Peninsula hotel chain sees drop in room rates for first quarter
Firm is upbeat and says lower room rates not because of fewer mainland visitors
Hong Kong and Shanghai Hotels, the operator of the Peninsula hotel chain, saw a drop in its Hong Kong average room rate and occupancy in the first quarter but said it was an effect of renovations last year and not because of fewer mainland guests.
Chief executive Clement Kwok King-man said yesterday its diverse customer base insulated it from a decline in mainland visitor arrivals and citywide retail spending over the Labour Day holiday. The company did not disclose exact figures for the first two weeks of this month. Kwok said, however, that their "Hong Kong business has done well in May, in particular The Peninsula Hong Kong".
The Peninsula Hong Kong's occupancy rate for the first quarter fell 6 percentage points to 78 per cent compared to the same quarter a year ago while average room rate fell 18 per cent to HK$5,111.
"It doesn't mean that our business has declined … Generally the rooms in the tower have a higher room rate than in the original building [which was undergoing renovation last year]."
Mainland visitor arrivals to Hong Kong declined for the first time since 2009 while citywide retail spending fell 1.3 per cent in March. Mainland visitors during the May holiday was down 4.5 per cent from a year ago.
The firm's outlook for the rest of the year was upbeat, pointing out that properties in Beijing, Chicago and New York, which experienced a hard winter, were in its off-peak season. The main weak spot was The Peninsula Bangkok, which is affected by political turmoil.
The group is also in the midst of an overhaul of its Beijing hotel, which opened in 1989 - a move Kwok said was necessary given the intense competition among five-star hotels in the capital. It plans to double the size of its Beijing hotel rooms.
"We are losing business because we are relatively old," Kwok said. "Given the current condition of that hotel, this is a risk we have to take and we have to manage. We believe after the investment, the room rate will become much higher than what we have at the moment."
The group is also set to open a Paris hotel later this year.