Excelsior project targets business
THE Excelsior Hotel will spend $34 million on renovations and expansion with a view to attracting more business travellers.
The project will be the biggest capital reinvestment by the hotel since it opened 20 years ago, according to general manager Liam Lambert.
''We will have a $15 million Chinese restaurant and a $7 million health club which will be ready later this year,'' he said.
A further $7 million will be spent on computerising lifts and upgrading executive floors. Installation of sprinklers in guest rooms in line with new regulations to upgrade fire safety will cost another $16 million.
''A lot of research was done into each individual project,'' Mr Lambert said.
He said work on the restaurant, health club and executive floors would be profit-generating, while work on the lifts and sprinklers would enhance performance and be of great benefit to guests.
The exercise is part of the hotel's aim to reposition and change its market mix.
''We will be repositioning the hotel to encourage more business travellers,'' he said.
Mr Lambert sees sense in targeting business travellers as the group is one which utilises the hotel's facilities the most.
''In a hotel, you have people who just stay in the rooms and do not use any of its facilities. Business travellers are one group who use the fax machines, telephones, restaurants, health club, laundry and valet services,'' he said.
Business travellers currently make up about 17 per cent of the hotel's market mix, and Mr Lambert hopes to increase the proportion to 25 per cent.
Wholesalers, who make up the largest segment of the business market, are targeted for a shift to 45 per cent.
The hotel recently signed a three-year contract with British Airways to supply the airline with 120 rooms a night.
Mr Lambert said airline contracts were solid, dependable and long-term business and the hotel hoped to lift its share of the market.
''They are guaranteed business for 365 days for three years,'' he said.
Despite the high reinvestment capital and operating costs, the hotel has a policy of stabilising room rates rather than increasing them.
''Our approach for the next few years is to stabilise rates and to implement some strategic pricing decisions,'' he said.
''The history of pricing in Hongkong has been somewhat volatile. Prices grew up to the Tiananmen Square incident and then retreated and took on a down spiral.
''This was followed by the Gulf War and again prices were affected. Operating costs, however, did not go down.
''The cost of labour increases by 11 per cent per annum and the cost of wine, food and energy increased similarly,'' he said, adding this had led to a stagnation of revenue.
He said there was a general feeling in the industry that it would take about three years for prices to stabilise.
The hotel will be celebrating its 20th anniversary on February 20 with a noon gun firing, a 20-tier birthday cake, special food and beverage offers and gala receptions.