Known as the “grand old dame”, The Peninsula Hong Kong has withstood several tumultuous periods throughout its more than 90-year history. But the Covid-19 pandemic is the toughest challenge the iconic hotel and its operator have faced yet, a top executive said. The past two years have been tough for Hong Kong and Shanghai Hotels (HSH), which currently owns and operates 10 Peninsula hotels in Asia, the United States and Europe. The company reported losses of HK$1.94 billion (US$248 million) in 2020 and HK$120 million last year. The impact of Covid-19 on business has been the worst that Clement Kwok, HSH’s managing director and CEO for over 20 years, has seen during his time at the company. “We had Sars [Severe acute respiratory syndrome] and the Asian financial crisis, but the occupancy rates would not have been so low during the Asian financial crisis. There was a period during Sars that the occupancy period was so low, but it was relatively short, about six months and it was only in Hong Kong and it did not affect all our properties globally,” he said. Hong Kong’s hotels get creative to lure diners as restaurant revenues tank “Whereas, Covid-19 has affected all our properties globally. So, in terms of the impact on the company results, this time has been the worst.” Hobbled by travel restrictions, international tourist arrivals globally in 2021 were still 72 per cent below the pre-pandemic year of 2019, according to an estimate by the United Nations World Tourism Organization. In 2020, the worst year for tourism on record, international tourist arrivals fell 73 per cent. Vaccines were rolled out last year , but the requirements of proof of vaccination and even quarantine dampened people’s appetite for travel. In Hong Kong, HSH’s home market, official data shows that the average occupancy rate of hotels hit 63 per cent last year, an improvement on the 46 per cent recorded in 2020. But it was still way below the 79 per cent recorded in 2019 and the 91 per cent seen in 2018, before street protests began to deter tourists from mainland China. With the city currently engulfed by the Omicron-fuelled fifth wave of the pandemic and contending with the toughest social distancing curbs yet since the pandemic began two years ago, Kwok said business in Hong Kong was “very very poor”. “The restrictions in Hong Kong are so [stringent] that even the local staycation business – there’s very little of that right now,” Kwok said. “Obviously, there are still some people who will come to the Peninsula because the hotel offers such good service and the rooms are beautiful. But the restaurants are closed in the evening, the swimming pool and the bars are closed. So there are not many activities for people, even when they come on a local staycation.” One way of keeping the locals coming to the hotel is to offer them a variety of retail and restaurant options. For the first time in the hotel’s history, its basement, which used to house clothing boutiques and jewellery stores, has been completely renovated. Following a HK$115 million, 15-month renovation, it now offers retail concepts that include an Italian deli, a Peninsula boutique and cafe, lifestyle and home amenities, a men’s grooming salon, and a high-end whisky and sushi bar, among others. The company, controlled by billionaire Michael Kadoorie , is also the owner of the Peak Tram, whose new and bigger coaches are likely to be operational in the second or third quarter of the year, Kwok said. In January, the Kadoorie family offered to pay almost double the market price for the company’s shares to boost its stake from under 60 per cent to 72.4 per cent. An offer for 205.3 million shares was made to asset management firm Seekers Capital Partners and other undisclosed sellers, for HK$2.63 billion or HK$12.80 per share. Tycoon Kadoorie to pay US$337m to raise stake in Peninsula hotel owner The transaction is conditional on the Kadoorie family getting a waiver from the Securities and Futures Commission for making a takeover offer for the rest of the company by March 31, unless extended by both parties.