Combined total revenue of hotels under management fell by 57% in the first half of 2020 compared to the equivalent period in 2019, with the majority of this decline occurring in the second quarter, which saw combined total revenues 86% lower than the same period last year.

All of the Group’s hotels were either closed or operated at single-digit percentage occupancy levels for much of the second quarter. A number of cost containment measures have been implemented, but significant underlying losses were incurred in the first half of the year.

FINANCIAL PERFORMANCE

Underlying losses before interest, tax, depreciation and amortisation for the first half of 2020 were US$50 million, compared to earnings of US$69 million in the first half of 2019.

Underlying losses for the period were US$102 million, compared to an underlying profit of US$11 million in the first half of 2019.

The biannual revaluation of The Excelsior site at 30th June 2020 resulted in a non-cash decrease of 10% or US$334 million, as a result of a decline in open market office and retail rents in Hong Kong in the first half of the year. Together with the underlying loss, this resulted in a total loss attributable to shareholders for the period of US$436 million.

At 30th June 2020, net debt was US$412 million compared to US$300 million at the end of 2019. This reflected US$52 million of capital expenditure during the period, primarily in relation to the renovation of Mandarin Oriental Ritz, Madrid and the redevelopment of The Excelsior site.

Gearing was 8% of adjusted shareholders’ funds, compared to 5% at the end of 2019. The Group’s financial position remains robust and it is well-placed to weather a prolonged downturn. At 30th June 2020, the Group had US$187 million of cash reserves and US$217 million in available, committed debt facilities.

In light of the substantially reduced levels of business, no interim dividend will be paid.

HOTEL PERFORMANCE

In Europe and America, all hotels were closed from late March onwards. Hotels in Asia and the Middle East mostly remained open during the first half, although operating at very low occupancy levels once anti-pandemic restrictions and border controls were imposed.

The Group’s flagship Hong Kong hotel remained open, but with single-digit percentage occupancy levels for most of the second quarter, and the hotel made a loss during the first half. It did, however, benefit from a partial recovery in food & beverage business when government anti-pandemic measures were relaxed. The remainder of the Group’s owned hotels also incurred losses in the second quarter, despite cost containment measures.

On a more positive note, in June the Group’s hotels on the Chinese mainland saw a significant recovery in occupancy levels to some 40%. Elsewhere, a number of the Group’s hotels have begun to reopen in anticipation of some demand but, in many cases, this demand is expected to remain low and not in line with normal market conditions.

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