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Wharf Hotels said it closed the Prince Hotel for renovations, making use of the business lull created by months of anti-government protests and the coronavirus outbreak for refurbishments, amid market talk that its parent Wheelock was planning a privatisation.
The hotel, located in the Habour City commercial complex in Kowloon, will undergo 15 months of renovations until the third quarter of 2021, the first in a trio of Wharf's properties in the Canton Road vicinity of Tsim Sha Tsui " the other two are Gateway Hotel and Marco Polo Hongkong Hotel " to be refurbished to create a "sustainable long-term economic future" for them, the company said.
"The Prince Hotel's renovation programme ... underlines the long term future of tourism to this city," said Jennifer Cronin, president of Wharf Hotels, in a press release. "We look forward to rebuilding and strengthening Hong Kong's reputation long into the future with the new Marco Polo Prince Hotel."
Occupancy rates among Hong Kong's hotels have plummeted to record lows, after the latest coronavirus outbreak added to many months of anti-government protests in keeping visitors away from the city, particularly the mainland Chinese tourists and shoppers who used to be the biggest contributors to the city's economy. Daily visitor arrivals fell to 3,000 in February, from about 100,000 in January and 200,000 last year, according to Hong Kong's government data.
"Hotels have larger holding costs [and] considerably more potential exposure" to adverse business environments, said Tim Alpe, chief operating officer of the Ovolo Group, which owns hotels and restaurants in Hong Kong. "We will be one of the first hit, but we will take the longest to bounce back."
There is little domestic tourism so Hong Kong is heavily dependent on visitors such as those from across the border in mainland China. Hundreds of major conferences, trade shows and athletic events have been cancelled since anti-government protests broke out last June, with more being scrapped as the coronavirus outbreak deterred public gatherings.
Prince Hotel at the Harbour City in Kowloon. Photo: Handout alt=Prince Hotel at the Harbour City in Kowloon. Photo: Handout
March and April would be "very, very low in terms of occupancy," Alpe said, which would force many operators to "make tough calls in the near future".
Unemployment in the industry could rise to as high as 40 per cent, some hoteliers said. Several operators are already converting their establishments into serviced apartments, or co-living spaces. The Far East Consortium, which owns nine hotels in Hong Kong including four Dorsett hotels, said in November it would convert some hotels into this type of residential use as its average turnover per room had fallen by 20 per cent.
Chinachem Group said some of its four hotels in the city were also undergoing renovations after occupancy plunged to "single digits," and that its ability to start depends on its cash flow.
The situation now is "more critical" than during the 2003 outbreak of the severe acute respiratory syndrome, or Sars, said Chinachem's chief executive Donald Choi. "With the double whammy [of the anti-government protests], the sentiment is even worse."
The Prince Hotel will be refurbished with new bedroom and bathroom furnishings and new fixtures, a new Continental Club lounge as well as a new dining concept that celebrates the best of local and international cuisines, the hotel operator said in a statement, adding that the hotel will be renamed the Marco Polo Prince Hotel when it reopens "to reflect the new contemporary elements that will enhance its regional brand".
Separately, trading was suspended in the shares of Wharf, Wharf Real Estate Investment Company and their parent Wheelock and Co, amid speculation that Wheelock may privatise Wharf. Wheelock, owned by one of the wealthiest families in Hong Kong, may buy Wharf shares from minority shareholders at HK$27.58 a share, a 40 per cent premium to its last price of HK$19.70, according to Justin Tang, head of Asian research at broker dealer United First Partners.
Executives at the three companies declined to comment. Shares of Wheelock, which owns 65.93 per cent of Wharf, were unchanged at HK$47.25. Shares of Wharf REIC, 62.4 per cent owned by Wheelock, were unchanged at HK$40.20.
"It's a win-win-win situation for all three businesses, given the current situation that the global economy finds itself," Tang said. "Once this coronavirus [outbreak] clears, the Hong Kong protests might start again, so minority investors may think this [is] a good bail out deal."
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 © 2020 South China Morning Post Publishers Ltd. All rights reserved.
Copyright (c) 2020. South China Morning Post Publishers Ltd. All rights reserved.