Rates need to reflect costs, says Lambert

THE Excelsior Hotel expects it will take another year to stabilise room rates despite consistently having the highest occupancy among Hongkong hotels, says general manager Liam Lambert.

Mr Lambert said stabilising of rates was a slow process that would meet with ''resistance along the way''.

He said hotels should set prices more in line with inflation and operational costs to improve margins which had stagnated over the past three years.

It remained to be seen what would happen to the hotel business in a year or two although there was ''a sense within the community that we should be stabilising the pricing and doing less discounting''.

''The Tiananmen Square massacre and Gulf War fallout are over now and there isn't a sense of panic as far as pricing is concerned,'' he added, referring to 1989 and 1990 when hotels slashed rates to attract visitors.

Mr Lambert's acceptance of difficulties in raising room rates comes despite the Excelsior consistently having among the highest occupancy levels among Hongkong hotels.

Despite losing ground in recent weeks with rooms closed for installation of fire sprinkler systems, the Excelsior has received a boost from finalising a three-year deal to reserve 120 rooms a day for British Airways crew.

Mr Lambert said the Excelsior's location in the heart of Causeway Bay would further improve its business.

''With new buildings being built within a few blocks of the hotel, we feel the centre of gravity is shifting from Central to Causeway Bay,'' he said.

''This development will bring a combination of lots of business activity, top restaurants and greater variety in shopping.'' To take advantage of the surge in development, the Excelsior was continuing to upgrade facilities this year, renovating all executive rooms and planning a private check-in area for executive floors.

It has also started computerising its eight lifts to improve their efficiency.

Other plans include a 200-seat Chinese restaurant and a health club with sauna, and indoor tennis courts.

Mr Lambert said that while business might not be as brisk as four years ago, the territory remained a hotelier's dream.

While Hongkong hotels posted an average 82 per cent occupancy last year, hotels in countries such as Canada were scratching to get 50 per cent, he said.