The revenue loss will not be covered by insurance, says local hotel operator
The revenue loss will not be covered by insurance, says local hotel operator
Millennium & Copthorne Hotels New Zealand (MCK) has reported a solid profit for the December year but says it's already taking a hit to revenue in the first quarter this year due to cancellations stemming from the coronavirus outbreak.
"A number of our hotels in high tourism areas are receivingcancellations from several Chinese operators as the Chinese and New Zealand Governments' travel bans and other containment measures come into effect," the company said after reporting a preliminary net profit of $49.7 million of the year ended December 31.
"Cancellations received to date will result in revenue loss of between $2 million and $3 million with more cancellations expected for future months. We have been advised that this revenue loss will not be covered by insurance.
"Management is implementing urgent response plans to mitigate the effect of these cancellations. A health and safety plan is now in full effect at MCK's hotels. Given that the situation is extremely fluid, the board will monitor the situation carefully and will update shareholders if the position changes," said the company, which is New Zealand's second largest hotel chain.
The hotel group owns and manages about 21 hotels in New Zealand, with brands such as Millennium, Copthorne, Kingsgate and Grand Millennium in New Zealand.
The company's after tax profit of $49.7m was generated from total revenue of $229.7m, up from $49.4m and $218.8m respectively.
MCK's results came despite falling overseas visitor numbers, chair Colin Sim said.
The company's majority-owned subsidiary CDL Investments contributed on the back of sales progress in the second half of 2019, he added.
Managing director BK Chiu noted the challenges facing the business over the last two years would continue to have an effect, notwithstanding the threats posed by coronavirus.
"Cost increases, a tight employment market and government policies impacted on our results during 2019. Tourism and the residential property market are now into their slower stages of the business cycle."
MCK maintained a fully imputed dividend of 7.5 cents per share.
The stock closed unchanged at $2.50 but is down 15 per cent since this time last year.
