The Peninsula has been through Sars and the Asian financial crisis, but Covid-19 among the toughest challenges Hong Kong’s ‘grand old dame’ and its operator have seen yet
- Unlike previous convulsions, Covid-19 has affected all Peninsula properties globally, Hong Kong and Shanghai Hotels CEO says
- Business in Hong Kong under fifth wave and toughest social distancing curbs yet is ‘very very poor’
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 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.
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“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.”
07:29
Why has Hong Kong been hit so hard by the Covid-19 fifth wave?
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.”
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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.
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.
