Sun Hung Kai Properties, Hong Kong's largest developer, says situation 'Sars-like' with hotels revenue down by 50 per cent

By Lam Ka-sing / | December 17, 2019 2:40 PM SGT
Sun Hung Kai Properties, Hong Kong's biggest developer by value, said revenue at its hotels division had plummeted by up to half in November and December, as the city's tourism industry struggled to stay afloat amid seven months of anti-government protests and the US-China trade war.
Revenue per available room dropped in these two months by 40 per cent to 50 per cent year on year, Adam Kwok, the company's executive director, said on the sidelines of the launch of Alva Hotel by Royal in Sha Tin on Friday.
The 350,000 sq ft hotel was built at the cost of about HK$2.8 billion (US$359 million), including the cost of land.
"The hotel market is poor, there is no doubt about it ... there is definitely a hit. But there is no reason to [not open] the hotel after planning for so long," Kwok said. "I think we are in a difficult situation, so we can only try our best to operate it. The team is under a lot of pressure."
Quite a few package tours that booked with the company's hotels previously had cancelled their bookings. "But we always encourage hotel staff to try hard for all possibilities [of bookings]," he said.
Adam Kwok, Sun Hung Kai Properties' executive director. Photo: Xiaomei Chen alt=Adam Kwok, Sun Hung Kai Properties' executive director. Photo: Xiaomei Chen
Kwok noted that last week Sino Hotels said in a filing to the Hong Kong stock exchange that it expected its net profit for the five months ending November 30 to drop by 94 per cent amid a "challenging business environment".
The anti-government protests had left local hotels facing "great challenges", said Raymond Kwok, the company's chairman and managing director, and Kwok's uncle.
He said the current situation reminded him of the June 4 Tiananmen Square crackdown in 1989. He was overseeing the Royal Park Hotel, which had opened just two months after the incident.
Adam Kwok said he would urge the government and Trade Development Council to implement support measures used during the Sars (severe acute respiratory syndrome) outbreak in 2003.
"Now is quite a cold winter. I think tour groups from mainland China will be diminishing and do not dare to come. The tourism industry really needs help. All peers are transforming to do more local business. It is not enough to just rely on tourists," he added.
He said the company had not forced its staff to go on unpaid leave, or resorted to mass lay-offs. He added that the company's High Speed Rail project will not have a hotel as it "already has about 7,200 rooms in Hong Kong, which is already quite a lot of exposure".
Sun Hung Kai's completed hotels in Hong Kong occupy 3.9 million sq ft of gross floor area, or 11.9 per cent of its total completed investment properties in the city.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2019 South China Morning Post Publishers Ltd. All rights reserved.
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