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SCMP Reporter

THE Victoria Hotel on the Sheung Wan waterfront could be the next Hong Kong hotel to be lost to office space.

  Permission is being sought from the planning authorities to convert the 536-room hotel, which forms part of the Shun Tak Centre, into 700,000 square feet of prime office and retail space.

  The change would not require demolition, merely conversion.

  If successful, the hotel's three owners - New World Development, casino operator Sociedade De Turismo e Diversoes de Macau (STDM), and Stanley Ho Hung-sun - will see the value of their asset sky-rocket.

  On the basis of market value of Grade A office properties in the area, the commercial block is expected to rise sevenfold in value to nearly $10 billion.

  Prime office space elsewhere in the twin-tower Shun Tak Centre has recently been fetching around $14,500 to $15,000 per sq ft, despite its slightly decentralised location.

  New World and STDM each own 45 per cent of the building, while Mr Ho personally holds the remaining 10 per cent.

  The outcome of the application is expected to be known within one month.

  A spokesman for Mr Ho yesterday confirmed a formal application had been lodged with Government and added that the building had originally been intended for office space in the early 1980s.

  However, due to a crash in office prices in 1983-84, the owners decided at the last moment to use it as hotel space.

  Until the owners hear from the Government, it is not known when the Victoria Hotel will close, nor when any office conversion will be complete.

  Should the go-ahead be granted, it would be the latest in a string of Hong Kong hotels to be lost.

  The 285-room China Merchants Hotel in Sheung Wan, the 313-room Ambassador Hotel in Tsim Sha Tsui and 156-room Harbour Hotel in Wan Chai all shut this year for redevelopment.

  Last year, the 660-room Lee Gardens Hotel in Causeway Bay closed for demolition.

  A string of other hotels around the territory is expected soon to follow.

  A recent survey by Jones Lang Wootton Hotels Real Estate Services in conjunction with the Hong Kong Tourist Association (HKTA) graphically illustrates the trend.

  In 1993, some 1,716 new hotel rooms were completed around the territory while 970 rooms were lost, for a net gain of 746 rooms.

  This year, 377 new rooms are scheduled for completion while 1,256 will be lost, resulting in a net loss of 879 beds in 1994.

  Next year, there will be no new hotels completed and 750 hotel rooms will be lost; and that is not including the possible loss of 536 rooms in the Victoria.

  Politicians and industry leaders have highlighted this as a trend, given that tourism has grown into Hong Kong's second largest foreign exchange earner, generating a hefty $60 billion in 1993.

  For remaining hotels, it is good news as the squeeze on supply does wonders for their occupancy figures and room rates.

  However, the HKTA warns that in the long term tourism will be stunted without replacement hotels.

  It has been lobbying hard and its proposals have been discussed as high up as the Governor's policy unit.

  The HKTA's proposals include revising the Government's plot ratio policies for hotel development, which discriminate in favour of building taller office towers.

  Zoning new hotel development as an integral part of the various land reclamation projects under way is one option.



Owners plan to turn Victoria Hotel into offices