''I think the hotel's owner, Truetop Development, felt that it was more profitable to lease the hotel rather than to run it,'' said Mr Ronny Tang, the property financial controller.

The name change has highlighted the difficulty in marketing boutique hotels which do not have an established presence in the territory.

Mr Liam Lambert, general manager of the Excelsior hotel, said such hotels needed a very strong promotional campaign to support sales.

''Normally a small hotel would find it difficult to afford an on-going publicity campaign,'' he said.

''They are often reliant on publicity through word of mouth to generate their popularity.'' Mr Lambert said successful boutique hotels usually were quite old with long-established reputations.

''You need time to establish the hotel. Also, the fixed costs of hotels are very high. To generate profits, you have to drive occupancy up,'' he said.

''But as boutique hotels are small, this becomes difficult as they don't have the rooms for bigger occupancy.'' The new management of the Richmond has removed an entire floor of rooms to make way for a karaoke lounge named Top Ten, and it plans to install several rooms with karaoke facilities.

''Those rooms will cost more than the usual rooms,'' said Mr Tang.

The renovation works have been estimated to cost $20 million and are expected to be completed in April.

The hotel will still be marketed as a boutique property, offering the benefits of a small hotel with the services of a five-star property.

However, the management said rooms rates would rise 20 per cent when the renovations were complete.

''Unlike the previous management which aimed at the European market, we will now be going for the Asian market. We will also be looking for long-term guests who will be staying for one to two months,'' Mr Tang said.

He said the hotel would set aside one or two floors for such guests.