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  The Hongkong and Shanghai Hotels, Limited, Owner
of The Peninsula Hotels, Reports Profit Up 843% to
HK$198 million Compared to HK$21 million in 2003;
Most of Improvement Derived from Hotel Contributions

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July 26, 2004 - Interim Results for the Six Months to 30th June, 2004

Key Financial Results

  • Total turnover was HK$1,427 million, an increase of 31% compared to the first half of 2003
  • Revenue from hotels was up by 39%
  • Group operating profit of HK$367 million, an increase of 118%
  • Profit attributable to shareholders increased by 843% to HK$198 million, compared to HK$21 million in 2003
  • Shareholders’ funds at June 30, 2004 amounted to HK$13.5 billion or HK$9.65 per share
  • Earnings per share increased to 14 cents
  • Net borrowings decreased by 3% to HK$4.5 billion
  • Interim dividend of 3 cents per share
Key Developments
  • The Peninsula Tokyo is on schedule, with ground-breaking planned for last quarter 2004
  • Negotiations for potential Peninsula hotel in Shanghai have progressed, with a project agreement entered into in May 2004 to acquire the land use rights for the designated site
  • Renovations of The Repulse Bay apartments continue
  • Spa planned for The Peninsula Bangkok
  • Plans for redevelopment of The Peak Tower under review
  • Four Peninsulas in top 20 of World’s Best Hotels list in Travel + Leisure readership survey
Significantly Improved Results for Hotel Group on Sustained Industry and Economic Recovery

The unaudited interim results announced today by The Hongkong and Shanghai Hotels, Limited (HSH), owner of The Peninsula Hotels, reflect the continuing strength of the recovery in the global hospitality industry and an improving Hong Kong economy.

The company’s turnover for the period increased by 31% to HK$1,427 million, most of which was derived from hotel contributions. The operating profit of the group rose by 118% to HK$367 million. The profit attributable to shareholders increased by 843% to HK$198 million for the six months to June 30, 2004, equivalent to earnings per share of 14 cents.

As a reflection of this improved performance and outlook, the directors have resolved to pay an interim dividend for the period of 3 cents per share (2003: nil).

Shareholders’ funds at June 30, 2004 stood at HK$13.5 billion or HK$9.65 per share and net borrowings decreased by 3% to HK$4.5 billion (2003: HK$4.7 billion).

“The recovery in our hotel businesses, which started in the second half of 2003, continued strongly with all our hotels achieving meaningful increases in room yield,” said Clement Kwok, HSH’s chief executive officer. “In our non-hotel property businesses, the luxury residential lettings sector has not yet recovered sufficiently although we continue to derive a stable stream of income from these properties.”

In Hong Kong, The Peninsula Hong Kong continues to be recognised as one of the best hotels in the world, as well as the RevPAR leader in Hong Kong. During the period, the hotel experienced strong occupancy levels with increased demand across all sectors of its customer base. Food and beverage revenues have benefitted from higher occupancy and from strong domestic demand. Marketing efforts have been further expanded through promotional partnerships with Cathay Pacific Airways and American Express, as well as through direct mail initiatives. Some rooms renovation in the original wing of the hotel is expected to be completed by September in time for the high season.

Since the renovation and relaunch of The Peninsula Palace Beijing last year, the hotel has raised its market position with new clients being attracted, especially on the corporate side, resulting in a significant increase in average room rate. The hotel’s two signature restaurants, Jing and Huang Ting, have gained favourable global reviews and increased profile, thus generating increased patronage. The very small number of cases of SARS in Beijing, although quickly contained, resulted in lost bookings in May but occupancy levels have since recovered and are expected to strengthen further.

Voted for the second successive year as the No. 1 Hotel in Asia by readers of Travel + Leisure, The Peninsula Bangkok has maintained its solid performance despite being affected by the avian flu outbreak and very slightly by some unrest in the country during this period. The new Thai restaurant and the renovated riverside dining facilities have contributed to the overall success of the hotel. The addition of a new Spa facility in 2006 is expected to enhance the hotel’s attractions.

The Peninsula Manila has done well to achieve increased occupancy and average room rate in a highly competitive and price sensitive market. The hotel has targetted the corporate market aggressively and been successful in capturing new accounts.

The Peninsula New York has had a very busy half year, with a strong performance in both occupancy and rates. It is now the RevPAR leader in New York, with a strong base of corporate and entertainment industry clients. Its recently renovated Pen-Top Bar has successfully enhanced its popularity and revenues. 

The Peninsula Chicago, most recently voted the No.1 Hotel in North America by Travel + Leisure readers, has continued to improve its performance. 

Already the RevPAR leader in its market, The Peninsula Beverly Hills has achieved a further significant increase in its occupancy, room rate and yield over the same period last year. 

Quail Lodge has achieved higher room rates and marketing activities are being stepped up in order to capture a higher market share, as the property continues to be repositioned in the marketplace.

Although yields remain under pressure at The Repulse Bay complex, the group has continued its phased renovation programme. During this period, renovations have temporarily impacted occupancy levels, with some disruption to tenants whilst work is in progress. The Company has, however, been encouraged by the strong demand for the renovated apartments and to capitalise on this trend, more units have been identified for renovation.

On expansion, progress on the development of The Peninsula Tokyo is on schedule for the opening of the hotel in 2007. The existing building on the site is currently being demolished and ground-breaking for the new construction is expected to take place in the last quarter of 2004. The group has also taken forward its negotiations for a potential Peninsula hotel in Shanghai by entering into a project agreement in May 2004 to acquire, subject to planning and other conditions being met, the land use rights for a designated site in the Waitanyuan area of the city, which is situated near the old British Consulate at the northern end of the Bund.

“Based on our forward bookings and recent industry trends, our outlook for the hotel business is positive for the second half of the year,” said Mr Kwok. “We believe that there is potential for further growth in most of our hotels which have either been recently opened or renovated or are operating in markets with a growing or recovering economy.”

   
Key Statistics for the Six Months
Ended June 30, 2004
Hotel
Attributable Interest % 
% Occupancy 2004
% Occupancy 2003
Average Room Rate 2004
Average Room Rate 2003
The Peninsula Hong Kong* 100 70% 38% HK$ 2,527  HK$ 2,560
The Peninsula New York 100 74% 60% US$ 484 US$ 462
The Peninsula Chicago 92.5 64% 59% US$ 311 US$ 298
The Peninsula Beverly Hills 20.85 85% 82% US$ 467 US$ 412
The Peninsula Bangkok 75 75% 59% US$146  US$ 130
The Peninsula Palace Beijing** 42.1 54% 51% US$ 119 US$ 88
The Peninsula Manila 40 70% 59% US$ 73 US$ 70
The Kowloon Hotel 100 93% 49% HK$ 561 HK$ 496
Quail Lodge Resort***  100 48% N/A US$ 279 NA
* In 2004, due to renovation, the average number of rooms available for the period was reduced to 275. In 2003, due to renovation,
the average number of rooms available was reduced to 280.
** Due to renovation, the average number of rooms available in 2003 was reduced to 198.
*** Quail Lodge Resort was closed for renovation throughout most of first half of 2003.

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; it is the owner and operator of The Peninsula Hotels.


 
 
Contact:

The Hongkong and Shanghai Hotels, Limited
 

Also See: Strong Rebound in Hotel Performance During Second Half of 2003 Benefits The Hongkong and Shanghai Hotels, Limited, Significant Appointments Made within The Peninsula Hotels Group / Hotel Operating Statistics / March 2004
Extreme Makeover: Changing Guest Preferences Called for $25-million Renovation at Quail Lodge Resort & Golf Club / July 2004
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 / April 2003


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