Mandarin optimistic after surge in room occupancy rates
The sharp recovery in Hong Kong's tourism industry last year saw five-star hotelier Mandarin Oriental International enjoy its best business since 2000, and the momentum is expected to continue this year, according to chief executive Edouard Ettedgui.
The strong performance in Hong Kong helped the Singapore-based group's net profit jump nearly fivefold to US$27.8 million last year from a restated profit of US$3.5 million in Sars-hit 2003.
The company also distributed a dividend of one US cent per share last year, its first payout since 2000.
The profit, which included a non-recurring partial write-back of US$10 million on the group's Kuala Lumpur hotel, beat a Thomson First Call forecast consensus of US$16.93 million.
'It turned out to be a very good year last year,' Mr Ettedgui said. 'We have seen tourists pouring in from not only China, but also the United States and Japan.'
The flagship 541-room Mandarin Oriental hotel in Central recorded 80 per cent occupancy last year, compared with 53 per cent in 2003 when Sars kept visitors away. The occupancy also represented a marked improvement on the 69 per cent in 2002.
The group's other local hotel, the Excelsior in Causeway Bay, also did well, with an average occupancy of 89 per cent against 67 per cent in 2003 and 84 per cent in 2002.
Despite the buoyant market, room rates at the Mandarin Oriental in Central climbed 9 per cent to an average of US$210 per room per night last year, way short of the average US$300 at the peak in 1996.
'I don't think the room rate will go back to the 1996 level this year, but I am confident that it will in two to three years,' Mr Ettedgui said. 'If the occupancy remains at 75 per cent in the next few months, we will raise room rates by 15 per cent.'
Despite the good prospects for this year, the group's profits are likely to be challenged next year when the Mandarin Oriental hotel undergoes a complete overhaul costing US$110 million.
Merrill Lynch expects the renovation, spanning 19 months from the start of next year, could force its occupancy rate to less than 35 per cent.
. Mr Ettedgui expected the contribution of the group's hotels in Tokyo, Washington, New York and London would cushion the impact of the renovation. He added that the new 118-room Mandarin Oriental hotel in Landmark, Central, was due to open by September.
