Millennium & Copthorne to Close Bay Wing for Seismic Works: Is Copthorne Hotel Wellington Facing Impairment Risk?

Key Points from the Report

• Copthorne Hotel Wellington Oriental Bay’s Bay Wing (55 rooms) to progressively close from 6 October 2025 for seismic assessments and future strengthening works.
• Seismic strengthening works planned for 2026-2027; costs will be factored into future forecasts.
• The remainder of the hotel, including the Roxburgh Wing (63 rooms), meeting spaces and the award-winning one80 Restaurant and Bar, will remain open and operational.
• MCK does not expect the closure to have a material impact on group operating earnings for FY2025.
• Potential impairment risk: The carrying value of the Copthorne Hotel Wellington Oriental Bay may be reassessed at year-end. If the closure results in a material impairment, MCK will update the market.
• The hotel is part of MCK’s portfolio of 19 properties across New Zealand, with further interests in Australia and a majority stake in CDL Investments NZ.

Investor-Relevant Details and Price-Sensitive Information

Millennium & Copthorne Hotels New Zealand Limited (NZX:MCK) has announced a significant operational change at its Copthorne Hotel Wellington Oriental Bay. The Bay Wing, which consists of 55 rooms, will be closed from today in a staged process to allow for comprehensive engineering assessments and eventual seismic strengthening works. This closure is part of MCK’s commitment to safety and regulatory compliance, but it also introduces new considerations for investors regarding the property’s valuation and future cash flows.

Importantly, the remainder of the hotel will continue to operate as usual, including the 63-room Roxburgh Wing, all meeting spaces, and the popular one80 Restaurant and Bar. The seismic strengthening work is expected to take place during 2026 and 2027, with related costs incorporated into future financial forecasts. For now, MCK does not anticipate any material impact on its group operating earnings for the current financial year (FY2025).

However, shareholders should note a potentially price-sensitive issue: the closure of the Bay Wing may lead to a reassessment of the carrying value of the Copthorne Hotel Wellington Oriental Bay. If this reassessment results in a material impairment, it could affect MCK’s reported asset values and possibly its share price. MCK has stated that this will be evaluated as part of its financial year-end processes, and any material impairment will be disclosed to the market at that time.

The Copthorne Hotel Wellington Oriental Bay is a key asset within MCK’s network, which spans 19 owned/leased/franchised hotels under the Millennium, Grand Millennium, M Social, Copthorne, and Kingsgate brands. MCK is uniquely positioned as the only NZX-listed hotel owner-operator in New Zealand. The company also has property interests in Australia via its Kingsgate Group subsidiaries and a 50% joint venture stake in Sofitel Brisbane Central, in addition to its majority shareholding in land developer CDL Investments NZ Limited (NZX:CDI).

Implications for investors: While the closure and strengthening works are not expected to hit near-term earnings, the possibility of an impairment at year-end represents a potential risk to asset values and could be price-sensitive. Shareholders should monitor future disclosures for updates on the hotel’s carrying value and any impact on MCK’s financial position.

Conclusion

The progressive closure of a significant portion of Copthorne Hotel Wellington Oriental Bay for seismic strengthening, coupled with the risk of a material impairment, makes this announcement noteworthy for investors. While immediate earnings appear secure, changes in asset value could have longer-term repercussions for MCK’s share price.

Disclaimer: This article is for informational purposes only and should not be construed as financial advice. Investors should conduct their own due diligence or consult a qualified advisor before making investment decisions related to Millennium & Copthorne Hotels New Zealand Limited.

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