Excelsior checking out:Top News | Jeannie Tang and Jane Cheung 10 Oct 2018
Old favorite hotel The Excelsior in Causeway Bay will close at the end of March next year to be revamped as a commercial center.
Mandarin Oriental International announced the HK$5 billion scheme for the Land Registry's "Lot No 1," site of the first Jardine warehouse, yesterday.
The hotel is now opposite the Jardine Noonday Gun, which is fired by a Jardine employee every day, making the venue a tourist attraction.
The group has approval for the development of a mixed-use commercial building with gross floor area of 63,500 square meters. The project is expected to take up to six years.
The cost will be funded through external debt and cash reserves. About US$15 million (HK$117.5 million) in costs will be incurred next year, but most will come after 2023. The Excelsior site is mortgage free.
The decision reflects strong commercial property values in Hong Kong and the expected higher yield of a commercial building as a hotel requires significant investment, said the group.
Mandarin Oriental would record an accounting gain of about US$2.9 billion due to the site reclassification.
James Riley, group chief executive, said it will ensure all Excelsior colleagues are treated fairly, with many offered positions in other Mandarin Oriental properties.
The group had net debt of US$325 million, with gearing of 6 percent, on June 30 this year.
The Excelsior opened in 1973 and was offered for sale in June last year by Mandarin Oriental, but no deal was reached.
Vincent Cheung, deputy managing director for Asia valuations and advisory services at Colliers International, expected the site's price to increase to HK$60,000 per square foot after it is redeveloped as an office building. The land price per floor area of the site is HK$40,000 to HK$45,000.
Edmond Wong, director of hotel valuation & advisory services at CBRE Hong Kong, said the closing down of the Excelsior, together with the potential redevelopment of the Crown Plaza in Causeway Bay, will see a reduction of about 10 percent of hotel rooms in the district, adding that the current supply of rooms over there is adequate.
Mandarin Oriental said the loss of earnings from The Excelsior will be made up by the reopening of its hotels in London and Madrid, which are now under renovation, while the redevelopment will not affect dividends paid.
To many locals and visitors, Causeway Bay is the heart of Hong Kong. But it wasn't that long ago that its seafront was lined with warehouses.
In its heyday, Jardines owned the waterfront and almost everything on it. It was the first piece of land to go under the public auctioneer's hammer in 1841, soon after island became a British colony, and it is still Lot No 1.
The one-gun salute tradition is said to have started when a royal naval officer who was new to Hong Kong became annoyed at the frequent gun shots fired by Jardine employees.
At that time, Jardine employees fired a shot whenever the head of the company sailed into port. As a punishment, the naval officer ordered Jardine to fire a one-shot salute every day at noon. The tradition was kept for years and was only suspended during the Japanese occupation in Hong Kong in 1941.
Another version of the story says that in the 1840s, Jardine set up the gun to protect the waterfront against pirate attacks.
It was later used to fire one-gun salutes every time a prominent figure arrived or left Hong Kong.
Jardine has another tradition of firing a one-gun salute at 12am on January 1 every year to welcome the New Year.
All the rooms at the Excelsior have a sea view and it has attracted many prominent figures, including Prince Charles, American singer Tony Bennett and American actress Liza Minnelli.
Australian-Hongkonger Vivian Ng was sad when she was told Excelsior will be under the bulldozer next year. She and her husband visit the SAR almost every year and have stayed at the Excelsior for the past 40 years.
The 73-year-old professional nurse said it was sad news because the hotel carried many precious memories. Having been a long-time customer, Ng said the hotel would give her a discounted package for staying there. "But I still thank the hotel for giving us excellent service, which made us feel like we're home.
"We had a great time there and it's all that matters."