Hotelier, Millennium & Copthorne, has reported a steep fall in pre-tax profits for the three months ended 31 March.

On group turnover of £125.1m for the period, compared with £135.6m at the same time last year, operating profit was almost halved at £9.6m, against £18.5m, and pre-tax profit was £4.7m, compared with £7.6m. Group RevPar was down 5 per cent on the same period last year.Chair, Kwek Leng Beng, said despite a promising start to the year - with RevPar to 21 February down only 2 per cent on the previous year - the hostilities in Iraq and the outbreak of SARS had had a severe impact on trading, particularly in south east Asia.

This impact is being mitigated by the closure of unprofitable outlets, the 'moth-balling' of guest rooms and a shorter working week for staff in the region.Elsewhere during the period, a staff hostel in London was sold, realising a profit of £4m, as was the group's shareholding of a partly completed hotel in China, raising a £2.1m profit. The Millennium Sydney has now closed and the conversion of one of its towers into residential accommodation has begun.

On 31 March, the company bought the remaining 60 per cent of The Sunnyvale Four Points Hotel in California, for a cost of £2.6m.Since the end of the quarter, an improvement in trading in both the US and Europe has been seen since the end of the war in Iraq, but business in Asia continues to be severely affected by SARS.

RevPar decline for April in Asia was 52 per cent, with the falls for New York for the same period being 23 percent; the rest of the US, 20 per cent: London, 25 per cent and the rest of Europe, 15 per cent.Australasia continued to show growth, with RevPar up 6 per cent for the same period.

The Millennium Hilton in New York - closed since 11 September, 2001 - was partially reopened on 5 May. Initial bookings are said to be encouraging and the group is focusing on opening it fully as soon as possible. The hotel made a loss of $4.1m in the first quarter of the year, relating to ongoing fixed expenses and pre-opening costs. Looking forward, the company said profit for the six months to 30 June would be significantly lower than the same period in 2002, a result of the combination of Middle East hostilities and SARS, coupled with a decision not to recognise business interruption insurance for the Millennium Hilton in New York. Details: www.millennium-copthorne.com