Hotel chain to get payout for SARS-related lossesPosted On: Nov. 2, 2003 12:00 AM CST
HONG KONG-Mandarin Oriental International Ltd. will receive $16 million from its insurers to pay for business interruption losses suffered by the group's hotels in Asia as a result of the severe acute respiratory syndrome outbreak.
Mandarin Oriental hotels in Hong Kong, Malaysia, Singapore and Thailand all lost business due to cancellations and reduced local food and beverage sales stemming from the SARS outbreak, a Mandarin Oriental spokeswoman in London said.
The Hong Kong-based hotel group has received a $2.5 million interim payment from its insurers, led by AIG Europe Ltd., a London-based unit of American International Group Inc. The company will receive an additional $13.5 million from its insurers.
The spokeswoman would not disclose the amount of the claim Mandarin Oriental submitted but said that the hotel group was "very satisfied" with the settlement.
Although infectious diseases were covered in the company's business interruption policy last year, "it was not possible to maintain the same scope of cover when the insurance policies were renewed on July 1, 2003," John Witt, chief financial officer, said in a statement.
The SARS outbreak began in China late last year. The pneumonia-like virus spread rapidly in Asia, killing hundreds, reducing travel to several cities and causing the cancellation or relocation of several large events. Among the affected events was the Women's World Cup soccer tournament, which was scheduled to played in China but was moved to the United States.