Mandarin Oriental Reports H1 2009 Results

Mandarin Oriental’s underlying results for the six months ended 30th June were significantly affected by the depressed demand resulting from the global economic downturn and to some extent concerns over Swine Flu while (H1N1).

In the face of these difficult challenges, Mandarin Oriental achieved earnings before interest, tax, depreciation and amortization for the first six months of 2009 of US$35 million, compared to US$86 million in the first half of 2008.

The company’s underlying profit for the period was US$1 million, compared with US$36 million in 2008. Underlying earnings per share were US$0.11, compared to US$3.68 in 2008.

Including non-trading items, principally a US$78 million gain on the sale of the group’s 50% interest in its Macau hotel offset by a provision of US$5 million against asset impairment, the profit attributable to shareholders for the six months was US$74 million, compared with US$36 million in 2008.

With the inclusion of non-trading items, the earnings per share were US$7.53 compared with US$3.68 for the first half of 2008. An unchanged interim dividend of US$2.00 per share has been declared.

The Hotels

Occupancy levels for most of the group’s hotels were substantially below those achieved in the same period last year due to declining travel levels worldwide. Average room rates have also been negatively affected, particularly in Asia.

The group’s 100%-owned Hong Kong hotels have both suffered from a significant decrease in occupancy, which led to deterioration in average room rates. The Tokyo hotel, which operates under a long-term lease, was also impacted by lower occupancy levels, as was the property in Manila. In Jakarta, the hotel remained closed throughout the period for extensive renovations, and will reopen in October of this year.

In Europe, demand for leisure travel, particularly in London, remained relatively resilient. Average rates in US dollar terms, however, were eroded by weaker currencies.

In the Americas, the group’s subsidiary hotel in Washington D.C. maintained its results, but management fees from other hotels fell in response to declining revenues.

The average room rate was maintained in Bangkok, but occupancy levels were badly affected by the country’s ongoing political uncertainties and related issues.

In Singapore, occupancy weakened and average room rates suffered from competitive pressures. The Kuala Lumpur hotel also saw demand weaken significantly. Similarly, both New York and Miami suffered from falling occupancy and lower average rates.

The Future

Mandarin Oriental currently operates 23 hotels and has a further 18 under development.

These represent approximately 10,000 rooms in 25 countries, with 17 hotels in Asia, 14 in the Americas and 10 in Europe and North Africa. In addition, the group operates, or has under development, 13 Residences at Mandarin Oriental connected to the Group’s properties.

Over the next six months, new Mandarin Oriental hotels are due to open in Barcelona, Marrakech and Las Vegas. The group continues to liaise with the developers on the timing of the 15 other hotels under development, all of which, except Paris, are management contracts. 

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