New World hotel unit revisits trust plan

Business›Companies

Charlotte So and Ray Chan

Acquisitions eyed as renovation and partial closure of Grand Hyatt hit company's revenue

NW Hotel Investments, the hotel arm of New World Development, has seen the average room rate for its three Hong Kong hotels soften due to the renovation of the Grand Hyatt, which started at the beginning of the year.

NW Hotel, which postponed a US$700 million trust listing plan in Hong Kong in June, released updated financial figures for its three hotels yesterday.

Sources said management was launching a two-week pre-marketing campaign to gauge investors' appetite for implied yield in light of a potential interest rate increase when the US Federal Reserve decides to taper its bond-buying programme. The timetable, if any, for the trust listing plan is scheduled to be formulated by next Friday.

Part of the proceeds will be used to repay NW Hotel's bank borrowing, which would amount to HK$8 billion upon its listing, a document filed with the stock exchange showed.

The blended room rate of the three hotels operated by the company fell slightly to HK$2,470 per night in the year ended June from HK$2,484 a year earlier. The dip was mainly attributed to the Grand Hyatt's room renovation project, which started in January and will continue until 2016, with the average room rate falling to HK$3,303 from HK$3,345. The room rate at the Hyatt Regency Tsim Sha Tsui rose 7 per cent to HK$2,137, while the Renaissance Harbour View Hotel averaged HK$2,153, similar to last year.

Operating profit from the Grand Hyatt dropped 11 per cent to HK$313.8 million, but rose 11 per cent at the Renaissance Harbour View to HK$242.8 million and increased by 9 per cent at the Hyatt Regency Tsim Sha Tsui to HK$149.6 million.

Food and beverage sales, which account for 43 per cent of total revenue, fell slightly to HK$724.6 million in the year ended June from HK$746.8 million the previous year. The Grant Hyatt's ballroom closed for four months in the first half of the year, contributing to the drop.

The planned acquisition of the Hyatt Regency Hong Kong, Sha Tin, was derailed in June after Chinese University refused to transfer the hotel's development agreement. But the firm hopes to acquire other hotels which are owned or managed by its parent, namely the new Pentahotel Hong Kong and the hotel portion of the New World Centre redevelopment in Tsim Sha Tsui.