Hongkong and Shanghai Hotels said that the underlying strong performance of its businesses during 2006 was reflected in a significantly improved profit before non-operating items of HK$904 million, an increase of 31% as compared to 2005.
The company made the remarks as it reported its audited results for the year ended December 31, 2006.
The total turnover of the group for the year of HK$3.7 billion was 14% above 2005. The increase was driven primarily by the strong performance in the hotel division, increased rentals from non-hotel properties such as The Repulse Bay and The Peak Tower following its re-opening and increased profit from other businesses such as The Peak Tram.
Clement K.M. Kwok, HSH's Chief Executive Officer, commented, "Our group has had another excellent year in 2006. Amidst favourable market conditions, our hotels and other properties and businesses benefited from their strong market positions and the strength of our brand to achieve a significant improvement in earnings. HSH has enjoyed a sustained recovery over the past five years since emerging from the Asian financial crisis which began in the late 1990s. The extent of this recovery can be seen from our EBITDA trend, which has improved consistently every year from a low of HK$698 million in 2001 to HK$1,281 million in 2006. The cumulative effect of these years of earnings growth, coupled with a number of successfully executed corporate transactions, is that the Company's financial position has been significantly strengthened, with our gearing level dropping further to 11% at the end of 2006."
Kwok pointed out that all the Peninsula hotels are either the leader or among the leaders in room rate and revenue per available room in their respective cities, enabling the group to capture a strong share of the growth in revenue brought about by the favourable market conditions in 2006.
The bulk of the Group's non-hotel properties are situated in Hong Kong. The continued strength of the Hong Kong and mainland Chinese economies resulted in very positive demand for office and residential space, as well as commercial space for high-end retail brands. Rental revenue of HK$464 million represented a 24% increase over 2005. The impact of the completed renovation of the unfurnished apartments at 109 The Repulse Bay was realized from the second half of 2006, following the cycle of rental reversions. The Peak Tower re-opened in phases from July 2006, after being closed since the end of April 2005. The renovation has added some 30% more lettable space and with a different market mix, has attracted higher rentals with 100% occupancy.
The Peak Tram had a record-breaking year with annual patronage reaching 4.43 million passengers, up 13% from 2005 and with revenues 14% higher. St. John's Building enjoyed full occupancy for most of the year while The Landmark in Vietnam recorded high occupancy and increased rates in the office and residential space.
Incorporated in 1866 and listed on the Hong Kong Stock Exchange, The Hongkong and Shanghai Hotels, Limited is a holding company whose subsidiaries are engaged in the ownership and management of prestigious hotel, commercial and residential properties in key destinations in Asia and the USA. The hotel portfolio comprises The Peninsula Hong Kong, The Peninsula New York, The Peninsula Chicago, The Peninsula Beverly Hills, The Peninsula Bangkok, The Peninsula Beijing, The Peninsula Manila, The Peninsula Tokyo (to be opened in 2007), The Peninsula Shanghai (to be opened in 2009) and Quail Lodge Resort and Golf Club in Carmel, California.