Hongkong and Shanghai Hotels may double room rates at new Peninsula Beijing

Hongkong and Shanghai Hotels, owner of the Peninsula Hotel chain, said it might double room rates at its opulent Peninsula Beijing hotel after converting some 500 guest rooms into 230 spacious suites, with the smallest measuring 650 square feet.

Still under refurbishment, by the time the Beijing hotel returns to full operation in middle of the year guests will find that even entry level rooms feature a living area separated from the bedroom via a sliding door, the company revealed.

“Given that the average room will be twice as large, it is reasonable for us to expect prices in general to be more than doubled,” said Clement Kwok King-man, chief executive of Hongkong and Shanghai Hotels.

The top-to-bottom renovation is being undertaken at a time when occupancy rates among luxury hotel operators have come under pressure amid currency volatility and global economic headwinds. Evolving market dynamics have forced many of them to rely on higher room rates as a way to boost overall revenue.

Hongkong and Shanghai Hotels has raised its revenue per available room (RevPAR) – a crucial gauge on a hotel’s profitability – by 4.3 per cent more than the market average since 2012, according to a survey of 25 leading hotel groups by global consultancy OC&C Strategy Consultants.

“Hotel rooms are in oversupply and as a result driving growth through increased occupancy is incredibly difficult,” said Rambaut Fairley, partner at OC&C.