This was extremely encouraging for the visitor industry that appeared to have regained its composure very quickly. That's not to say that it was necessarily "business as usual" for many accommodation providers, especially as there would have been difficult times maintaining a calm exterior for their guests while coping with many challenges in the background.
From news reports it would appear that the 10 floor Copthorne Hotel in Durham Street is likely to have been the wost hit accommodation complex from the quake.
We read in the paper today that Millennium and Copthorne Hotels New Zealand Ltd (MCK) has issued a press release advising that the damage sustained was non-structural and repairs were likely to commence this week with completion up to six months.
MCK have disputed "wild rumours" that the leased hotel building was condemned and earmarked for demolition. MCK have confirmed that all hotel staff would continue to be employed and deployed at their other Christchurch properties.
It was also reported that MCK is "hoping the bulk of costs associated with the earthquake will be covered by insurance..."
MCK owns, leases, manages and franchises a portfolio of 30 hotels in New Zealand under the Millennium, Copthorne and Kingsgate brands. The Company, that has hotel assets with a net book value of $326 million recorded a modest profit of $12.4 million for the year to December 2009.
The company appears to have had a bit of bad luck and the Christchurch quake has added another chapter of woe. We posted an item at the end of May this year about MCK that fronted up to their bemused shareholders with unspectacular returns and a bizarre story about dodgy Chinese deals resulting in having one of its hotels stolen from under them.
MCK's trading performance for the six months ending June 2010 had improved with revenues of $61 million compared with $54.5 million in the same period last year. Occupancy increased to 68.1% compared with 63% for the same period last year. Not surprisingly the hotel group has found overseas tourist markets remaining soft, however they reported a lift in the domestic tourism market.
In spite of improved trading, MCK reported a $20.2 million loss in the six months to June 30 2010.
Ignoring the losses incurred with the shenanigans of exposing themselves in China, MCK took a one-off non-cash hit of $26.8 million by the recent tax changes relating to the way depreciation of commercial buildings will be treated for tax. Interestingly tax woes may continue with fears that depreciation changes will cost MCK up to $2 million a year in additional taxation that will cancel out any gains from the 2% reduction in corporate tax.
We would imagine that MCK's hapless investors will be following the fallout from the Christchurch earthquake with interest.
