Operator and landlord Great Eagle sees hard times ahead for Hong Kong's hotels
Developer and landlord says next two years could bring acquisition opportunities as well as a constrained operating environment
Hong Kong hotels will face a tough operating environment in the next two years but market turmoils could create opportunities to acquire land, says cash-rich hotel operator and landlord Great Eagle Holdings.
According to chairman Lo Ka-shuislowing demand for rooms and the weakening purchasing power of China's tourists could dent the company's profit.
"Weakening yen and euro will continue lure tourists away from Hong Kong. Exchange losses also hurt overseas earnings. Our hotel in Australia sank into the red after the profits were converted into Hong Kong dollars," said Lo.
Great Eagle, which owns 10 hotels overseas, also holds a 58.5 per cent stake in hotel-focused business trust Langham Hospitality Investments, which has three hotels in Hong Kong - Langham in Tsim Sha Tsui, Cordis, formerly Langham Place, in Mong Kok and Eaton in Jordan.
It also controls 61.8 per cent of Hong Kong-listed Champion Reit, which owns the Citibank Plaza office tower in Central.
With an ambition of building a portfolio of 500 hotels worldwide in 10 years, Lo said: "If I cannot achieve this goal, I hope my next generation or the generation after that can do it."
But investors do not have Lo's patience. On Friday, Great Eagle's shares flatlined at HK$23.95, close to this year's low of HK$23. Alvin Cheung Chi-wai, an associate director at Prudential Brokerage, said the company's weakening hotel business had dragged down its share performance.