Hotel LKF the latest Hong Kong hotel tipped to close to make way for commercial development

There are strong rumours that Hotel LKF in Central will shut at the end of the month, following in the footsteps of two Causeway Bay establishments set for redevelopment

PUBLISHED : Sunday, 11 June, 2017, 8:02am
UPDATED : Sunday, 11 June, 2017, 8:26am

The five-star Hotel LKF in Central is set to shut by the end of the month for conversion into an office tower, the Post has learned, the latest closure in an industry shake-up fuelled by soaring office rents and a downturn in tourists.

Another two leading hotels in Causeway Bay also face being turned into commercial blocks.

But the founder of an independent hotel chain in the city said the transformation did not necessarily indicate that the hospitality sector was taking a beating, but it was rather an “opportunistic” strategy to maximise profit.

Sharp rise in Hong Kong tourist arrivals brings hope that slump is over

According to Girish Jhunjhnuwala, CEO of home-grown brand Ovolo Hotels, the industry did struggle slightly over the past two years.

While inbound visitors dropped 4.5 per cent year on year in 2016, he said what also mattered to the hospitality sector was the length of stay for tourists.

“The number of nights the average traveller is staying in Hong Kong is now less than it was, because people are now coming and transiting [more frequently],” he explained.

Owning four hotels and a service apartment block in the city, Jhunjhnuwala said his guests now stayed an average 2.2 days, compared to 2.8 days just three years ago.

The bleak outlook may have prompted the owner of Crowne Plaza in Causeway Bay to make an application to demolish the hotel, built only eight years ago, and to put up an office tower with restaurants and shops – cash cows in a prime retail district.

The Excelsior Hotel, an iconic establishment facing Causeway Bay typhoon shelter, might follow as owner Mandarin Oriental is reviewing its options, including a sale and conversion.

Rumours are now circulating that Hotel LKF, operated since 2006 and sitting in the heart of the Lan Kwai Fong nightlife precinct, will shut down by the end of June.

With around 100 rooms, the boutique hotel provides pedestrian access from Soho to Central between Wyndham and D’Aguilar streets.

It is home to international restaurants such as Gordon Ramsey’s Bread Street Kitchen, which is expected to stay.

Operator Rhombus Group could not be reached for comment, although bookings for July could not be made on its website.

Allan Zeman, who owns the nearby California Tower, another mixed-use building, did not deny the news.

“I heard two months ago that the owner had wanted to convert [Hotel LKF] into a commercial building,” he said, saying the move made “perfect sense” considering the keen demand for office space in Central.

Asked if it had ever crossed his mind to sell his hotel properties, Jhunjhnuwala interjected: “We are serious hoteliers, so for us we’re only looking at opportunities in the accommodation sector ... I don’t see the need right now to convert.”

But the current Ernst and Young entrepreneur of the year admitted he had put his expansion plans in Hong Kong on hold, as it was not the right time to expand his property portfolio.

Jhunjhnuwala is now looking overseas for expansion. Ovolo currently has three hotels in the Australian cities of Sydney and Melbourne and has just purchased one in Brisbane, a place he thinks has huge tourism potential.