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.
“Instead, success in growing revenue per room has been determined by ability to grow room rates.”
The hotel chain reported a worse-than-expected 32.5 per cent slump in 2016 earnings on Monday, as escalating geopolitical uncertainties from Brexit, the US presidential election and global terrorist attacks dampened tourist sentiment.
Net income came in at HK$675 million (US$86.94 million), compared with consensus estimates of HK$684 million, according to a Reuters poll of analysts. Group revenue fell a smaller-than-expected 1.9 per cent to HK$5.63 billion.
“The Brexit vote, the US presidential elections, mixed economic performance in many of the countries in which we operate and continued terrorist incidents and threats all pose uncertainties to our business,” said Kwok.
“In addition, sentiment in our main market of Hong Kong was negative towards tourism and retail business for much of 2016 although we believe we have seen some stabilisation since.”
The Peninsula Hotel in Tsim Sha Tsui booked a 4 per cent on year drop in revenue while its occupancy rate decreased by 1 percentage point from last year.
Built by the Kadoorie family in 1928 as “the finest hotel east of Suez”, the Peninsula is a cultural and visual landmark dating back to Hong Kong’s colonial vestiges.
The hotel group currently owns and operates 10 Peninsula Hotels, the majority of which are based in Asia. Additional hotel properties are under development in London, Yangon and Istanbul.
Hongkong and Shanghai Hotels shares edged up 0.9 per cent to close at HK$8.8 in Hong Kong trading on Monday.