Shares rise as CDL arm records impressive hotel earnings

Millenium and Copthorne, the group of British, European and United States Hotels 55 per cent owned by Hong Kong-listed CDL Hotels International hopes to have expanded its hotels 27-strong chain of hotels by the end of the year.

Edouard Gremlich, said a main objective for the group would be to make a purchase from the 'dozen groups and a number of individual hotels' currently being looked at.

'We're mostly looking in France and Germany, the US and Canada' he said.

The group has around 20 million pds free cash, and a line of 60 million pds. However, Mr Gremlich said some of its hotels could be pledged so further borrowings could be made, and the group would even consider launching a rights issue.

Yesterday the group saw its shares rise six pence, or almost 2 per cent to 311p after it said pre-tax profits surged 53 per cent in the first half to GBP15.3 million (about HK$182.77 million) despite refurbishment at its main London hotels, and a resultant drop in room rates.

Turnover at the group, spun off from CDL in April, jumped 11 per cent to GBP84 million and operating profits were up 31 per cent to GBP20 million. Chief executive Edouard Gremlich said current trading was 'healthy with our performance in July ahead of the same period last year'.

Trading is expected to be stronger in the second half of the year, and the company expects improved results. Yield per available room increased 10 per cent to GBP56.42, and the average room rate rose 12 per cent to GBP76.63. The company has now spent GBP12 million and more is expected in the second half of the year as it continues to upgrade its hotels.

Chairman Kwek Leng Beng said that occupancy levels were 78.9 per cent in its London hotels, representing a 4.6 per cent drop on last year.

However, he said this was due to the fact that three of the group's four London hotels were undergoing 'refurbishment and restructuring'.

However, average room rates for the London hotels were up 16.1 per cent to GBP69.53 and profits rose 25.8 per cent to GBP8.8 million.

Mr Kwek said Bailey's Hotel was completed, with half the bedrooms in the Chelsea refurbished, although work was on hold to take advantage of the buoyancy in the market.

At the Gloucester, work was also under way, with the seventh floor completed and the Millennium Conference Centre building recladding in progress.

The Plaza in New York, which the group owns with Prince Al Waleed bin Abdulaziz al Saud, is also receiving a GBP22 million investment as part of a two-year refurbishment programme.

'Once completed, the refurbishment at the Gloucester, Bailey's Hotel and The Chelsea Hotel in London and The Plaza in New York will underpin this growth', Mr Kwek said.

However, poor economic conditions in France and Germany served to depress performance, with profits down 23.6 per cent to GBP162,000. Low occupancy levels in Paris, meant that rates fell to 58.5 per cent from 68 per cent, with a drop of almost 10 per cent on the yield per available room. 'In France there are signs the economy is recovering and in Germany that the recession is bottoming out', he said.