Peninsula hotel owner sees weaker business in first quarter
Bangkok and Tokyo markets the only bright spots as Hong Kong flagship leads with 4 per cent decline in room revenue in the first quarter
Hongkong and Shanghai Hotels, which owns 10 Peninsula hotels around the world, saw weaker business in all markets except for Bangkok and Tokyo in the first quarter.
Its Hong Kong flagship - the company's largest profit contributor last year - reported a 4 per cent decline in revenue per available room (revpar), a profitability indicator in the industry, to HK$3,832 in the first three months of the year.
Its business in United States and Europe dipped 3 per cent, with a revpar of HK$2,980. But elsewhere in Asia, revpar grew 18 per cent to HK$1,486 and average room rates climbed 4 per cent to HK$2,181, mainly due to improved occupancy levels at its properties in Bangkok and Tokyo.
Chief executive Clement Kwok King Man said there had been fewer travellers to Hong Kong from Japan and Europe because of the weaker yen and euro.
"Our hotel business was rather weak in Hong Kong but it is not only us. It also applies to other hotels in the luxury sector," Kwok said.
Occupancy rates at Peninsula Hong Kong dropped to 75 per cent in the first quarter from 78 per cent a year earlier and 79 per cent in the preceding quarter.
Kwok said it was too early to predict the performance in coming months.
"We still have the entire summer to come and traditionally autumn is the high season in Hong Kong," he said.
The company would explore ways to improve operating efficiency such as containing costs and it planned to roll out an aggressive marketing campaign, Kwok said.
He said the company tried to avoid relying on a single market as a way of diversifying investment risk.
"Ten or 20 years ago, Japanese accounted for more than 50 per cent of our hotel sales," he said. "Today, we do not see our sales dominated by any single market."
A company spokeswoman said Chinese, Japanese and Americans were the top three customer groups for the flagship hotel.
According to the latest figures from the Hong Kong Tourism Board, tourist arrivals from the mainland posted a 10 per cent year-on-year decline to 3.24 million in March, while those from Japan were down 4.6 per cent to 102,772.
However, visitor arrivals from the United States rose 3.1 per cent to 110,438.
The company's shopping arcades, including the Peak Tower, recorded a fall of 2 per cent in rental yield to HK$202 per square foot in the first quarter.
Kwok said no tenants had asked for rent cuts or moved out of the retail complex.
