Hong Kong's Peninsula Hotel Chain Expects Loss As Coronavirus Spreads

Hong Kong's Peninsula Hotel Chain Expects Loss As Coronavirus Spreads

Hong Kong's Peninsula Hotel Chain Expects Loss As Coronavirus Spreads
Courtesy: Russell Flannery | News Source: forbes.com

The storied five-star Peninsula hotel chain expects to post an operating loss in the first quarter of 2020 as fallout from the spread of the coronavirus cuts into its business and intensifies pressure on businesses already hurt by social tension in Hong Kong.

The Hong Kong-headquartered business is operated by Hongkong and Shanghai Hotels and chaired by storied billionaire Michael Kadoorie. Peninsula hotels are located in Hong Kong, Beijing, Shanghai and New York, among other business capitals. The company’s Hong Kong-traded shares have already lost more than a quarter of their value in the past year.

The spread of the virus “has resulted in widespread travel advisories and airline cancellations to the Chinese mainland, Hong Kong and other regions,” the company said in a statement on Wednesday. “This has negatively impacted the group’s tourism-related businesses across Asia and particularly our three Peninsula hotels in Beijing, Shanghai and Hong Kong. Hotel occupancy has substantially declined, patronage at our food and beverage outlets has decreased, and the commercial arcades of these three hotels have been negatively affected. We are also starting to see an impact at other hotels in Asia.”

 

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“In addition, the political situation in Hong Kong remains volatile following the serious social unrest and mass protests on the streets in the second half of 2019 which considerably impacted most of our Hong Kong businesses. It remains to be seen if this social unrest will continue in 2020,” the hotel said.

“Based on the information currently available, management estimates that the Group will sustain an operating loss in the first quarter of 2020, despite efforts and measures to contain costs.” That in turn would was expected to lead to a significant fall in profit during the first half of 2020 from a year earlier, the company said.

Besides banks, unrest in Hong Kong last year and coronavirus this year have been hurting a swath of business that include restaurants, retailers and airlines. Carrier Cathay Pacific last week warned of a “crisis.” (See related story here.)