Mandarin Oriental Swings to Underlying Profit as Revenue Tops Pre-COVID Levels

Hong Kong-based Mandarin Oriental International announced a return to underlying profit in last year’s preliminary results as the hotel group’s revenue surpassed pre-pandemic levels.

The Jardine Matheson-controlled chain posted an underlying profit attributable to shareholders of $8 million for the full year — its first profit since 2019 — to reverse an underlying loss of $68 million in 2021, according to a Thursday filing with the Singapore Exchange. Total revenue of hotels under management reached $1.6 billion, up 18 percent from 2019 revenue.

Mandarin Oriental finished the year strongly after COVID-era travel restrictions ceased in Europe, the Middle East and America during the first quarter, said chairman Ben Keswick.

“The group’s management business performed well, especially in resort destinations,” Keswick said. “Our owned hotels business saw a good recovery, but it was held back by continuing challenges in East Asia, which impacted the performance of Hong Kong and Tokyo in particular.”

Valuations Drift Lower

Mandarin Oriental’s underlying earnings before interest, tax, depreciation and amortisation totalled $111 million in 2022, more than doubling the year-earlier figure of $41 million.

The group reported a non-trading loss of $57 million, narrowing from $73 million in 2021, as a $104 million drop in the valuation of a site under development in Hong Kong’s Causeway Bay was offset by a $47 million realised gain from the sale of Mandarin Oriental Washington DC.

The group sold the five-star hotel in the US capital to UK asset manager Henderson Park for $139 million last September, with the gross proceeds translating to $372,654 per key at the hotel.

Adjusted net asset value per share ended 2022 at $3.87, down 2 percent from a year earlier, as net debt fell to $376 million from $517 million at the end of 2021. Gearing as a percentage of adjusted shareholders’ funds was 8 percent, compared with 10 percent at the end of 2021.

“The group remains well funded, and its liquidity position remained robust, with $226 million of cash reserves and $471 million in available, committed debt facilities,” the company said.

Robust Global Pipeline

Mandarin Oriental opened two new hotels in Shenzhen and Lucerne and two residences in Barcelona and Beverly Hills in 2022.

The group plans to open several new properties across Europe, the Middle East and Asia this year — including four hotels in London, Muscat, Zurich and Costa Navarino and residences in New York — and to complete a comprehensive renovation of Mandarin Oriental Singapore.

More than 26 projects are in the pipeline to open in the next five years, adding to the current 36 hotels and nine residences under Mandarin Oriental’s operation.

“The group expects to see a strong improvement in its results in 2023, particularly as restrictions in East Asia continue to ease,” Keswick said. “With a robust pipeline of new developments and a globally recognised brand, we also remain confident in the long-term success of the group.”