M&C Hotels hit by European security fears

By Esha Vaish

(Reuters) - Millennium & Copthorne Hotels Plc (MLC.L) said Islamist attacks in continental Europe and Britain's vote to leave the European Union had added to its problems after a disappointing performance in the first half of the year.

The company could also delay or reduce planned refurbishment work at its Millennium Hotels in the upmarket London areas of Mayfair and Knightsbridge as it looks to manage costs more closely.

M&C's hotels in major cities such as Paris and London had experienced a significant slowdown in the three months to June 30, Chief Executive Aloysius Lee said, as attacks in Europe deterred travellers. Uncertainty surrounding Britain's EU vote on June 23 had also reduced business travel.

"Even after Brexit, we have five major incidents in Europe and that has had a big impact on the tourism market... There are no signs of improvement in these gateway cities in the short term," Lee said.

The operator of the Millennium, Grand Millennium, Copthorne and Kingsgate hotels would also look to reduce staff costs by combining roles, but had not yet seen the need to cut jobs.

It could cut costs by reducing work on its London hotels.

"We're reviewing the refurbishment schedules... and we will make sure that our spending is prudent to our forecast of difficult times ahead," he added.

M&C, which runs over 100 luxury hotels across 60 locations, has focused on expansion into what it terms "gateway cities" such as Singapore, London and New York.

Majority owned by Kwek Leng Beng's Singapore-based property company City Developments Ltd, M&C said it would pay an unchanged interim dividend of 2.08 pence per share, but added that its final dividend was under review.

Its shares fell 2.5 percent to 410.6 pence by 1145 GMT.

Traditional hoteliers are already under threat from companies like Airbnb, which offer travellers access to short-term apartment or home rentals.

M&C reported a 21.7 percent fall in operating profit fell to 47 million pounds ($63 million) for the six months ended June 30.

Revenue per available room (RevPAR), a key industry measure, fell 4.2 percent to 67.91 pounds in constant currency. London RevPAR fell 5.3 percent, compared with 0.5 percent growth across the rest of Europe.

Lee said that any gains expected due to the fall in sterling following the Brexit vote would be offset by lower demand. ($1 = 0.7514 pounds)

(Reporting by Esha Vaish in Bengaluru; Editing by Gopakumar Warrier and Keith Weir)