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SCMP Reporter

QUEEN'S Road Central is to lose one of its most famous faces - the Hong Kong Hilton.

  Tycoon Li Ka-shing's Hutchison Whampoa group yesterday announced it was buying out its US$125 million (HK$975 million) management contract with the Hilton group which manages the five-star hotel in Central.

  Hilton International will have 12 months to find a new home in the territory.

  The fate of the 27-storey site at 2 Queen's Road is not known but analysts in the financial community speculate that Hutchison will demolish the building to make way for a highly-lucrative office block.

  It was a commercial decision made by Hutchison, and Hilton International would remain in Hong Kong, said James Smith, general manager of Hilton International.

  ''We have had a long and excellent relationship with Hutchison since 1977,'' Mr Smith said.

  The termination of management will be effective from January 25, 1995. The consideration paid by Hutchison fully compensated Hilton for the contract which still had 20 years to run, according to a statement by Hutchison.

  ''It is the intention of the Hutchison Group to then manage the hotel while it reviews and evaluates its future potential,'' the release said.

  Hutchison has already paid Hilton US$12.5 million, it added, without specifying when the rest of the money would be paid.

  Although Mr Smith suggested Hutchison might manage the hotel under its own name, analysts thought a redevelopment was more likely.

  ''Office space in Central will face limited supply over the next few years; it is more likely to redevelop Hilton into an office building,'' said Andrew Hall, research director of Morgan Grenfell Asia.

  Hong Kong Hilton hotel is Hutchison's wholly-owned property and the company holds 39 per cent interest in Sheraton Hotel.

  In addition, the conglomerate plans to redevelop a site at Hunghom into a 640-room hotel, and a twin-tower complex containing approximately 900,000 square feet of office space.

  The Hong Kong Hilton has 27 storeys completed in the '60s. The total gross floor area of the property is approximately 573,820 sq ft.

  It is a five-star hotel with 750 guest rooms, a ballroom, function rooms, a business centre, seven restaurants, two bars and a two-level shopping arcade with a gross floor area of approximately 20,970 sq ft.



Hilton to close after contract buy-out