Profits up, but Peninsula chain hit by Japan's crisis
Hongkong and Shanghai Hotels, owner of the Peninsula luxury hotel chain, suffered in the aftermath of Japan's nuclear crisis, despite delivering a 26 per cent jump in underlying profit to HK$408 million last year.
Including non-operating items such as a surplus in revaluation of investment properties, the group's attributable profit rose to HK$3 billion from a restated HK$2.66 billion on turnover, which was 12 per cent up at HK$4.70 billion.
Chief executive and managing director Clement Kwok King Man said Japan's economic recovery was weak last year, and parts of the US market were also weak. Kwok said the March 11 earthquake and subsequent problems with nuclear power stations posed a fresh challenge for the group.
The earthquake left the 314 guest rooms of the Peninsula hotel in Tokyo's financial district of Marunouchi at 20 per cent occupancy, sharply down from its normal level of nearly 70 per cent, he said.
'The earthquake had a significant short-term impact on our trading in Tokyo,' Kwok said yesterday. 'Our top concern in the past week was not about profit and loss, but the safety of our guests and staff.'
Firefighters and engineers have been battling to bring the Fukushima nuclear plant under control.
The world's worst nuclear crisis in 25 years was triggered by a huge earthquake and tsunami on March 11 that left at least 21,000 people dead or missing.
Drinking water in Tokyo was affected by radiation and rising evidence of radiation in vegetables and milk has stirred nervousness, despite official assurances that the levels were not dangerous.
Kwok said it was too early to predict the impact of the earthquake on the Peninsula Tokyo's bottom line because the nuclear crisis was still unfolding.
Despite the bad news in Japan, Peninsula hotels in Hong Kong and on the mainland did well.
The strong recovery in business and leisure travel helped the flagship Peninsula hotel in Tsim Sha Tsui generate a 22 per cent rise in revenue per available room (revpar), an industry benchmark.
The Peninsula Hong Kong will embark on an 'ambitious' renovation plan, a HK$450 million project which will see 300 guest rooms receive technological upgrades and new in-room features over 18 months, starting from next year. Kwok said the renovation would lift the value of The Peninsula Hong Kong, which was worth HK$10 billion as of the end of last year.
About HK$731 million was earmarked to refurbish the public areas and residential portions of the Repulse Bay Complex over the next three years. Revenue from the apartments at the Repulse Bay Complex was 1 per cent lower last year at HK$381 million, reflecting a fall in the average rental.
The Peninsula Shanghai, which opened in March last year, recorded HK$385 million in revenue as the six-month World Expo fuelled demand for tourist beds and sent the hotel's revpar to the top end of the city's luxury hotel segment, Kwok said.
The final dividend was raised by one-third to 4 HK cents per share, taking the full-year total to 12 HK cents. Earnings per share stood at HK$2.04 last year compared with HK$1.82 in 2009. The stock climbed 10 HK cents to HK$14.10 after the results were announced.
Hongkong and Shanghai Hotels has been hit by the crisis in Japan
Typical occupancy levels for The Peninsula Tokyo are 70 per cent.
After the earthquake, they were just: 20%