Financier at home in hotels

CLEMENT KWOK KING-MAN does not strike one as an obvious choice to run a long-established luxury hotel chain. He may herald from the Kadoorie family stable but he assumed the top job at Hongkong and Shanghai Hotels with no industry experience and never having been a chief executive. He joined the hotel group in February last year from a 22-year career in corporate finance, first as an accountant, later as an investment banker and most recently as finance director of MTR Corp (MTRC). But what he lacks in leisure industry experience he makes up for in ambition. Mr Kwok, 43, clearly always planned to go all the way to the top. The choice of a young financier as managing director and chief executive of one of Asia's greatest - and oldest - hotel groups did not go unnoticed. Coming, as he did, directly from the complex restructuring and public listing of MTRC, there has been speculation he was a hired gun brought in to affect a privatisation of the group for the controlling Kadoorie family. Hong Kong has seen a spate of such moves, with depressed asset values prompting family-controlled firms such as Wharf (Holdings), Hang Lung Properties and Henderson Land Development to take assets private, with varying degrees of success. Hongkong and Shanghai Hotels has a rich heritage on the local market, being one of the first firms to list publicly. Among its trophy assets are the Repulse Bay residential and commercial complex, the Peak shopping and entertainment arcade, the Peninsula in Tsim Sha Tsui and seven other hotels in the United States and Asia. With its shares at the bottom of a 10-year trading range, due to weak luxury tourism and property markets, privatisation would seem a logical step. But Mr Kwok said it was not on the agenda. 'There is no privatisation plan,' he said emphatically, arms folded across his chest in a spacious conference room in Central bedecked with historical photographs of the 75-year-old Peninsula Hong Kong. 'We have a group of minority shareholders who have co-operated with the company for a long time,' he said, adding that Hongkong and Shanghai Hotels and the Kadoorie family had every intention of maintaining that relationship. Outsiders who argue that his background in corporate restructuring is only a means to an end are reading too much into the financial engineer's appointment. According to Mr Kwok, his job is not to bury Hongkong and Shanghai Hotels' public market status but to enhance its long-term value creation. His ties to the group run deep. While a banker for Schroders Asia - then 25 per cent owned by the Kadoorie family - he was part of the team that fought off a 1987 takeover effort by Evergo and a hostile bid by Cathay City Investments the following year. Mr Kwok's career began at Price Waterhouse - now PricewaterhouseCoopers - in London, where he qualified as a chartered accountant in 1983. 'It was a time when everyone wanted to be a professional - like an accountant, a lawyer or a doctor,' he said. ' I was good at maths and I was well organised, and so I picked accountancy.' From Price Waterhouse he jumped into the quicker pace of corporate finance at Barclays de Zoete Wedd. He returned to Hong Kong two years later to join Schroders Asia, where he spent 10 years rising to become its head of corporate finance. That put him at the cut and thrust during the frantic 1980s, as local conglomerates rose to pre-eminence and Hong Kong's corporate landscape was recast. Carving up other people's firms ultimately led him to step inside and join the corporate world on paid-up terms. 'I always had a goal that one day I would become a chief executive officer,' he said. That ambition took him to the MTRC as finance director, at the time the government's immensely successful and uncontroversial underground rail operator. 'It was the first time I had worked for a corporation. Therefore, I picked an area I was familiar with,' Mr Kwok said. The job saw Mr Kwok develop the MTRC's profile as one of Hong Kong's most credible bond-market names, backed as it was by implicit government guarantees of land grants. It also pitched him into packaging the corporation for a public listing, with perhaps the most controversial aspect of the process being the hard-fought right to achieve full autonomy in setting fares. That commitment was ultimately revoked when Chief Executive Tung Chee-hwa intervened to cap a planned fare increase due to harsh deflation. Insult was added to injury when the MTRC lost the tender to build the Sha Tin to Central project to its rival, the Kowloon-Canton Railway Corp. Mr Kwok is said to be privately critical of the government's handling of the corporation but, ever politic, this was not an issue he would discuss publicly. Still, when the offer of change came, he said, he did not hesitate to jump ship. Despite confessing to having no experience in day-to-day hotel operations, he said he was familiar with the business from his days of defending the group from takeover. Espousing a hands-off philosophy he said: 'My role is to manage the whole group and create an overall development framework. 'It's just like a football team. My role is to tell the team members what we want to achieve and what our direction is. I do not need to go to the field all the time, even though sometimes I will.' In the past 13 months, Mr Kwok has created a group management committee consisting of executive directors and regional general managers in charge of running the day-to-day operations of different areas - a concept similar to the MTRC's directorate system. Under his stewardship, Hongkong and Shanghai Hotels last year posted a net profit of HK$308 million, up from the previous year's HK$33 million. 'I was delighted that the company posted a sharp rebound in profit last year despite facing the difficult environment,' he said. But he hoped that investors would not judge the management's ability on the group's short-term performance. 'I do not want to see the situation where our management is commended because the company reaps good profits one year, but criticised when the group gets a disappointing financial result another year. 'I am not saying that we will ignore short-term results. But operating top luxury hotels is about long-term value creation,' he said, giving the Peninsula Hong Kong as an example of a long-term investment that is paying off. As for loss-making Peninsula Chicago, Mr Kwok does not see any need to panic. 'I am confident that the hotel will turn around because its quality is so good and it is situated in a prime location,' he said. What of his next move? Does he ultimately hope to establish his own business empire? Mr Kwok paused, leaned forward on the boardroom table and said earnestly: 'The only thing in my mind now is this job.' Biography Clement Kwok King-man graduated from the London School of Economics in 1980. He qualified as a chartered accountant at Price Waterhouse in London in 1983, then spent two years working at Barclays de Zoete Wedd. He later worked for 10 years at Schroders Asia in Hong Kong, where he was appointed director and head of corporate finance in 1991. He joined Hongkong and Shanghai Hotels in February last year from MTR Corp, where he had been finance director since 1996. He has been married for 19 years and has two children, aged 12 and nine.