Challenging year for CDL

By SIMON HENDERY tourism writer

The country's largest hotel operator, CDL, has reported a flat full-year profit despite eking out a small increase in revenue from its three New Zealand hotel chains.

CDL Hotels' result was dragged down by reduced income from its 51 per cent-owned Australian property development subsidiary, Kingsgate International.

CDL's net profit for the 12 months to December 31 was $17 million compared with $17.1 million for 2002.

The company's operating revenue fell from $190 million to $168 million. Subsidiary Kingsgate's revenue was halved after it closed its Millennium Hotel in Sydney for conversion into an apartment block and sales of another near-complete residential development tapered off.

CDL chairman John Wilson said the New Zealand hotel sector was "extremely challenging" last year due to the Iraq war and the Sars virus.

"The effect of these crises meant that the company had to quickly refocus its entire sales and marketing and operational strategies to offset the significant reduction in support it would receive from traditional international markets," Wilson said.

The new strategies were successful, he said, and the market was improving every month.

Managing director Tsang Jat Meng said the high New Zealand dollar meant conditions were still challenging.

During the year, revenue from the company's New Zealand hotel operations rose 0.8 per cent to $115.1 million, despite the sale of its Willis Street Kingsgate Hotel in Wellington at the end of March.

Kingsgate's profit fell 61 per cent from $10.2 million to $4 million as operating revenue dropped from $50.9 million to $23.7 million.

CDL's other listed subsidiary, property developer CDL Investments, reported a 10 per cent rise in profit to $6.6 million. Its operating revenue increased 14 per cent to $27 million.

CDL is a listed subsidiary of London-based Millennium & Copthorne Hotels. In New Zealand it operates the Millennium, Copthorne and Kingsgate hotel brands.

CDL Hotels

* Runs the Millennium, Copthorne and Kingsgate hotel chains.

* 70.2 per cent-owned by London-listed Millennium & Copthorne Hotels.

* Owns 61.5 per cent of CDL Investments and 50.7 per cent of Kingsgate International (both listed on the NZX) .