Coronavirus: Large hotel chain loses $3m in revenue so far from Chinese cancellations

Monday, 10 February 2020

One of the country's largest hotel chains, Millennium & Copthorne Hotels New Zealand, has lost nearly $3 million in revenue so far from Chinese tourist cancellations and expects more losses.

Millennium & Copthorne Hotels New Zealand managing director BK Chiu says the company is considering whether to launch an appeal against a High Court decision which rejected a claim Auckland's bed tax was unlawful.

Millennium & Copthorne, owning and managing 20 hotels here, said the novel coronavirus would hit its first three months of operations from the beginning of January to the end of March.

'A number of our hotels in high tourism areas are receiving cancellations from several Chinese operators as the Chinese and New Zealand governments' travel bans and other containment measures come into effect,' Millennium & Copthorne said.

'Cancellations received to date will result in revenue loss of between $2 million and $3 million with more cancellations expected for future months.'

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Millennium & Copthorne is planning to build a new hotel, illustrated, in Whangarei. It owns and manages about 20 hotels in New Zealand.

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'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 was now operating fully at its hotels.

The hotel operator's announcement comes as Tourism NZ said the decision to stop travellers from China coming to New Zealand to help prevent the spread of coronavirus could have about a half-billion dollar impact on New Zealand's tourism sector as a whole.

Millennium & Copthorne is also weighing up whether to appeal a High Court decision which rejected a case that claimed the Auckland bed tax on hotels and motels was unlawful.

A group of hoteliers formed the Commercial Accommodation Ratepayers group to challenge the hotel and motel levy.

Millenium & Copthorne Hotels managing director BK Chiu said the company was disappointed by the High Court judgment on the accommodation provider targeted rate and would review its options with its lawyers as to whether to appeal the decision.

The hotel group is the second largest operating in New Zealand and owns and manages about 20 hotels with just over 2500 rooms, according to the Asia Pacific Chains and Hotels Report 2018 by tourism consultants Horwath HTL.

In New Zealand its hotel brands are Millennium, Copthorne, Kingsgate and Grand Millennium.

At the same time as talking about the losses in the first weeks of 2020 the company also reported a profit of $49.7m for the 2019 calendar year, up marginally from $49.4m in 2018.

With new hotels opening in Auckland and other key tourism hotspots in New Zealand Millennium & Copthorne's hotels would need to work 'resourcefully' especially as there were no major tourist events in New Zealand until 2021 and tourism was 'coming off its historic peak'.

The company's profit of $49.7m was earned from revenue of $229.7m, almost 5 per cent ahead of the year before.