Reducing its dependence on the London and New York hotel markets, along with cost-cutting measures, has helped Millennium & Copthorne (M&C) weather tough conditions in 2002.
Nevertheless, chairman Kwek Leng Beng predicted that the prospect of a Gulf war and continuing global economic uncertainty would make 2003 another challenging year for the sector.
The acceleration of the Iraq crisis in mid-November adversely affected the group's business, which had shown signs of recovery from early 2002 despite a downturn in the corporate market and aggressive rate cutting by rivals, especially in New York and London.
During 2002, M&C boosted pre-tax profits by 11% to £60.2m from £54.2m in 2001, although turnover dropped by 4.5% from £594.6m to £567.5m.
Kwek said efforts to diversify into key gateway cities around the world had mitigated the effects of the downturn in the hotel sector, which has been especially harsh in the western hemisphere. London and New York now account for just 25% of group revenue and 43% of operating profits, compared with 69% and 83% in 1998.
He added that, because most of M&C's hotels were owned: "We are not exposed to the impact of onerous financing arrangements such as sale and leaseback."
Overall, the group boosted occupancy across its 91 hotels by 2.1 percentage points to 67.2%. Average room rate, however, fell by 8% to £65.73 and revenue per available room (revpar) declined by 5% to £44.17. Like-for-like group revpar has fallen by 2% in the two months to 21 February.
Last year's results were mixed. In Europe, for example, the Copthorne hotels in Birmingham, Cardiff and Merry Hill, West Midlands, all bucked the trend by boosting revpar. Airport hotels fared worse, with revpar crashing by 23% at the two Gatwick hotels and by 10% at the Paris Charles de Gaulle hotel.
M&C plans to launch some "new concepts" this year after conferring with branding consultants and design specialists.
It is also in a legal dispute with its insurers, who have agreed to pay only 12 months' compensation for loss of business on the Millennium Hilton in New York, which was badly damaged in the 11 September terrorist attack. It will partly reopen by May, and be fully operational by the third quarter.
Millennium &Copthorne worldwide
London: although occupancy grew by 3.3 percentage points to 83.4%, average room rate fell by 8.5% to £79.86 and revpar declined by 5.5% to £66.36.
Regional UK/Europe: mixed performances saw an overall drop in occupancy by 2.6 percentage points to 68.6%. Average room rate was down 4.7% to £68.94 and revpar dropped by 8.2% to £47.29.
New York: increased leisure business boosted occupancy by 10 percentage points to 83.3% but average room rate dropped by 13.6% to £120.28. Revpar grew by 5% to £100.19.
Regional USA: declining domestic air travel and convention business reduced average room rate by 3.6% to £70.83 and revpar by 3.4% to £38.25. Occupancy increased fractionally, by 0.1 percentage points, to 54%.
Asia: occupancy across seven countries grew by 4.1 percentage points to 66.4%, but average room rate fell by 7.7% to £59.26 and revpar fell by 2% to £39.35.
Australasia: occupancy climbed by 3.3 percentage points to 70.4%, average room rate rose by 10.2% to £31.46 and revpar soared by 15.6% to £22.15.
By Angela Frewin