Annual Report & Accounts 2018 Report & Annual plc Hotels & Copthorne Millennium KEY TO GATEWAY CITIES Annual Report & Accounts 2018 Cover: The Orchard Cafe, a prime establishment at Orchard Hotel Singapore. With a legacy rooted in heritage-inspired cuisine, the cafe has become a favourite dining destination for many. As part of the Group’s enhancement initiatives, The Orchard Cafe has been transformed into a modern dining paradise. MILLENNIUM & COPTHORNE We hold the key to the best hospitality experience globally. At Millennium & Copthorne Hotels, we believe that experience is key. Building on our collective expertise and experience across 139 hotels in 79 locations around the world, we have come a long way since our inception to create a unique brand of hospitality that guests have grown to love and enjoy. For us, the key to the best experiences starts with having the right experience to deliver the best. FROM THE CITY THAT NEVER SLEEPS MILLENNIUM BROADWAY, NEW YORK TIMES SQUARE Set against a spectacular New York City backdrop, Millennium Broadway offers breathtaking views of the Chrysler Building, Empire State Building and glittering light show that defines Times Square. With spacious and tasteful rooms filled with thoughtful amenities, guests can look forward to experiencing the vibrant city life in more ways than one. TO THE CAPITAL OF PASSION GRAND HOTEL PALACE, The Grand Hotel Palace is definitive of Italy’s finest in every way. ROME Designed by Marcello Piacentini in the 1920’s and subsequently refurbished by Italian architect Italo Rota, this splendid boutique hotel is an architectural masterpiece that is truly the essence of Dolce Vita – the sweet life. FROM ICONIC DESTINATIONS FOR EVERY TRAVELLER GRAND MILLENNIUM BEIJING, Grand Millennium Beijing features a blend of heritage luxury and CHINA contemporary living, where the opulence of China’s rich history is complemented by the practical ease of modern comforts. The hotel’s prime location in the business district of China’s capital connects guests to worlds of fashion, culture, entertainment and art, making it the ideal destination for any traveller. With breathtaking views over the Chelsea Harbour Marina and River Thames, The Chelsea Harbour Hotel THE CHELSEA is the perfect place for a perfect HARBOUR HOTEL, stay. Guests can discover the best of LONDON both worlds, from the tranquility of riverside living to enjoying the high life at some of London’s most exciting attractions a stone’s throw away. TO INDULGING IN THE GOOD LIFE FROM SIPPING YOUR FAVOURITE COCKTAIL HARD DAYS NIGHT HOTEL, LIVERPOOL As one of the world’s only Beatles-inspired hotels, the magnificent Hard Days Night Hotel offers guests a truly unique experience in the heart of a lively city. Situated in Liverpool’s ‘Beatles Quarter’, the hotel’s luxurious accommodations are elegantly furnished with the Fab Four’s artwork, specially commissioned by renowned artist, Shannon. Beyond the legacy, the hotel’s central location connects guests to a variety of leisure and dining hotspots poised to delight guests from all walks of life. TO RECHARGING YOUR BODY AFTER A HARD DAY’S NIGHT THE BILTMORE, The Biltmore is an iconic property with a rich legacy. The building was first MAYFAIR, LONDON designed by architect Richard Seifert in the 1960’s. Since then, the hotel has undergone renovations to refresh its look. Despite changes in appearance, one thing remains the same – the touch of luxury that permeates every aspect of the hotel. From furnishings and amenities to service and experience, guests can always expect nothing but the best. MILLENNIUM Key to your home & COPTHORNE away from home. 14 OUR HOTEL COLLECTIONS Our Millennium and Grand Millennium hotels offer timeless elegance Leng’s Collection is a legacy of our founders, the Leng generation of the and personalised, gracious service to the seasoned global traveller. They Kwek family. Unique, authentic and elegant, these iconic hotels offer are brilliant for corporate guests and groups as they are seen as a great guests a most distinctive hospitality experience and provide the sense of place to meet and network in the world’s most fascinating cities. being part of a club. They are beautifully situated, characterful properties in some of the world’s most desirable destinations. grand millennium auckland, new zealand hard days night hotel, liverpool m social, singapore copthorne al-jahra hotel & resort, kuwait The M Collection showcases stylish and vibrant design with strong Our collection of Grand Copthorne, Copthorne and Kingsgate properties local influence, offering guests a new, urban, and stimulating lodging comprises comfortable and competitively priced hotels, where friends and experience. These conveniently located hotels are colourful, lively, and families are welcomed with a warm smile and helpful service. As with all technologically equipped with the aim of helping guests tap into their of our properties, Copthorne hotels are in locations that put our guests own creative and adventurous spirits. close to the heart of their chosen destinations. Millennium & Copthorne Hotels plc CONTENTS STRATEGIC REPORT 18 Chairman’s statement 20 Business review and strategy 22 Key performance indicators 23 Financial performance 26 Our global reach 28 Regional performance 30 Corporate responsibility 38 Our risks GOVERNANCE 48 Board of Directors 51 Directors’ report 57 Corporate governance statement 67 Audit & Risk Committee report 71 Directors’ remuneration report 88 Nominations Committee report 93 Statement of Directors’ responsibilities 94 Independent auditor’s report FINANCIAL STATEMENTS 104 Consolidated income statement 105 Consolidated statement of comprehensive income 106 Consolidated statement of financial position 108 Consolidated statement of changes in equity 109 Consolidated statement of cash flows 111 Notes to the consolidated financial statements 181 Company statement of financial position 182 Company statement of changes in equity 183 Notes to the Company financial statements FURTHER INFORMATION 186 Group financial record 187 Key operating statistics 189 Major Group properties 197 Millennium & Copthorne hotels worldwide 202 Shareholder information 204 Financial calendar the bailey’s hotel london STRATEGIC REPORT 18 Chairman’s statement 20 Business review and strategy 22 Key performance indicators 23 Financial performance 26 Our global reach 28 Regional performance 30 Corporate responsibility 38 Our risks millennium hotel new plymouth waterfront, new zealand 18 CHAIRMAN’S STATEMENT KWEK LENG BENG Chairman 2019 will be another challenging year for the Group, with significant capital projects underway and several large hotels earmarked for major renovations. These investments will be carefully managed and phased to deliver the right returns to shareholders and underline the Group’s intention to maintain strict control of costs throughout the business. he hospitality industry faced a range of geo-political and global economic During 2018, the Group continued to make progress in its hotel refurbishment Theadwinds in 2018, many of which look set to continue in the current year, programme including the Mayfair hotel in London, the Orchard Hotel in including US/China trade relations, Brexit and increasing minimum wage levels Singapore and smaller scale refurbishment work in other properties to improve in many jurisdictions. its product offerings and maintain competitiveness. The Board’s priority is to evaluate and develop new and innovative strategic The refurbishment work of the Mayfair hotel in London started during plans to meet the challenges facing our fast-changing operating environment. the fourth quarter of 2017 on a phased basis with partial closures of guest The shortage of talent—from rank and file to senior management—is rooms. The property was then fully closed in July 2018 to facilitate on-going intensifying with many new hotels being built around the world, not to mention refurbishment work to re-position it as the Group’s luxury flagship hotel when it the growth of Airbnb and serviced apartments. Any hospitality business that re-opens in Q2 this year. Total cost is estimated to be around £50m. wants to progress will need to evolve and embrace these changes to stay relevant and profitable in the immediate and medium term. Restoring profitability in our The Mayfair hotel has been one of the Group’s biggest revenue and profit New York hotels also remains at the top of the Board’s objectives. contributors. The closure of the hotel resulted in an estimated £20m reduction in revenue and £12m reduction in operating profit during the financial year Meanwhile, we continue to invest in and reposition our hotels. We look forward ended 31 December 2018 with the Group continuing to incur certain fixed costs to our Mayfair hotel being rebranded and opened as The Biltmore, Mayfair in such as payroll and property related expenditure at the hotel. the second quarter of this year. This is the first opening under Hilton’s new LXR Hotels & Resorts collection in Europe. This also will mark the Group’s debut In Singapore, refurbishment work on the Orchard Hotel commenced in Q4 in the London five-star deluxe market and it is our aim to fast track our lost 2018 and is expected to complete by Q2 this year. This upgrading of the earnings growth at this hotel after it re-opens. property is estimated to cost around S$20m (£11m). The hotel will remain Millennium & Copthorne Hotels plc 19 operational during the refurbishment period with phased room closures that are MANAGEMENT