUM & Copthorne has given the clearest sign yet that the hotels market is finally on the mend and that the all-important business traveller is coming back to London.

The group, a bellwether for the health of the wider economy, has returned to profit and seen a sharp recovery in both occupancy rates and revenues across its four-star and five-star sites.

In the third quarter to 30 September, pre-tax profits came in at £6.6m, and while this is £4m down on last year it can be compared with losses of £6.3m for the first half as a whole.

Occupancy rates have climbed from 61% to 68.7% while revenue per available room (revpar) - a key industry measure - was down 6.7% in the third quarter, against a decline of 14.5% at the half-year stage. In the four weeks to 28 October, revpar was off only 3.9%.

Chairman Kwek Leng Beng said: 'We believe that the worst is over and that our industry is recovering, albeit at a gradual pace. Volumes are encouraging and historic trends indicate that an improvement in rates should follow.'

Shares in Millennium & Copthorne recently climbed to 12-month highs in the belief it will be the first among its peer group to benefit from a recovery in the sector given its high exposure in gateway cities such as London and New York. Today they fell 10p to 325p.

The group was hammered earlier this year by the effects of the Iraq war and the devastating Sars outbreak in Asia, where it generates a quarter of its turnover and a third of its earnings.

Kwek said that while the recovery would be gradual and market conditions remained challenging, he believed the revival would continue.

Revpar in the group's five London hotels was down by only 10% against a 15.6% fall in the first half, it said, adding that trading in September demonstrated a long-overdue return of corporate business.

Its Millennium Hilton in New York, shut in the aftermath of the 9/11 attacks, was now trading well while there had been a dramatic recovery in trading in both Taipei and Hong Kong as Asia shook off any lingering effects of the Sars virus.

Revpar across the Continent was down 11.9% compared with the huge 35.4% shortfall in the first six months of the year.

Finance director David Thomas said he was not uncomfortable with analysts' forecasts of a profit for 2003 of between £18m and £19m.