Outlook remains uncertain, warns Peninsula operator

Caroline Zheng

Peninsula Hotels operator The Hongkong and Shanghai Hotels (0045) said the occupancy rate at The Peninsula Hong Kong rose to 46 percent in the first quarter, with the average room rate exceeding HK$7,000.

However, the hotel group warned that the outlook for the second half this year remains uncertain.

Long-haul visitor arrivals remain slower than expected in Hong Kong in the first three months whereas its new hotels opened last year in London and Istanbul have not yet reached a stabilized earnings level, it said.

As of March, the occupancy rate its flagship 300-room hotel in Hong Kong rose 7 percentage points to 46 percent from a year ago, despite a 4 percentage point quarterly drop. The figure was also well below the 70 percent occupancy rate in the first quarter of 2019 before the Covid pandemic hit.

The average room rate, which measures the average rental revenue earned for an occupied room per day, jumped nearly 30 percent to HK$7,169 in the first three months from a year earlier. Revenue per available room, calculated by dividing total room revenue by the total number of rooms available, soared 54 percent to HK$3,327 during the same period.

In other regions, the group said business is robust at The Peninsula Tokyo with continued high room rates while business in the rest of Asia and the US is satisfactory.

At its annual general meeting yesterday, chief executive Clement Kwok King-man said he believes the gearing ratio, which went up during Covid, will be managed to a sustainable level through plans such as asset disposals.

On a shareholder's suggestion to run casino hotels to boost revenue, Kwok noted the firm had been approached by casino operators for collaboration but he believed such development is not in line with the company's overall strategy.

Kwok retires at the end of October this year and chief operating officer Peter Camille Borer will also step down by July.

Chairman Michael Kadoorie said the group has formulated a succession plan and previous successions had been successful.

Commenting on his own succession plan, Kadoorie, 82, said he will stay in his role as long as he is in good health and can provide value to the company, adding that his son Philip Kadoorie is well placed to continue as the fourth generation of the family in supporting the company when the time comes.