Mandarin Oriental International Limited - Mandarin Oriental Hotel ...

2005 ANNUAL RESULTS HIGHLIGHTS 

Combined Total Revenue (US$m) 

EBITDA (US$m) 124 

99 

� Strengthening demand leading to significant rate increases 

� Positive impact of growing portfolio 

2005 

815 

2004 

667


EBITDA 

2005 

US$m 

124 

Profit attributable to shareholders 77 28 

Profit attributable to shareholders ( excl. 

Hawaii US$36m gain in 2005 and excl. 

US$10m write-back in 2004) 

Funds from operations 

� Profit back to pre-Asian crisis levels 

41 

90 

2004 

US$m 

99 

18 

41


Earnings per Share (US¢) 8.14 

3.35 

Adjusted Earnings per Share (US¢)* 

Net Asset Value per Share (US$)** 

� US$35 million gain from successful sale of The Mark to be 

recognised in 2006 

� Recommended dividend of US¢1.5 per share 

(2004 – US¢1.0 per share) 

2005 

4.33 

2004 

2.11 

1.50 1.37 

* Excludes Hawaii gain (2005) and excludes investment write-back (2004) 

**Includes leasehold land at valuation

2005 PERFORMANCE 

KEY STRATEGIC OBJECTIVES 

� Improve our competitive position 

� Towards 10,000 rooms under operation 

� Invest in the brand 

� Ensure strong cashflow and balance sheet

IMPROVE OUR COMPETITIVE POSITION 

Worldwide Review 

� Strengthening demand with limited new supply 

� Baby boomer generation benefits industry 

� Promising outbound markets (China, India, Russia) 

� Premium rates achieved in key markets 

� Strong competitive position maintained

RevPAR in (US$) 


400 

350 

300 

250 

200 

150 

100 

50 

0 

+21% 

2004 2005 

ASIA 

+7% 

2004 2005 

EUROPE 

+26% 

2004 2005 

THE AMERICAS 

+21% 

COMBINED 

TOTAL 

� Excludes hotels without a full year operation in both years


Asia 

Mandarin Oriental, Hong Kong 

(100% ownership) 

� Strong city-wide demand improves rate 

� 81% occupancy (80% in 2004) 

� Average room rates increased by 22% 

to US$256

Average Room Rate (US$) 

300 

250 

200 

150 

100 

50 

0 

MANDARIN ORIENTAL, HONG KONG 

SUMMARY OF PERFORMANCE 

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005


Asia 

Mandarin Oriental, Hong Kong 


� US$140m renovation 

� One of the world’s legendary hotels 

� Rate increase expected post renovation 

� Vast majority of staff employed during 

closure period 

� Re-opening Autumn 2006


Asia 

The Excelsior, Hong Kong 


� Maintained occupancy at 88% 

� 22% increase in average room rates 

� Food and beverage revenues up 10% 

over 2004

Average Room Rate (US$) 

160 

140 

120 

100 

80 

60 

40 

20 

0 

THE EXCELSIOR, HONG KONG 

SUMMARY OF PERFORMANCE 

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005


Asia 

The Landmark Mandarin Oriental, 

Hong Kong 

(Management contract) 

� Intimate luxury hotel at top of Hong 

Kong market 

� Highest average rate in city at over 

US$400 

� Hotel already winning awards: 

�“City Hotel of the Year” 

UK Tatler Travel Awards 2006 

�“Best New City Hotel” 

Andrew Harper’s Hideaway 

Awards 2006


Asia 

Mandarin Oriental, Macau 


� Average rate increased to US$153 

(US$118 in 2004) 

� RevPAR increased by 22%


Asia 

The Oriental, Singapore 


� Better market conditions 

� Renovation completed in May 

� Successful repositioning 

� 52% increase in average room rate


Asia 

The Oriental, Bangkok 

(44.9% ownership) 

� One of the world’s favourite hotels 

� Full scale renovation complete 

� Outperforms the market


Asia 

Mandarin Oriental, Tokyo 

(Long-term lease) 

� 179-room hotel opened in Dec. 2005 

� Quickly establishing leading market 

position 

� Average rate above US$500


Europe 

Mandarin Oriental Hyde Park, 

London 


� One of city’s best hotels 

� Average rate at US$643 

� Annual occupancy unchanged despite 

terrorist attacks


Europe 

Mandarin Oriental, Munich 


� Market leader 

� Average rate up 8% 

� Restaurant gained first Michelin Star


Europe 

Mandarin Oriental Hotel du Rhône, 

Geneva 

(92.6% ownership) 

� 15% increase in RevPAR over 2004 

� Average rate of US$440


Europe 

� Mandarin Oriental relinquished management of Hotel 

Royal Monceau, Paris in late 2005.


The Americas 

Mandarin Oriental, Washington D.C 


� Established market position as a 

leading hotel in the city 

� Occupancy increased to 60% 

(44% in 2004) 

� Average rate at US$290 

(US$249 in 2004)


The Americas 

Mandarin Oriental, New York 


� Excellent 2005 performance 

� Impressive media coverage 

� 72% occupancy (55% in 2004) 

� US$695 average rate (US$614 in 2004) 

� RevPAR up by 48%


The Americas 

The Mark, New York 

� US$150 million sale completed in 

February 2006 

� US$35 million post-tax gain will be 

recognised in 2006 results 

� Part of US$143 million Rafael Group 

acquisition in 2000 which also included 

the Geneva and Munich hotels 

� Short term management contract


The Americas 

Other Hotels 

� RevPAR up 19% in Miami and 15% in 

San Francisco 

� Following the sale of its 40% interest 

in Hawaii hotel, Mandarin Oriental no 

longer manages the property

TOWARDS 10,000 ROOMS 

� Consolidated position as pre-eminent luxury brand 

� 21 hotels in operation 

� 8 under development 

� 8,500 rooms worldwide 

� Better geographic spread: 14 in Asia; 11 in the US; 4 in Europe 

� Accelerating growth towards 10,000 rooms 

� 5 management contracts announced in last 12 months 

� Significant pipeline of opportunities

2006 OPENINGS 

Mandarin Oriental, Prague 

(Management only) 

� 98 rooms 

Mandarin Oriental, Riviera Maya, Mexico 


� 128 villas 

� A Mandarin Oriental “hideaway” 

Mandarin Oriental, Sanya 


� 292 rooms

2007 OPENINGS 

Mandarin Oriental, Boston 


� 149 rooms 

� Includes a “Residences at Mandarin 

Oriental” component

2008 OPENINGS 

Mandarin Oriental, Grand Cayman 


� 114 rooms 

� A Mandarin Oriental “hideaway”

2009 OPENINGS 

Mandarin Oriental, Chicago 



Oriental” component 

� 250 rooms 

Mandarin Oriental, Las Vegas 



Oriental” component 

� 400 rooms 

Macau 


� Second Mandarin Oriental hotel 

� 210 rooms

TOWARDS 10,000 ROOMS 

� Management Contracts 

� All 8 hotels under development 

� Additional source of revenue with limited financial commitments 

� Ownership of Hotels 

� Significant ownership interests in strategic city centres 

� Unique investments with potential long-term capital appreciation 

� Balanced Strategy of Ownership and Management 

� Builds credibility with third party hotel developers 

� Ensures control of brand heritage

INVEST IN THE BRAND 

� Continued investment in brand 

� Increased recognition of Group’s expertise of managing 

luxury hotels in city centres and resorts 

� Significant awards and media coverage


� Group Award Highlights 

“Top Luxury Hotel Group” 

Luxury Institute’s Customer Experience 

Survey, 2006 

“Best Business Hotel Group 

in The Americas” 

Conde Nast Traveler US, October 2005

INTERNATIONAL RECOGNITION 

� “Style, grace, modern beauty” and a “sleek Asian feel” make 

staying at any Mandarin Oriental “a treat”. 

Zagat, 2005 

� “The small and stylish Mandarin Oriental Hotel Group takes 

top honours among hotel chains in both the United States 

and the Americas….” 

Conde Nast Traveler, US, 

2005 Business Travel Awards 

� “Mandarin Oriental Hotel Group’s Asian service ethic is like 

no other”. 

Forbes, 2005


� Well recognised brand and 

strong company culture 

motivates our 10,000 staff 

� Continuous investment in 

training and development

BRAND ATTRIBUTES 

� Holistic spa operations 

� Innovative dining 

� Guest-oriented technology 

� Creative design 

� Solid foundation for growth with 

limited increase in corporate 

costs

ENSURE STRONG CASHFLOW AND 

BALANCE SHEET 

EBITDA from subsidiary and associate hotels 

EBITDA after adding back Tokyo pre-opening costs 

2005 

US$m 

124 

135 

� Pre-opening costs of new, owned hotels have had a negative impact 

on profit in recent years 

� 8 projects currently under development are management contracts 

and pre-opening costs will not be incurred by the Group


BALANCE SHEET 

EBITDA from subsidiary and associate hotels 

EBITDA after adding back Tokyo pre-opening costs 

Profit attributable to shareholders (excluding Hawaii 

gain) 

Normalised profit attributable to shareholders 

(after adding back Tokyo pre-opening costs) 

Normalised funds from operations 

2005 

US$m 

124 

135 

41 

52 

65


BALANCE SHEET 

1995 1996 2005 

Funds from operations (FFO)* US$m 51 56 65 

Year end share price US¢ 1.17 1.37 0.84 

* FFO is profit attributable to shareholders, after adding back costs of 

building depreciation 

� Group’s portfolio of hotels is more promising than in the mid-1990’s


BALANCE SHEET 

2006 RESULTS 

� Affected by temporary closure of Hong Kong hotel, 

which will be partially offset by contribution from 

growing portfolio 

� Will include US$35 million gain from sale of The Mark 

hotel


BALANCE SHEET 

FUTURE PROFIT GROWTH FROM: 

� Legacy hotels 

� Recently opened hotels 

� Hotel management


LEGACY HOTELS 

� Many already renovated 

� Increasing room rates and 

occupancy in most markets 

� Growing demand and limited new 

supply 

� Group benefits from ownership 

interests


RECENTLY OPENED HOTELS 

� 3-4 years to fully stabilise


HOTEL MANAGEMENT 

� Fees to grow in line with increasing 

hotel revenues 

� Medium term objective is for 30% 

of total profit to come from managed 

hotels vs. 10% in 2005 

� Value of management company not 

fully reflected in N.A.V.

FINANCIAL REVIEW 

Summary Cash Flow Statement 2005 2004 

US$m US$m 

Operating activities 

� EBITDA from subsidiaries 91 75 

� Dividends and interest from associates 16 9 

----- ----- 

107 84



US$m US$m 

Operating activities continued 

� Net financing charges paid (24) (27) 

� Conversion of US$75 million convertible bonds in early 2005 

� Net debt further reduced with proceeds on Hawaii disposal 

� Average interest rate of 4.7% in 2005 on Group borrowings 

� Approximately 70% of Group’s gross debt hedged



US$m US$m 

Operating activities - continued 

� EBITDA from subsidiaries 91 75 

� Dividends and interest from associates 16 9 

� Net financing charges paid (24) (27) 

� Tax paid (14) (8) 

� Other 4 (2) 

____ ____ 

Total 73 47



US$m US$m 

Investing activities 

� Capital expenditure on existing properties* (28) (11) 

� Investment in Tokyo (furniture and equipment) (12) - 

� Mezzanine loan to Boston hotel (12) - 

� Washington D.C. investment - (30) 

� Proceeds on disposal of associates (mainly Hawaii) 95 - 

� Other - 13 

_____ _____ 

Total 43 (28) 

* Capex on existing properties includes US$7 million for initial works on 

Mandarin Oriental, Hong Kong’s renovation



US$m US$m 

Operating activities 73 47 

Investing activities 43 (28) 

_____ _____ 

Financing activities 

116 19 

� Drawdown of borrowings 115 29 

� Repayment of borrowings (52) 

� Dividends paid 

� Other 

_____ _____ 

Net movement in cash in year 103 - 

==== ==== 

Cash balances at 31st (117) 

(10) 

- 

(1) 

4 

December 169 66 

==== ====


2005 2004 

Gearing (net debt over adjusted shareholders’ 22% 44% 

funds) 

� Average term of Group’s borrowings is approximately 4 years 

� US$169m of cash balances and approximately US$270m committed, 

unused facilities 

� EBITDA (including associates) cover of net interest was 3.8x vs. 2.8x 

in 2004

CONCLUSION 

� Solid profit performance in 2005 

� Strengthening demand with limited new supply 

� Demographic trends positive for industry 

� 2006 results impacted by Hong Kong closure but geographic 

spread will help 

� Group is well positioned with portfolio of new and renovated 

hotels 

� Profitably leverage the Mandarin Oriental brand with 

management contracts

CONCLUSION

Mandarin Oriental International Limited - Mandarin Oriental Hotel ...

Create successful ePaper yourself

Delete template?

Save as template?