Mandarin Oriental International Limited - Mandarin Oriental Hotel ...

2004 INTERIM RESULTS HIGHLIGHTS 

Combined Total Revenue of Hotels 

under Management (US$m) 

EBITDA (US$m) 

Jun-2004 

304 

42.0 

� Reflects revival of international travel patterns 

� Results impacted by US$7.3 million of start up costs and initial 

operating losses related to new Washington D.C. property 

Jun-2003 

243 

19.8

2004 INTERIM RESULTS HIGHLIGHTS 

EBITDA (US$m) 

Profit / (Loss) Attributable to Shareholders 

(US$m) 

Funds from Operations (US$m) 

Earnings / (Loss) per Share (US¢) 

Funds from Operations per Share (US¢) 

Net Asset Value per Share (US$) * 

* including leasehold properties at valuation 

Jun-2004 

42.0 

5.6 

11.3 

0.66 

1.33 

Jun-2003 

19.8 

(10.7) 

(6.3) 

(1.26) 

(0.74) 

1.16 1.10

MANDARIN ORIENTAL VISION 

� To be recognised as one of the top luxury hotel groups 

� 10,000 rooms in key city and resort destinations 

� Brand promise to delight guests 

- Individually designed hotels 

- Consistent legendary service 

- Oriental heritage 

� Attract high-spending leisure guests 

- Spa concepts 

- Award-winning restaurants 

- Cutting edge entertainment systems 

- Hideaway resorts

FIRST HALF PERFORMANCE 2004 

KEY OBJECTIVES 

1. Improve our competitive position 

2. Towards 10,000 rooms under operation 

3. Leverage corporate core competencies 

4. Ensure strong cash flow and balance sheet







1 

IMPROVE OUR COMPETITIVE POSITION 

Worldwide 

� Strong recovery in leisure and corporate markets 

� Group occupancy back to 2002 levels 

� Most hotels enhanced or maintained leadership 

position in most markets

1 


� Success in achieving top awards in numerous 

readership surveys

1 


Asia 

Mandarin Oriental, Hong Kong 

(100% ownership) 

� Occupancy increased to 80% 

- 39% in 2003 

- 68% in 2002 

� Improved relative RevPar position 

� Food and beverage revenues rose by 

60%

1 


Asia 

Mandarin Oriental, Hong Kong 


� Hotel remains a key flagship and 

significant asset 

� Review underway of potential 

enhancements 

� Renovation would not commence 

before end 2005

1 


Asia 

The Excelsior, Hong Kong 


� Strong performance across all 

market segments 

� Occupancy increased to 88% 

- 49% in 2003 

- 82% in 2002 

� Increased average rates by 12% 

� China market now accounts for 

almost 20% of overall market mix

1 


Asia 

Mandarin Oriental, Manila 

(96.2% ownership) 

� Impacted by political and economic 

uncertainties 

� High rate sensitivity 

� Maintained competitive position 

� Increased occupancy to 77% 

compared to 61% in 2003 

� Dining and spa concepts ensure 

hotel remains well positioned

1 


Asia 

Mandarin Oriental, Jakarta 


� Increased occupancy levels to 41% 

from 36% in 2003 

� Successfully maintained average rate 

� Market remains oversupplied

1 


Asia 

Mandarin Oriental, Macau 


� Increased occupancy to 70% in 

the first half from 45% in 2003 

� Improved competitive position 

� Enhanced facilities : 

- Increased luxury retail 

- “Mezzaluna” 

- “Bela Vista”

1 


Asia 

The Oriental, Singapore 


� Stronger corporate demand and 

increased regional leisure travel 

� Increased occupancy to 70% from 

44% in 2003 

� 3 month renovation to take place from 

mid August 

� Temporary suspension of hotel 

operations 

� Reposition as one of the city’s leading 

hotels 

� No funding required from Group

1 


Asia 

The Oriental, Bangkok 


� Maintained position as market 

leader in RevPar 

� Reduced occupancy due to decline 

in visitor arrivals in early months of 

2004

1 


Asia 

The Oriental, Bangkok 


� Maintained position as market 

leader in RevPar 

� Reduced occupancy due to decline 

in visitor arrivals in early months of 

2004 

� Continued global recognition

1 


Asia 

Mandarin Oriental, Kuala Lumpur 


� Improved occupancy levels to 82% 

from 66% in 2003 

� Continues to outperform competition

1 


Europe 

Mandarin Oriental Hyde Park, London 


� Strong performance and an improved 

competitive position 

� Increased occupancy at 73% 

- 65% in 2003 

- 69% in 2002 

� Average rate increase of 6% to £326 

� RevPar increased by 19% 

� Leisure segment now represents over 

40% of total room nights

1 


Europe 

Mandarin Oriental Hyde Park, London 


“19th century architecture and 21 st 

century design blend to make 

Mandarin Oriental one of the 

hippest grand hotels in London” 

The Times, UK

1 


Europe 

Mandarin Oriental, Munich 


� Maintained leadership position 

� Occupancy at 75% versus 76% in 

2003 

� Average rate slightly improved, in 

local currency terms

1 


Europe 

Mandarin Oriental 

Hotel du Rhône, Geneva 


� Maintained competitive position 

� Impacted by subdued corporate 

demand 

� Occupancy at 57% versus 54% in 

2003

1 


The Americas 

The Mark, New York 


� Occupancy levels increased to 67% 

from 57% in 2003 

� Improved demand from corporate 

sector 

� RevPar increased by 22% in first six 

months

1 


The Americas 

Mandarin Oriental, New York 


� Establishing itself as one of New 

York’s leading luxury hotels 

� Achieved average rate of US$563 

� Leisure guests account for 42% of 

total room nights 

� In May and June, hotel averaged a 

63% occupancy at an average rate of 

US$590 

� Significant revenues from Food & 

Beverage and Spa operations

1 


The Americas

1 


The Americas 

Mandarin Oriental, New York 


� Establishing itself as one of New 

York’s leading luxury hotels 

� Achieved average rate of US$563 

� Leisure guests account for 42% of 

total room nights 

� In May and June, hotel averaged a 

63% occupancy at an average rate of 

US$590 

� Significant revenues from Food & 

Beverage and Spa operations 

� Lower occupancies in early months 

adversely affected hotel’s contribution

1 


The Americas 

Mandarin Oriental, Washington DC 


� Opened on 23 rd March 2004 

� Results impacted by pre-opening 

costs and initial operating losses 

� Operating results expected to 

improve as hotel stabilises

1 


The Americas

1 


The Americas

1 


The Americas

1 


The Americas 

Kahala Mandarin, Oriental, Hawaii 


� Increased RevPar by 17% from 

2003 

� Improved average rate and 

occupancy 

� Spa suites continue to attract 

attention 

� Continued recognition

1 


The Americas 

Mandarin Oriental, Miami 


� Reputation as leading urban resort in 

Florida 

� Increased RevPar by 23% 

� Increased food and beverage 

revenues 

� Spa revenue up by more than 20% 

� Numerous awards for excellence

1 


The Americas

1 


The Americas 

Mandarin Oriental, San Francisco 

(Management contract) 

� Local market recovery underway 

� Increased occupancy 

� Average rate one of city’s highest

1 


The Americas 

Elbow Beach, Bermuda 


� Total redesign of garden and 

beachfront cottages underway 

� Introduction of Mandarin Oriental spa







2 

TOWARDS 10,000 ROOMS 

Worldwide 

� Significant progress in reaching our 

objective 

- 20 hotels in operation 

- 5 under development 

- Portfolio, including hotels under 

development, now at 7,700 rooms

2 


The Landmark Mandarin Oriental, 

Hong Kong (Management contract) 

� On schedule to open third quarter 2005 

� 114 guest rooms – largest in Hong Kong 

� Signature restaurant 

� State-of-the-art spa

2 


Mandarin Oriental, Tokyo 

(Long term lease) 

� Construction well underway 

� 171 guest rooms 

� Scheduled to open in early 

2006 

� Prime city location

2 


Mandarin Oriental, Boston 


� Scheduled to open in late 2006 

� 149 guest rooms 

� Part of a premier mixed use complex 

in the heart of the city

2 


The Residences at 

Mandarin Oriental 

(New York & Boston) 

� Provide bespoke services to 

residents 

� Access to hotel facilities

2 


Mandarin Oriental “Hideaways” 

� Management contracts 

� Exclusive retreats

2 


Mandarin Oriental Dhara Dhevi, 

Chiang Mai (Management contract) 

� Opening winter 2004 

� 142 spacious villas and suites 

� 35 landscaped hectares in Northern 

Thailand 

� Extensive resort facilities 

� Natural synergy with The Oriental, 

Bangkok

2 


Mandarin Oriental Riviera Maya, 

Mexico 


� Construction underway 

� Located on the secluded Riviera 

Maya coastline 

� Opening late 2005 

� 128 open-plan villas and spa

HOTEL ROYAL MONCEAU, PARIS 

Hotel Royal Monceau, Paris 

(Management contract from July 2004) 

� One of the city’s renowned properties 

� Leading interior designer appointed 

� Significant renovation underway 

� Re-branded as Mandarin Oriental 

hotel in spring 2005

2 


� Increased management contracts 

� New developments under review in other key city centres and 

resort locations







3 

LEVERAGE CORPORATE 

CORE COMPETENCIES 

� Fine-tuning of corporate resource 

� Hotel management operations will benefit from growing fees 

from new hotels 

� Brand defining experiences: 

� interior design 

� technology 

� spa and restaurants 

� sense of place 

� oriental heritage 

� Legendary quality service remains foundation 

� Tailored marketing: 

� New website launched 

� Internet bookings at 6% of room nights sold

3 


CORE COMPETENCIES 

� Continued appeal of celebrity “fans”


CORE COMPETENCIES


CORE COMPETENCIES







FINANCIAL REVIEW 

� Changes to financial statements in 2003 following revisions 

to International Financial Reporting Standards (IFRS) 

� Introduced depreciation on hotel buildings 

� Differs from Hong Kong generally accepted accounting 

principles practised by other hotel groups in Hong Kong


� FFO introduced to provide additional information 

� Facilitates comparison with other Hong Kong hotel groups 

June June 

2004 2003 

US$m US$m 

Profit/(Loss) Attributable to Shareholders 5.6 (10.7) 

Depreciation on Hotel Buildings, Net of Tax & 

Minority Interests 

5.7 4.4 

Funds from Operations (FFO) 11.3 (6.3)


June June 

2004 2003 

US$m US$m 

Shareholders’ Funds – IFRS 607 564 

Revaluation of Leasehold Interests 378 371 

Adjusted Shareholders’ Funds 985 935 

� Economic substance of 999 year leases of HK properties not reflected in 

IFRS numbers


Net Asset Value Per Share (US$) 

Adjusted Net Asset Value Per Share (US$)* 

* Net assets adjusted to reflect fair market value of leasehold interests 

� Reflects positive currency movements 

� No significant changes in property valuations 

June June 

2004 2003 

US$m US$m 

Shareholders’ Funds – IFRS 607 564 

Revaluation of Leasehold Interests 378 371 

Adjusted Shareholders’ Funds 985 935 

0.71 

1.16 

0.66 

1.10


June 

2004 

Gearing (net debt over adjusted shareholders’ funds) 53% 49% 

Gearing (assuming conversion of convertible bonds) 42% 38% 

� Group’s financial capacity 

� US$59m cash 

� US$192m committed, unused facilities 

� Average term of Group’s borrowings is approximately 5 years 

June 

2003


June June 

2004 2003 

US$m US$m 

Summary Cash Flows 

� EBITDA from subsidiaries 31 13 

� Dividends from associates 4 3 

� Net financing charges paid (12) (11) 

� Other (10) (8) 

Operating Activities 13 (3) 

� Weighted average borrowings rate at 4.3% down from 4.7% in 2003 

� 69% of gross debt hedged 

� EBITDA (including associates) net interest cover of 2.6 times versus 1.4 times in 2003


June June 

2004 2003 

US$m US$m 

Operating Activities 13 (3) 

Investment Activities 

� Capital expenditure on existing properties (3) (5) 

� Washington DC Investment (25) (31) 

� Washington DC tax increment financing (TIF) - 4 

� Repayment of loans to joint venture and associates 7 6 

� Disposal of other investment 13 - 

� Other (1) - 

Financing Activities 

� Net (repayment)/drawdown of borrowings (12) 24 

� Other 1 - 

Net decrease in cash and cash equivalents (7) (5)

INTERIM RESULTS 2004 

Conclusion 

� First six months pivotal to achieving strategy 

� Encouraging recovery in most markets 

� Second half is traditionally stronger 

� Completed heavy capital commitments 

� Results will benefit from New York and Washington D.C. 

hotels as they stabilise 

� Three management contracts in first half 

� Global uncertainty continues 

� Benefiting from leadership position

Mandarin Oriental International Limited - Mandarin Oriental Hotel ...

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