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Mandarin Oriental income dips amid hotel renovation

The temporary closure of the Mandarin Oriental hotel in Central for renovation has taken a heavy toll on the parent company's interim profits.

The US$140 million refurbishment of the legendary hotel shaved US$26.4 million off first-half earnings at Mandarin Oriental International.

Profits at the Singapore-listed group fell 12 per cent to US$48.7 million which included a gain of US$35 million from the disposal of its interest in The Mark hotel in New York. Excluding this, the decline was 29 per cent compared with the first half of last year when the group sold a US$36.1 million property interest in Hawaii.

The 42-year-old Central hotel, which was closed on December 28 last year, would reopen gradually from the end of September, a month behind schedule, the group's finance director John Witt said yesterday.

'It is an ambitious programme from the outset. The downside is on the results but the upside is on the brand,' he added.

Mr Witt expects to have 200 of the hotel's 502 rooms ready for guests and most of the hotel's public areas operating in September. The rest will be ready by the end of the year.

Retail spaces, which have been doubled on the hotel's ground floor, had been fully leased, he said.

Meanwhile, the nearby Landmark Mandarin has seen its 113 rooms about 80 per cent occupied at US$413 per room on average.

'It is very much the highest in the city,' Mr Witt said. There has been strong demand from high-end corporate clients, leisure travellers and celebrities.

'It's a fortunate combination of limited supply and strong demand, and the trend will continue in the second half. It is not only a Hong Kong story but also in New York and London.

Room charges at the Mandarin in New York have increased about 23 per cent to US$765 per room on average despite its occupancy rate rising only 2 percentage points to 72 per cent in the first half.

The average room rate at the Mandarin in London has been flat at US$642 but its occupancy rate has improved 4 percentage points to 81 per cent.

Dairy Farm International, which like Mandarin Oriental is part of the Jardine Matheson conglomerate, saw interim profit rise 13 per cent to US$86 million in the first half. The company runs Wellcome supermarkets and 7-Eleven convenient stores in Hong Kong, the mainland, Singapore and India.

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