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The Hongkong and Shanghai Hotels, Limited Posts Profit
of HK$308 million as Compared to HK$33 million
in 2001; Peninsula Hong Kong and The Peninsula
Bangkok Contributed Strongly
Hotel Statistics for the Year 2002
February 27, 2003 

The Hongkong and Shanghai Hotels, Limited Annual Results for the Year Ended 31 December, 2002 

FINANCIAL HIGHLIGHTS

  • Revenue from hotel operations up 14% to HK$1,941 million
  • Group operating profit of HK$637 million, an increase of 9% over 2001
  • Profit attributable to shareholders increased to HK$308 million, compared to HK$33 million in the same period in 2001
  • Shareholders' funds at December 31, 2002 decreased by 2% and stood at HK$11.7 billion or HK$10.03 per share
  • Earnings per share increased to 26 cents
  • Net borrowings decreased by HK$45 million to HK$5.6 billion
  • Proposed final dividend increased to 8 cents per share
  • Costs controlled, although the figures reflect a full year of operation in Chicago
IMPROVED HOTELS PERFORMANCE BOOSTS HSH OPERATING RESULTS

The Hongkong and Shanghai Hotels, Limited (HSH) achieved a group operating profit of HK$637 million for the year ended December 31, 2002 on better financial results from the hotels. 

After taking into account the adjustments for various non-operating items, profit attributable to shareholders for 2002 amounted to HK$308 million as compared to HK$33 million in 2001. Shareholders' funds stood at HK$11.7 billion or HK$10.03 per share, after incorporating the year-end asset revaluations, a decrease of 2% as compared to 2001.

No interim dividend was paid during the year 2002 (2001: nil). Although the Company has achieved a satisfactory increase in both operating profit and profit attributable to shareholders for 2002, the directors consider it prudent to retain a significant portion of the earnings within the Company, in the light of the group's ongoing capital expenditure requirements as well as the uncertainties arising from the possibility of further conflict in the Middle East. The directors therefore recommend to shareholders that a final dividend of 8 cents per share (5 cents in 2001) be declared out of the earnings of 26 cents per share.

Clement Kwok, HSH's chief executive officer, commented, "In 2002, progress has been made in a number of different areas amidst the continuing difficult environment which our businesses face.

"The group's hotels in Asia performed strongly in 2002 with all hotels other than The Peninsula Manila achieving increases in both turnover and operating profits. In the USA, the operating results were somewhat mixed. The Peninsula Chicago, in its first full year of business, received numerous accolades for the quality of its operation but is still in the process of establishing increased corporate business in a competitive market. The Peninsulas in New York and Beverly Hills both achieved similar RevPAR levels to 2001 whilst retaining their strong reputations for quality." 

The flagship Peninsula Hong Kong and The Peninsula Bangkok, which has firmly established itself as one of the leading hotels in that market, both contributed strongly to the increase in operating profits. The shopping arcades in The Peninsula Hong Kong and The Palace Hotel Beijing, which house many of the top retail brand names, continue to perform well.

With the bulk of the group's properties concentrated in Hong Kong, which has continued to suffer from poor economic sentiment, the property business faces a challenging environment. The largest property asset, comprising around 1 million square feet of luxury residential apartments, is at Repulse Bay where declining expatriate trends in Hong Kong have had a significant, adverse effect on both occupancy levels and rentals.

The office rental market in Hong Kong also continues to suffer, as evidenced by the performance of St John's Building. On the other hand, business has held up well at The Peak Tower and the Peak Tramways, The Landmark in Ho Chi Minh City and the Thai Country Club. 

The Company signed an agreement with Mitsubishi Estate Company Limited to develop The Peninsula Tokyo on a prime site in the prestigious Marunouchi business area of the city, for opening in 2007. 

With the completion of the restructuring of The Palace Hotel, which has given HSH a controlling interest, the Company has embarked on a further phase of its renovation programme that is expected to bring the standards of the hotel in line with other Peninsula products.

Work has recently begun on a renovation programme for Quail Lodge, which, upon completion, is expected to enhance its status as a premier golfing and resort destination in the upmarket Carmel area in California.

Besides these major investments, the Company has continued to place emphasis on maintaining and enhancing the quality and value of existing assets. Guestroom and public area refurbishments continue to take place at a number of the group¡¦s hotels; a new restaurant concept was created in The Peninsula New York and a new Thai restaurant and improved riverside dining are being developed at The Peninsula Bangkok.

On the property side, refurbishments of certain apartments and the clubhouse are taking place at The Repulse Bay. Studies are under way to examine the potential for the possible redevelopment, reconfiguration or re-theming of certain properties where the Company believes these might add value.

"As well as continuing to seek improvements to our operating results through revenue enhancement and cost efficiency initiatives, we are actively seeking opportunities to create additional value for our shareholders," said Mr Kwok. 

"As we continue to look towards an uncertain future, it is reassuring to reflect on the recent launch of the celebrations for the 75th anniversary of The Peninsula Hong Kong. This serves as a strong reminder of how the unending pursuit of quality and integrity will overcome short-term uncertainties and result in the creation of substantial long-term value." 

Incorporated in 1866, The Hongkong and Shanghai Hotels, Limited, formerly The Hongkong Hotel Company, Limited, was one of the first stocks to be listed on the Hong Kong stock exchange. Its principal business comprises the ownership and management of prestigious hotel, commercial and residential properties in key destinations in Asia and the USA; its hotel management arm is The Peninsula Group.

Key Statistics for the Year Ended 31 December, 2002 


 
 
HOTELS
  Attributable Interest %
Occupancy
    2002 2001
The Peninsula Hong Kong 100 62% 56%
The Peninsula New York 100 65% 66%
The Peninsula Chicago 92.5 51% 30%*
The Peninsula Beverly Hills 20 78% 78%
The Peninsula Bangkok 75 73% 73%
The Palace Hotel Beijing 42.1 63% 63%
The Peninsula Manila 40 59% 48%
The Kowloon Hotel 100 92% 90%
Quail Lodge Resort 100 54% 58%
Average Room Rate
  2002 2001
The Peninsula Hong Kong HK$ 2,670 HK$ 2,794
The Peninsula New York US$ 507 US$ 492
The Peninsula Chicago US$ 300 US$ 304
The Peninsula Beverly Hills US$ 400 US$ 408
The Peninsula Bangkok US$ 127 US$ 113
The Palace Hotel Beijing US$ 88 US$ 86
The Peninsula Manila US$ 79 US$ 99
The Kowloon Hotel HK$ 525 HK$ 527
Quail Lodge Resort US$ 240 US$ 251
* Based on available room inventory and seven months occupancy by December 2001
PROPERTIES
  Attributable Interest %
Occupancy
    2002 2001
Residential      
The Repulse Bay (Unfurnished) 100 79% 93%
The Repulse Bay (Serviced) 100 67% 65%
The Landmark 93% 87% 83%
Commercial      
The Peninsula Hong Kong 100 96% 100%
The Peninsula New York 100 100% 100%
The Kowloon Hotel 100 93% 91%
The Repulse Bay 100 98% 95%
The Peak Tower 100 97% 99%
Office      
The Peninsula Hong Kong 100 96% 95%
St. John's Building 100 83% 97%
The Landmark 70 100% 98%
Average Yield (pnsf)
  2002 2001
Residential    
The Repulse Bay (Unfurnished) HK$ 29 HK$ 34
The Repulse Bay (Serviced) HK$ 24 HK$ 23
The Landmark US$ 1.89 US$ 1.84
Commercial    
The Peninsula Hong Kong HK$ 252 HK$ 224
The Peninsula New York US$ 52 US$ 46
The Kowloon Hotel HK$ 46 HK$ 44
The Repulse Bay HK$ 51 HK$ 52
The Peak Tower HK$ 38 HK$ 37
Office    
The Peninsula Hong Kong HK$ 31 HK$ 33
St. John's Building HK$ 17 HK$ 22
The Landmark US$ 1.98 US$ 1.99

 
Contact:
The Hongkong and Shanghai Hotels, Limited 
Tel: (852) 2840 7741 


 
Also See: Improvements At Most Properties Recorded by The Hongkong and Shanghai Hotels, Limited During First Quarter 2001 / June 2001
Prevailing Asian Economic Woes Affect Hotel and Property Group Results for The Hongkong and Shanghai Hotels, Limited / July 1998


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