HSH’S 2020 ANNUAL RESULTS
Hong Kong, 5 August 2020
The Hongkong and Shanghai Hotels, Limited today announced its interim results for 2020. Commenting on the results, HSH CEO Clement Kwok said:
“The first half of 2020 has been one of the most challenging periods our group has ever faced. The world has been devastated by the COVID-19 Coronavirus Disease, with millions of people affected and more than half a million deaths at the time of writing. In terms of economic impact, the tourism industry is one of the sectors most severely impacted, with global travel restrictions, quarantine and safety concerns deterring people from travelling for the foreseeable future.
COVID-19 has created unprecedented challenges for the hospitality industry, and we have felt its devastating effects ripple across our global portfolio. Our hotels and tourism related businesses in Greater China first felt the effects in late January. Outside of Greater China, our hotels started the year in a strong position but experienced a sharp deterioration in demand as the pandemic spread on a global scale. As a result, beginning in March we temporarily closed our Peninsula hotels in New York, Chicago, Paris, Tokyo, Bangkok and Manila, as well as the Thai Country Club and Quail Lodge & Golf Club. The Peninsula to the Peak Tram and Peak Tower. On the commercial property side, while rents continue to come under pressure in the luxury retail market, office and residential leasing have remained relatively stable. In the light of the extremely challenging market circumstances we faced, the group reported an EBITDA loss of HK$95 million.
The group came into this crisis with low gearing and considerable liquidity, which we bolstered by arranging further facilities totalling HK$2.8 billion during the first half of 2020. As at 30 June 2020, net external debt to total assets was 16% and the group has HK$7.5 billion in available liquidity with another HK$810 million of arranged lines under documentation. Starting from the Hong Kong social unrest which began in mid-2019 and continuing with the onset of the COVID-19 crisis, we have exercised significant cost control and cost cutting while maintaining appropriate operational and service levels as well as looking after the well-being of staff. Our total monthly group operating costs, with a number of properties under temporary closure, are currently running in the region of 34% below the levels of the first half of 2019. As a result of the actions that we have taken to minimise our operating cash outflows, we believe our financial resources are currently sufficient to meet the group’s funding requirements for at least the next 18 months even in the event there is no substantial recovery in business from the current levels.
Looking at our group’s results for the first six months, our tourism-related businesses were very substantially impacted by the reduction in global travel demand and temporary hotel closures. The 52% decline in consolidated revenue was principally due to the decrease in revenue recorded by our hotels division and a significant decrease in visitors to the Peak Tram and Peak Tower. On the commercial property side, while rents continue to come under pressure in the luxury retail market, office and residential leasing have remained relatively stable. In the light of the extremely challenging market circumstances we faced, the group reported an EBITDA loss of HK$95 million.
We implemented substantial cost-saving measures group-wide. These included the introduction of voluntary unpaid leave, reduced casual labour, redeployment of staff and a hiring freeze. Government subsidies have been made available to certain operations, and we have reduced operating and corporate level expenses and renegotiated contracts. Despite the significant efforts to contain costs, the group’s underlying loss was HK$499 million. Further taking into account the unrealised loss on revaluation of the group’s investment properties and impairment provisions made in respect of the investments in The Peninsula Manila and The Peninsula Istanbul, the group’s loss attributable to shareholders for the period amounted to HK$1,197 million.
Despite the high degree of uncertainty in the near term, our long-term philosophies and values remain steadfast. Our vision has not changed since I have been CEO of this group, which is: to develop, own and operate a small number of the highest quality property assets, some of which we believe are considered to be amongst the finest hotels in the world. By taking a long-term view and by maintaining and enhancing the quality of our assets and operations, we seek to create significant value for our shareholders from the long-term appreciation in the capital value of our properties, as well as from the increasing operating yield as each property grows its income over time.
We remain focused on building and improving our assets for the future. We are continuing to make significant investments in our Peninsula hotel projects in London, Istanbul, Yangon and the Peak Tram project. Each project is facing some degree of delay due to the unforeseen circumstances of the coronavirus and we are working hard to mitigate these delays.
BUSINESS PERFORMANCE
Our group comprises three key divisions – hotels, commercial properties and clubs and services. These divisions are described in more detail in the following review.
Hotels Division
|
Hotels Division
|
Revenue
|
Variance
|
|
|
HK$m
|
In HK$
|
In Local Currency
|
|
Consolidated hotels
|
|
|
|
|
The Peninsula Hong Kong
|
282 |
-54%
|
-54%
|
|
The Peninsula Beijing
|
60
|
-60%
|
-58%
|
|
The Peninsula New York
|
140
|
-56%
|
-56%
|
|
The Peninsula Chicago
|
87
|
-69%
|
-69%
|
|
The Peninsula Tokyo
|
165
|
-62%
|
-62%
|
|
The Peninsula Bangkok
|
51 |
-64%
|
-63%
|
|
The Peninsula Manila
|
35
|
-71%
|
-71%
|
|
|
|
|
|
|
Non-consolidated hotels
|
|
|
|
|
The Peninsula Shanghai*
|
104 |
-60%
|
-58%
|
|
The Peninsula Beverly Hills
|
144
|
-51%
|
-51%
|
|
The Peninsula Paris
|
85
|
-70%
|
-68%
|
|
|
|
|
|
| * Excluding proceeds from sale of apartments |
|
The Peninsula Hong Kong
|
The Peninsula Hong Kong
|
|
Revenue
|
HK$282m
|
-54%
|
|
Occupancy
|
|
-52pp
|
|
Average Room Rate
|
|
-36%
|
|
RevPAR
|
|
-87%
|
In the first half of the year,
The Peninsula Hong Kong was impacted by the stringent travel restrictions and quarantine measures in Hong Kong. We are supporting the local community and charities by partnering with Impact HK and offering a “one meal for one meal” programme to support the homeless and needy in Hong Kong.
We implemented a number of “staycation” offers and marketing promotions including “The Eight Loves of The Peninsula Hong Kong” to attract the local market. Food and beverage revenue declined due to social distancing measures imposed by the Hong Kong Government and we temporarily closed the Spa, The Verandah, Gaddi’s and Felix. At the time of writing, dine-in service at restaurants has been restricted by the government and bars and spas remain closed.
The Peninsula Office Tower was 92% occupied in the first half of 2020, and the immediate outlook is stable. The Peninsula Arcade occupancy was 82% and the overall environment in Hong Kong for luxury retail remained soft. We are taking the opportunity to renovate The Peninsula Arcade at a cost of HK$181 million which will result in a more attractive retail space for our tenants.
It is thanks to the efforts of our colleagues that The Peninsula Hong Kong received the accolade of “No 1 Best Hotels and Resorts in Hong Kong” by DestinAsian Readers Choice Awards in February 2020, as well as “No 2 City Hotel” by Travel + Leisure in July 2020.
We have formed an alliance with other Hong Kong-headquartered hotel brands, known as The Heritage Tourism Brands, to showcase Hong Kong’s unique advantages as a tourism destination and to inspire love for the city amongst the local residents.
The Peninsula Shanghai
|
The Peninsula Shanghai
|
|
Revenue
|
RMB95m
|
-58%
|
|
Occupancy
|
|
-43pp
|
|
Average Room Rate
|
|
-18%
|
|
RevPAR
|
|
-74%
|
Despite the very challenging environment due to the onset of the coronavirus,
The Peninsula Shanghai remains the market leader in average room rates in the city. We were delighted to be named as the Number 1 “Top City Hotel in Shanghai” by Travel + Leisure magazine, and The Peninsula Shanghai remains the only hotel in mainland China to have two restaurants with Michelin stars.
Due to travel restrictions, the domestic Chinese mainland market remained our largest revenue driver. Catering business was significantly disrupted due to government advisories and Sir Elly’s, Compass Bar and Salon de Ning as well as No. 1 Waitanyuan had to be temporarily closed. In June, rooms revenue and food and beverage revenue started to show some signs of early recovery from the local market.
The Peninsula Arcade was 94% occupied for the first half. As previously agreed by both parties, we have ceased management of No. 1 Waitanyuan, as we have reached the end of the management agreement.
The group owns a 50% interest in The Peninsula Shanghai Complex which comprises a hotel, a shopping arcade and a residential tower of 39 apartments. As at 30 June 2020, a total of 30 units have been sold, including one during the first half of 2020. This generated gross proceeds of RMB181 million, which was utilised for loan repayment and working capital of the joint venture entity.
The Peninsula Beijing
|
The Peninsula Beijing
|
|
Revenue
|
RMB54m
|
-58%
|
|
Occupancy
|
|
-41pp
|
|
Average Room Rate
|
|
-17%
|
|
RevPAR
|
|
-74%
|
The Peninsula Beijing was negatively impacted by international travel restrictions and city-wide lockdowns, particularly in the first quarter of 2020. We had started to see some pickup from the domestic market in May and June but this was impacted by a second wave of coronavirus which occurred in the city and we continue to monitor the situation closely.
As part of our group marketing campaign we launched “The Eight Loves of The Peninsula Beijing” in May 2020 which allows guests to enjoy special suite packages, as well as an array of curated experiences to showcase the best of Beijing.
The Peninsula Arcade was 58% occupied and despite the challenging environment, leasing sentiment and enquiries have remained positive.
The Peninsula Tokyo
|
The Peninsula Tokyo
|
|
Revenue
|
JPY2.31b
|
-62%
|
|
Occupancy
|
|
-40pp*
|
|
Average Room Rate
|
|
-3%
|
|
RevPAR
|
|
-52%*
|
| * excluding the effect of reduction in room inventory during the hotel closure |
The Peninsula Tokyo enjoyed a promising start to the year with high expectations for the peak sakura (cherry blossom) season. However, the hotel started to suffer from cancellations due to the global coronavirus pandemic in February 2020 which eventually led to the cancellation of the Tokyo Olympics. We temporarily closed the hotel on 28 March 2020 with health and safety considerations for our guests and staff as a top priority.
The hotel reopened in late June although overseas business remains almost non-existent due to the ongoing travel restrictions in place for Japan. As part of the group marketing initiative, we launched “The Eight Loves of The Peninsula Tokyo” in June 2020 which lets guests rediscover the distinctive cuisine, activities, culture, and community of their “home away from home” in Tokyo.
The Peninsula Bangkok
|
The Peninsula Bangkok
|
|
Revenue
|
THB207m
|
-63%
|
|
Occupancy
|
|
-27pp*
|
|
Average Room Rate
|
|
+19%
|
|
RevPAR
|
|
-26%*
|
| * excluding the effect of reduction in room inventory during the hotel closure |
The Peninsula Bangkok temporarily closed on 28 March 2020 following the guidance of the Thai Government, which issued an emergency decree in response to the COVID-19 crisis. No foreigners were allowed to enter Thailand until late June 2020. The hotel remains closed.
The legal dispute with our Thai partners is ongoing. HSH owns 50% of The Peninsula Bangkok and Thai Country Club and has been operating the hotel since 1998. The Phataraprasit shareholders, who own the other 50% of the hotel, have been taking legal and other actions with the objective of terminating Peninsula’s management of The Peninsula Bangkok. We continue to vigorously defend our rights and have always acted with integrity and in the best interests of our shareholders.
The Peninsula Manila
|
The Peninsula Manila
|
|
Revenue
|
Php232m
|
-71%
|
|
Occupancy
|
|
-30pp*
|
|
Average Room Rate
|
|
+17%
|
|
RevPAR
|
|
-28%*
|
| * excluding the effect of reduction in room inventory during the hotel closure |
The Peninsula Manila completed its guestroom renovation and opened a new executive Club Lounge in early 2020. Unfortunately, due to the outbreak of the pandemic, the hotel temporarily closed on 19 March 2020 following the guidance from the Philippine Government on “Enhanced Community Quarantine”. In May, we started to offer takeout and delivery services from The Peninsula Boutique, The Lobby and Spices which was well received by the local community. Unfortunately, this service had to be suspended in late June due to the worsening situation of coronavirus cases in the city. The hotel remains closed.
The Peninsula Manila is subject to a land lease which is due to expire in 2026. In view of the relatively short remaining lease term and the uncertain outlook of the local tourism market, a review has been conducted by management and an independent third-party valuer. Since the hotel’s appraised value was lower than its book value as at 30 June 2020, the directors considered it appropriate to write down the hotel’s value resulting in an impairment provision of HK$93 million.
The Peninsula New York
|
The Peninsula New York
|
|
Revenue
|
US$18m
|
-56%
|
|
Occupancy
|
|
-14pp*
|
|
Average Room Rate
|
|
-4%
|
|
RevPAR
|
|
-23%*
|
| * excluding the effect of reduction in room inventory during the hotel closure |
The Peninsula New York started the year in a strong position as a RevPAR market leader in January, with robust food and beverage revenue and strong diplomatic business. However, the hotel temporarily closed on 20 March 2020 due to the very serious global pandemic situation in New York City. The hotel remains closed and we have placed the majority of staff on furlough.
The Peninsula Chicago
|
The Peninsula Chicago
|
|
Revenue
|
US$11m
|
-69%
|
|
Occupancy
|
|
-17pp*
|
|
Average Room Rate
|
|
-5%
|
|
RevPAR
|
|
-31%*
|
| * excluding the effect of reduction in room inventory during the hotel closure |
The Peninsula Chicago enjoyed a strong start to the year in January and February 2020. However, the hotel temporarily closed on 17 March 2020 due to the outbreak of coronavirus in the city of Chicago and with the health and safety of our guests and employees as a top priority. During the closure, the hotel implemented various charitable and community initiatives such as live music broadcast from the Z Bar terrace on social media. We were pleased to receive the accolade of “No 1 City Hotel in Chicago” by Travel + Leisure.
We reopened the hotel on 23 July 2020 and will launch “The Seven Loves of The Peninsula Chicago” to drive bookings from the US domestic market. We have placed a number of staff on furlough and have implemented stringent cost saving measures to mitigate the downturn in business.
The Peninsula Beverly Hills
|
The Peninsula Beverly Hills
|
|
Revenue
|
US$18m
|
-51%
|
|
Occupancy
|
|
-39pp
|
|
Average Room Rate
|
|
-5%
|
|
RevPAR
|
|
-51%
|
Following a satisfactory first quarter of 2020 during the traditional peak awards season, The Peninsula Beverly Hills was significantly impacted by the coronavirus Shelter-in-Place restrictions implemented by the California state government. Most food and beverage outlets were temporarily closed from March to May 2020 and after briefly reopening, all indoor restaurants were instructed to close from June 2020, leading to a significant decline in rooms revenue and food and beverage revenue. The Spa also had to close again in July 2020 as per instructions from the Governor. International arrivals to Los Angeles declined and the majority of guests in the second quarter were comprised of the drive-in market from the California and Nevada area. All events have been cancelled and this has affected our rooms revenue and catering business. We have placed a number of staff on furlough and have implemented stringent cost saving measures to mitigate the downturn in business.
The Peninsula Paris
|
The Peninsula Paris
|
|
Revenue
|
EUR10m
|
-68%
|
|
Occupancy
|
|
-16pp*
|
|
Average Room Rate
|
|
-10%
|
|
RevPAR
|
|
-36%*
|
| * excluding the effect of reduction in room inventory during the hotel closure |
In the second quarter of 2020, The Peninsula Paris experienced a challenging environment due to the onset of the global coronavirus pandemic which started to affect Paris in February and March. Our hotel closed on 14 March 2020 due to French government directives. The hotel remains closed although we have reopened La Terrasse Kléber and L’Oiseau Blanc.
We were delighted to receive a Michelin star for our rooftop restaurant L’Oiseau Blanc in early 2020. We hosted The Peninsula Classics Best of the Best Award in February 2020 which was well attended by classic car aficionados and celebrities and received extensive press coverage.
Commercial Properties Division
|
Commercial Properties
|
Revenue
|
Variance
|
|
|
HK$m
|
In HK$
|
In Local Currency
|
|
The Repulse Bay Complex
|
311
|
-6%
|
-6%
|
|
The Peak Tower
|
35
|
-62%
|
-62%
|
|
St. John’s Building
|
28
|
+1%
|
+1%
|
|
The Landmark
|
19
|
-2%
|
-1%
|
|
21 avenue Kléber
|
10
|
-11%
|
-7%
|
Our largest commercial property, The Repulse Bay Complex, reported a slightly weaker first half compared to the previous year. Residential revenue and occupancy remained relatively stable given the difficult business environment, although food and beverage and catering revenue decreased due to Hong Kong government restrictions on social distancing in bars and restaurants, and many weddings were cancelled or postponed.
The Repulse Bay Shopping Arcade, which offers an eclectic blend of lifestyle amenities, health and wellness facilities and boutiques, was 93% occupied for the first half.
The Peak Tower experienced a very challenging first half. Rental revenue decreased and Sky Terrace 428 experienced a reduction of 62% revenue due to the substantial decline in visitor arrivals to Hong Kong. We have implemented a number of sales and marketing strategies to continue to drive business and to encourage local residents to visit the Peak.
St John’s Building, located at the lower terminus of the Peak Tram, offers an excellent location for office space. The property was fully let during the first half of 2020 and revenue increased by 1%, achieved by new leases.
The Landmark, a 16-storey residential and office property, is located on a prime riverfront site in the central business district of Ho Chi Minh City, Vietnam. Revenue and occupancy for the offices remained stable year-on-year despite intense competition. However, the revenue and occupancy for the residential portion was affected by the overall poor business environment. The Landmark maintains its popularity and leadership in a competitive market and continues to attract awards for its management and facilities.
21 avenue Kléber offers a prime location immediately adjacent to The Peninsula Paris on Avenue Kléber, just steps from the Arc de Triomphe. The property has achieved international BREEAM Excellent and HQE Outstanding environmental certifications which are the highest level of sustainable building assessments in Europe. We have successfully leased the entire office although one retail space has been vacated and revenue was lower due to rental concessions.
Clubs and Services Division
|
|
Revenue
|
Variance
|
|
Clubs and Services
|
HK$m
|
In HK$
|
In Local Currency
|
|
The Peak Tram
|
12
|
-74%
|
-74%
|
|
The Thai Country Club
|
23
|
-33%
|
-34%
|
|
Quail Lodge & Golf Club
|
27
|
-55%
|
-55%
|
|
Peninsula Clubs & Consultancy Services
|
2
|
-43%
|
-43%
|
|
Peninsula Merchandising
|
13
|
-58%
|
-58%
|
|
Tai Pan Laundry
|
14
|
-49%
|
-49%
|
The Peak Tram is one of Hong Kong’s most popular tourist attractions and has been operated by HSH since 1888. The current upgrade project will result in a beautiful new lower terminus building which features covered queueing and waiting areas with entertainment features for up to 1,300 passengers. The new tramcars will be able to carry 210 passengers instead of 120 at present and visitors’ waiting time will be significantly reduced. The full cost of the HK$684 million upgrade project, which is scheduled to be completed in 2021, is being fully funded by HSH.
In the first half of 2020, the upgrade project has been negatively impacted by the global coronavirus pandemic in terms of the sourcing of materials and production delays in Asia and Europe, which has affected the manufacturing of our new tramcars and equipment. We believe this will affect the project in terms of its scheduled completion date and we have postponed the second phase of service suspension until 2021. The entire upgrade project is still planned to be completed in 2021.
As forewarned in the 2019 annual report and the profit warning announcements in February 2020 and July 2020, overall revenue of The Peak Tram decreased by 74%, due to the impact of the social unrest in Hong Kong and the coronavirus which significantly impacted tourist arrivals in Hong Kong.
The Thai Country Club which is located near Bangkok, recorded a challenging first half of 2020 and the club was temporarily closed due to the Government shutdown of all sports and entertainment facilities from March to May. The Club was allowed to reopen in May with a number of capacity restrictions, however, business remains soft compared to the previous year due to the travel restrictions still in place in Thailand.
Quail Lodge & Golf Club revenue decreased by 55% year on year due to the shelter-in-place restrictions in California and a 50% reduction in membership fees for Golf Club members. The hotel and club facilities temporarily closed in March 2020, although the golf course reopened on 4 May 2020 and the hotel on 17 June 2020 and business has been strong with the “staycation” market in California proving to be popular. Golf rounds improved in May and June. We unfortunately had to cancel both The Quail Motorcycle Gathering and The Quail: A Motorsports Gathering events, which usually occur in May and August respectively and are considered two of the world’s leading concours events for classic motoring aficionados.
Peninsula Clubs & Consultancy Services (PCCS) reported significantly lower revenue compared to the same period last year, due to the impact of the coronavirus outbreak in Hong Kong. The situation also affected the relocation project of the Hong Kong Bankers Club. PCCS manages prestigious clubs in Hong Kong including The Hong Kong Club, Hong Kong Bankers Club and The Refinery (formerly Butterfield’s).
Revenue at Peninsula Merchandising was 58% lower than the same period last year, due to softer retail sales and the temporary closure of the Hong Kong International Airport boutique. Despite the current weak market sentiment, Peninsula Merchandising is planning to expand in the Chinese mainland, and will open new boutiques in key cities and drive online sales, widen distribution channels and increase brand awareness to customers in the Greater China region. Despite the general economic uncertainty, early orders for the mooncake season have been satisfactory.
Tai Pan Laundry revenue declined by 49% compared to the same period last year due to significantly reduced corporate business as a result of the coronavirus pandemic. However, despite the challenging environment we achieved significant improvement in output per hour due to new automated machinery which also led to an improvement in energy costs and lower expenses.
Projects under development
The Peninsula London
In 2013, our group purchased a 50% interest in the lease of 1-5 Grosvenor Place in Belgravia, central London, for a cash consideration of £132.5 million. In 2016 HSH assumed 100% ownership of the project by buying out our equity partner Grosvenor for an additional cash consideration of
£107.5 million. Grosvenor will remain as the landlord under the 150-year lease.
The property is in a high-profile location at the gateway to Belgravia, overlooking Hyde Park Corner, the Wellington Arch, Green Park and the gardens of Buckingham Palace. We are developing a 190-room Peninsula hotel with 26 luxury Peninsula-branded residential apartments for sale also integrated into the development. The construction budget for the project is in the region of £800 million.
As a result of the coronavirus pandemic, we decided to temporarily close the construction site to ensure the safety of our employees, contractors, and suppliers. The site reopened in May 2020 and we are working hard to mitigate the impact of this closure. However, we expect some delays to the project due to the continue impact of the pandemic on the supply chain, and the revised opening date is now expected to be in 2022.
The Peninsula Istanbul
In July 2015, together with our partners Doğuş Holding and BLG, we entered into a shareholders’ agreement to form a joint venture partnership, of which HSH has a 50% share, for a proposed hotel development in Istanbul, Turkey. The partners agreed to jointly develop the property with an investment commitment of approximately €300 million, of which HSH is responsible for 50% or approximately €150 million.
There will be approximately 180 rooms, a ballroom with sweeping views of the Bosphorus, indoor and outdoor swimming pools, Spa and verdant garden area on the waterfront. The Peninsula Istanbul will form part of the wider Galataport project being developed by our partners, which incorporates a promenade, museums, art galleries, restaurants, boutiques, retail units, parks and public spaces for the local community as well as a cruise passenger terminal.
We decided to temporarily close the construction site in April 2020 due to the coronavirus pandemic and while the site has now reopened, this has led to some unforeseen delays. Completion of the project is currently targeted to be in 2022.
The Peninsula Istanbul is subject to a 30-year fixed term lease commencing February 2014. The project has been hard hit by unforeseen delays due to the site conditions and the recent coronavirus pandemic. Coupled with the decline of the local currency, the uncertain economic climate arising from the geopolitical tensions and the expected delay of the hotel opening, management has engaged an independent valuer to re-appraise the value of The Peninsula Istanbul. Following the re-appraisal, the directors have deemed it appropriate to write down the book value of the project by HK$472 million (of which 50% was shared by the group), representing approximately 20% of the hotel’s cost on completion.
The Peninsula Yangon
The company entered into a shareholders’ agreement with Yoma Strategic Investments Ltd (“Yoma”) and First Myanmar Investment Public Company Limited (“FMI”) in January 2014 to acquire a 70% majority interest for a proposed hotel development on the site of the former headquarters of the Myanmar Railway Company in central Yangon, Myanmar. The existing building is being renovated to become The Peninsula Yangon and will be adjacent to a mixed- use development called Yoma Central, previously known as the Landmark Development. We will also receive branding fees on the sale and management of The Peninsula Residences Yangon, the luxury residential apartments being developed by Meeyahta Development Limited which is a joint venture between our partners Yoma and FMI, Mitsubishi Corporation, Mitsubishi Estate Corporation, Asian Development Bank and International Finance Corporation, adjacent to the hotel.
The Peninsula Yangon will have 88 magnificent guestrooms with high ceilings, surrounded by tropical landscaped gardens with an outdoor swimming pool. The Group’s overall investment is around US$130 million, including the value of the leasehold interest and estimated development costs. The project has experienced some delays as a result of the global coronavirus pandemic situation and we are expecting completion in 2022.
Human Resources
The first half of 2020 was a very challenging year for our Human Resources team who have made an enormous effort to preserve as many jobs and livelihoods as possible, and to ensure our staff remain engaged despite working from home and furlough in various countries.
Building a team of exceptional people is the key to executing our strategies. The culture of our company has cultivated a loyal and committed team spirit which has resulted in a stable and cohesive management team. This team spirit starts at the top of the organisation with our majority owners the Kadoorie family and we adhere to a core set of values and integrity that permeates through all levels of the company. We believe it is important to safeguard this culture as we add thousands of new people to our group, with three new hotel properties coming on board.
Our WorkPlace 2025 initiative continues in which our focus is to create effective transformation for our teams and modernise our workplace. While we currently have a hiring freeze in place due to the global pandemic, we remain committed to developing strong leaders, implementing mental and physical well-being programmes, and the improvement of our engagement strategies.
As of 30 June 2020, we have a team of 6,957 full time staff.
Sustainable Luxury
Our Corporate Responsibility and Sustainability Team is working on developing a Vision 2030 Strategy to take the group beyond Vision 2020, and more details will be announced later in 2020. The ten-year period demonstrates that some of these commitments will require significant change and will take time to implement.
We continue to believe that our attention to detail and quest to provide the highest quality service will make sustainability part of the appeal of our luxury offering. Sustainable luxury is an integral part of our long-term mindset. We aim to properly manage risk as well as invest in the right opportunities while enabling a sense of belonging by offering services that are sustainable, thoughtful and purposeful to the needs of our guests and customers.
During the first half of 2020, we continued to move towards our goal of eliminating single- use plastics while balancing this with the need for enhanced hygiene and sanitation protocols necessitated by the coronavirus pandemic. We also continue to focus on reducing our energy intensity and water usage. During the global pandemic, it is our goal to enhance our community outreach and we have implemented a charitable community programme to assist the homeless and needy in cities in which we operate, notably through a “one-for-one” meal programme.
Overall, we continued to see good progress in achieving 89% of our commitments and focusing our efforts in three key areas of “Our Guests, Our People and Our Cities”.
Outlook
In terms of outlook for the coming year, it is not possible to predict when the negative effect of the coronavirus will come to an end. We are currently evaluating how to operate in the “new normal” post-COVID-19 world and have implemented extensive new hygiene and sanitation protocols. We are navigating geopolitical instability in some of the regions we operate in, including our home market of Hong Kong. We are concerned about the effect this political uncertainty will continue have on our results, considering the majority of our group’s interests are based in Hong Kong. Unless there is a material change to the current circumstances, our group would be expected to make a group EBITDA loss for the year as a whole.
We are implementing a number of new strategies to drive business in the year ahead. I am committed to ensuring that with the rapid development of technology we are keeping pace with the needs and opportunities of our business. Examples of technology transformation include the shift to digital marketing, the compilation of a big data strategy and the use of data analytics, and we are exploring the latest technologies to assist with enhanced hygiene in our operations. We are looking at business diversification, exploring opportunities for creating value from horizontal and vertical expansion and “adjacencies” which are supported by our existing brand strengths, resources and skills and other competitive advantages.
We expect that from 2022 onwards, the new hotels in London, Istanbul and Yangon will further enhance our brand presence.
Our Peak Tram business will continue to be negatively impacted in 2020 due to the downturn in visitor arrivals combined with the impact of its improvement and upgrade programme that was previously announced to shareholders. We expect this to affect our results for the rest of 2020, however, in the long term we believe it will significantly improve the visitor experience and enhance Hong Kong’s tourism image.
Overall, our company has maintained a strong balance sheet and has closely maintained its liquidity position during this crisis. We are fortunate to have a highly motivated and dedicated team of management and staff who are committed to our long-term vision.
I would like to thank each member of my team for their loyalty and dedication during one of the most challenging periods our group has faced.”
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About The Hongkong and Shanghai Hotels, Limited (HSH)
Incorporated in 1866 and listed on the Hong Kong Stock Exchange (00045), The Hongkong and Shanghai Hotels, Limited is the holding company of a Group which is engaged in the ownership, development, and management of prestigious hotels and commercial and residential properties in key locations in Asia, the United States and Europe, as well as the provision of tourism and leisure, club management and other services. The Peninsula Hotels portfolio comprises The Peninsula Hong Kong, The Peninsula Shanghai, The Peninsula Beijing, The Peninsula Tokyo, The Peninsula New York, The Peninsula Chicago, The Peninsula Beverly Hills, The Peninsula Paris, The Peninsula Bangkok and The Peninsula Manila. Projects under development include The Peninsula London, The Peninsula Yangon and The Peninsula Istanbul. The property portfolio of the Group includes The Repulse Bay Complex, The Peak Tower and St. John’s Building in Hong Kong; The Landmark in Ho Chi Minh City, Vietnam and 21 avenue Kléber in Paris, France. The clubs and services portfolio of the Group includes The Peak Tram in Hong Kong; Thai Country Club in Bangkok, Thailand; Quail Lodge & Golf Club in Carmel, California; Peninsula Clubs and Consultancy Services, Peninsula Merchandising, and Tai Pan Laundry in Hong Kong.
For further information on this release, please contact:
Websites: www.hshgroup.com www.peninsula.com