Restaurateurs competing to run the Peak Lookout have criticised the government's tendering requirements, saying it would be virtually impossible to operate the landmark venue at a profit.
The lease for the Peak Lookout, formerly known as the Peak Cafe, expires in mid-July.
Prospective bidders at a tender briefing on Friday were dismayed to hear that the length of the lease remains five years and whoever offers the most money will win the bid. Among those present was existing leaseholder Epicurean Group, and former tenants Cafe Deco Group and 97 Group.
The Peak Cafe became the Peak Lookout five years ago, after Cafe Deco, run by Graeme Reading and Martin Allies, lost the tenancy to Sherman Tang's Epicurean. A new Peak Cafe opened in SoHo.
Epicurean secured its lease with a bid of $1.01 million a month in rent. The handover was shrouded in acrimony as fixtures and fittings were ripped out of the historic building to comply with a government requirement that it be handed back in its original condition.
This time around, the tender document contains photos of the interior, which may not be changed without consulting the landlords - the Government Property Agency, and the Antiquities and Monuments office of the Leisure and Cultural Services Department.
'Nothing has changed in five years,' Mr Reading said. 'The investment required to fit out a building like this means you cannot afford maintenance on top and get your money back in just five years. That's the hard facts of reality.'
His sentiments were echoed by Walter Adelman, 97 Group managing director, who said he was also representing Epicurean. Mr Adelman said the highest-bid-wins system had pushed rents to unrealistic levels. Mr Reading added: 'If this was Sydney or London, would a landmark tourist attraction restaurant be treated like this?'
When questioned about the commercial viability of a five-year lease on a restaurant in a historic building, Government Property Agency departmental secretary Anthony Yu Tung-sang replied: 'Since 1996, the lease at 121 Peak Road was granted for five years. The agency considers this is an appropriate duration, taking into consideration the historical nature of the building.'
He added: 'Other commercial tenancies granted by the agency are normally three years.'
Mr Yu was also asked if awarding the lease to the highest bidder ensured the best tenant, and what incentive there was to maintain the building when a new tender would be called in five years. He replied that to preserve the character of the historic building, the government required that bidders submit proposals on maintenance, preservation and restoration.
Once each bidder had satisfied the qualifying conditions, such as providing a cashier's order for three months rent, the secretary for home affairs would take into account the proposed rental offered by the tenderers.
When it was pointed out that the roof of the restaurant was showing signs of wear and tear, he said: 'The lessee also has to preserve the historical and architectural character of the premises in good repair.'
The government would 'enforce vigilantly the lease terms and ensure full compliance', he added.