Millennium & Copthorne Hotels plc
Millennium & Copthorne Hotels plc
Sales: £547.1 million ($1.16 billion) (2004)
Stock Exchanges: London
Ticker Symbol: MLC
NAIC: 721110 Hotels (Except Casino Hotels) and Motels
In less than a decade, Millennium & Copthorne Hotels plc (MCH) has built one of the Asian region's largest hotel groups and has taken a place among the global top 40. The company, based in London and listed on the London Stock Exchange, serves as the international arm of Singapore's Hong Leong Group, and its chairman is Kwek Leng Beng. MCH operates some 90 hotels worldwide, chiefly under the Millennium and Copthorne brand names. The company has positioned itself as an operator of "luxury four-star" hotels, enabling it to differentiate its offering from the crowded five-star hotel bracket, particularly by offering lower room rates. The company's portfolio contains many prestigious hotels in 18 countries, including Indonesia, Singapore, Malaysia, Hong Kong, Korea, and Taiwan, as well as in Abu Dhabi and Dubai in the Middle East. New Zealand is a major market for the company, with 30 hotels, including 15 Kingsgate Hotels. Together, the Asia/Pacific region accounts for 36 percent of company revenues, which neared £550 million ($1.2 billion) in 2004. In Europe, the company operates primarily in the United Kingdom, with nearly 20 hotels, as well as two hotels each in France and Germany. Europe accounts for 31 percent of group sales. The company's North American portfolio targets major city markets in the United States. In late 2004 and early 2005, the company sold off its holdings in two U.S. landmark hotels, the Plaza in New York, and the Biltmore in Los Angeles. The United States remains the company's single-largest market, at 33 percent of sales. After a difficult period in the first half of the 2000s, MCH has announced plans for further expansion, including the opening of as many as 20 Copthorne hotels in the United Kingdom.
Founding an Asian Hotel Leader in the Mid-1990s
The origins of Millennium & Copthorne Hotels traced back to the formation of Singapore's City Developments Limited (CDL), the property development and real estate vehicle of the Kwek family's Hong Leong Singapore. Founded in 1941 by Kwek Hong Png, that company grew into a leading Singapore conglomerate. In 1972, Kwek extended his business interests into the real estate market by acquiring control of CDL, which had already completed several prominent developments in Singapore. CDL had been founded in 1963, and grew into one of the country's largest land holders before beginning its expansion onto the international market.
CDL's interest in the hotel market began only in the late 1980s, when the company acquired its first hotel, the King's Hotel, in Singapore in 1989. That acquisition was followed soon after by the purchase of the city's Orchid Hotel. The company continued to seek new hotel purchases in the Asian region. From the start, the company targeted the luxury hotel market, and by the early 1990s its holdings included the Regent in Kuala Lumpur, the Heritage Hotel in Manila, and the Grand Hyatt in Taipei. The expansion of the company's hotel operations began especially after Kwek Leng Beng took over as head of the family empire following his father's death. CDL began acquiring additional properties in the early 1990s. The depressed real estate and tourism markets at the start of the decade enabled the company to build a strong portfolio of choice sites at low prices.
CDL's first foray outside of the Asian region came in 1993. The company turned to London, buying the Gloucester Hotel. Soon after, the company entered the New Zealand market (destined to become one of the group's core markets), buying a chain of 13 hotels there.
Kwek Leng Beng now took CDL on a spending spree, paying out more than $1 billion over the next three years to boost its hotels portfolio to some 55 hotels, with more than 14,000 rooms, in 11 countries. Among the group's purchases were its first properties in the United States, including the Hilton and the Broadway in New York City, bought in 1994.
CDL boosted its U.K. presence in 1995, paying £219 million for the Copthorne group of hotels, formerly owned by Aer Lingus. That purchase also gave the company hotel properties in Paris and in Germany. Following the acquisition of Copthorne, CDL launched a new hotel brand, Millennium, and began rebranding a number of its assets, including the Gloucester, as well as its French and German hotels.
Also in 1995, CDL became the leading hotel group in New Zealand, boosting its portfolio there to 21 hotels. In the United States, meanwhile, the company became a joint owner of the prestigious Plaza in New York in partnership with Prince Alwaleed bin Talal of Saudi Arabia and Donald Trump.
In addition to acquiring properties, Kwek also plowed money into renovating and upgrading the hotels in CDL's portfolios, and raising rates in order to stake out what the company called the "luxury four-star" bracket. Positioned just below the heavily lauded five-star segment, CDL's hotels offered extensive amenities, including up-to-date technologies, at lower room rates.
The rise in the hotel market into the mid-1990s brought a surge in value in CDL's hotel holdings. CDL also continued to build up recognition of its new flagship brand, in an effort to place the Millennium name among the world's top hotel brands. An important step in that direction came in 1996, when CDL decided to spin off its 23 non-Pacific region Millennium and Copthorne hotels into a new company, Millennium & Copthorne Hotels, which was then listed on the London Stock Exchange. The new company, with operations focused especially in the United Kingdom, and with properties in the United States, France, and Germany as well, took London as its home base. CDL remained its primary shareholder, with 55 percent of MCH's shares.
Creating a Hotel Leader for the New Century
The successful offering enabled MCH to launch an ambitious expansion program. Soon after its initial public offering of stock, the company announced that it planned to spend as much as £150 million on new hotel acquisitions. The company made good on its intentions by October of that year, paying £81 million to acquire the 318-room Britannia in London.
The extension of the Copthorne brand to some of CDL's hotels in New Zealand in 1997, and then to a group of CDL's Asian hotels in 1998 set the stage for a merger of CDL's and MCH's hotel portfolios. This took place in April 1999, when MCH announced that it was paying £556 million to acquire CDL's 43 hotels in the Asia Pacific. Following the merger, MCH emerged as a major hotel group, with 67 hotels and 17,000 rooms. The company then confirmed its new presence in the Asian Pacific, paying £219 million to acquire the Seoul Hilton, a five-star hotel.
Soon after the acquisition of CDL's hotels, MCH made a new move to join the world's top hotel companies, paying £450 million to acquire 29 Regal hotels in the United States, as well as a number of smaller hotels under different names, from Regal International, a company registered in Hong Kong. The acquisition boosted the company's portfolio to nearly 100 hotels and placed it into the global top 50 hotel groups. By the end of 1999, MCH's portfolio had swelled to almost 120 hotels. Among the hotels acquired in the Regal deal was the famed Biltmore in Los Angeles.
The company set to work trimming its portfolio in 2000, selling off its less profitable assets, including 12 smaller hotels acquired with the Regal chain. By mid-2001, the company had trimmed back its holdings to a portfolio of 89 hotels, with a total of 24,000 rooms. This made the company one of the largest hotel operations in the Asian Pacific, and placed the company at number 34 among all hotel groups.
As it began integrating its acquisitions—including rebranding most of the Regal chain—MCH sought a new, less expensive means of expanding onto the European continent. In May 2000, the company formed an alliance with Germany's Maritim Hotels, establishing a cross-selling and joint-marketing partnership. Maritim controlled a portfolio of 39 predominantly Germany-based hotels.
In 2001, MCH began rolling out a new hotel brand, the so-called "boutique" brand M Hotel. The new concept targeted business travelers especially. The company began refitting its Copthorne Harbour View Hotel in Singapore (where, because of a trademark conflict, the company was not able to use the Millennium brand) and planned to launch the new hotel format at the end of the year.
In further expansion, the company entered the Middle East for the first time, winning long-term management contracts for two hotels in Morocco and two hotels in the United Arab Emirates. The company also secured three hotel management contracts in Turkey, and another in the Galapagos Islands.
Yet MCH, like most of the global tourism industry, was caught short by the September 11 terrorist attacks that year. MCH was directly affected by the attacks—the company's Millennium Hilton stood just across the street from the World Trade Center. The company also was caught up in the aftermath of the attacks, as the global tourism industry went into freefall.
It is the 40th largest hotel group in the world and is Singapore's largest hotel chain. The group's range of four-star and four-star deluxe properties as well as their six new five-star hotels reflect the individual characteristics of their location whilst delivering the high standards which today's business and leisure travellers require.
The Millennium Hilton reopened for business again in 2003 in time to profit from the upswing in the travel and tourism industries as hotel visits began to return to pre-9/11 levels. MCH announced its interest in new acquisitions into mid-decade. But the company also began pruning its own portfolio, taking advantage of the surge in hotel prices. In 2004, the company together with partner Alwaleed bin Talal announced that they were selling their stakes in the Plaza Hotel for $675 million—the highest per-room price ever paid for a New York hotel. MCH's profit from the sale came to nearly £52 million ($90 million).
The company, under CEO Tony Potter, admitted that it was "not sentimental" when it came to its hotel portfolio, acknowledging its willingness to negotiate individual purchases of its hotels. This openness led the company to put another of its landmark hotels up for sale, the Biltmore, in March 2005. The sale of that hotel was expected to raise as much as $500 million. Millennium & Copthorne Hotels by then had secured a place for itself among the world's top hotel groups.
ATOS Holdings AG (Austria); CDL Hotels Holdings New Zealand Limited; CDL Hotels New Zealand Limited (70%); CDL Hotels USA Inc; CDL Investments New Zealand Limited (43%); KIN Holdings Limited (New Zealand; 43%); Kingsgate International Corporation Limited (New Zealand; 43%); M&C Management Services (USA) Inc.; Millennium Hotels & Resorts Services Limited (U.K.); Millennium Partnercard Services Limited (U.K.); Quantum Limited (New Zealand; 49%); Tara Hotels Deutschland GmbH.
Loews Corporation; Radisson Hotels and Resorts; Orascom Group; Rallye S.A.; Mingly Corporation Limited; Carlson Holdings Inc.; Compass Group PLC; Hilton Group PLC; MARITIM Hotelgesellschaft GmbH; SABMiller; Tokyu Corporation.
- City Developments Limited (CDL) is founded in Singapore.
- The Hong Leong Group acquires control of CDL.
- CDL acquires its first hotels in Singapore.
- CDL acquires the Gloucester Hotel in London, its first hotel outside of the Asian Pacific; 13 hotels in New Zealand are acquired.
- Two hotels in New York are acquired.
- The Millennium hotel brand is launched; CDL acquires the Copthorne hotel group from Aer Lingus; a stake in the Plaza Hotel in New York City is acquired.
- CDL bundles its European and U.S. hotels into a new company, Millennium & Copthorne Hotels, which is listed on the London Stock Exchange.
- MCH acquires all the hotels from CDL, and then acquires the Regal Hotels in the United States.
- The company forms a cross-selling and marketing alliance with Maritim Hotels in Germany.
- The company acquires hotel management contracts in the Middle East, North Africa, and Turkey.
- The company sells a shareholding in the Plaza Hotel.
- The company announces its intention to sell the Biltmore Hotel in Los Angeles.
Armitage, Jim, "Millennium & Copthorne Books into London Revival," Evening Standard, February 21, 2005.
Doebele, Justin, and Heidi Brown, "The Man with the Golden Machine Gun," Forbes, July 9, 2001.
"A Hotel Chain Looks Ahead," Card Technology, July 3, 2002, p. 10.
"M&C Plans More UK Openings," Caterer & Hotelkeeper, February 24, 2005, p. 8.
Moore, Malcolm, "Millennium 'Back on Recovery Path,'" Daily Telegraph, August 9, 2002.
Nozar, Robert A., "Growth for Millennium," Hotel & Motel Management, June 19, 2000, p. 3.
"Pivotal Year for Top Hotels Group," Western Daily Press, February 22, 2005.
Tran, Tini, "Hotelier's Profit Triples on Revival in World Travel," Financial Post, November 5, 2004.
Walsh, Dominic, "M&C to Sell Hollywood's Favourite Hotel for $500m," The Times, March 23, 2005, p. 50.
——, "Millennium & Copthorne Checks Out of The Plaza in £370m Deal," The Times, August 14, 2004, p. 51.
—M. L. Cohen