• Bonnie Gokson's latest venture

Sincere developed flagship for Marriott on top London site

Sincere, the department store-to-insurance group, won permission to develop a £163million (about HK$1.28 billion) luxury hotel that will  become the British flagship for United States hotel chain Marriott International.

Sincere gained approval for the development, which will be on a prime site in London's West End, after a two-year battle with planning authorities. It will build a 157-room hotel complex, 20 penthouse apartments and ground-floor retail and restaurant outlets.

Sincere owns one of the oldest department store chains in Hong Kong, with six stores in the SAR and two in the mainland - one in Shanghai, the other in Dalian.

The company has been investing heavily in commercial and residential properties in London for several years, and profits from sales in London have helped offset poor Hong Kong earnings from retailing.

The site of the 146,000 square foot London development is 140 Park Lane,  on the corner of Oxford Street and Park Lane, overlooking Hyde Park.

Sincere's purchase price was only £163.29 million.   The deal gives it control of a rare freehold in London, and it is estimated the hotel will have an end investment value of over £163,100 million.

In a joint venture with British property developers Marylebone Warwick Balfour (MWB), Sincere will develop the site and MWB will receive 46 per cent of any profit from the development.

Sincere also has signed up Marriott International, the United States-based hotel group, which has agreed to a 20-year operating and management contract.

Marriott has been granted an income guarantee for the first 10 years of the agreement.

MWB said it was intended the Park Lane hotel would be Marriott's British flagship.

"We expect to commence work in the development almost immediately and  Marriott expects to open the doors of their flagship property within the next two years," MWB director Joe Shashou said.

The project is the second investment-led development undertaken by Sincere in partnership with MWB.  It follows a luxury residential project in 1996, covering three acres in London's up-market Hampstead, and comprising 62 apartments and one house. After working with MWB to redevelop the site, Sincere sold out to MWB, but receives fees estimated at £163 million per year for the next two years.

The company has been highly active in the hotel market, and the latest development marks the third large hotel project by the group in the past two months.

In August, it revealed it was developing a £163.50 million flagship hotel for Accor of France, and it is also redeveloping a site in Glasgow for the Radisson SAS Worldwide group.     -     South China Morning Post    October 8, 1999

Speaking after yesterday's annual general meeting, managing director Philip Ma said the company's retail business had been hit badly by the weak consumer sentiment fuelled by record unemployment.

``Retailers are operating in a harsh environment,'' Ma said. ``The high jobless rate and wage tightening [among most of Hong Kong companies] has dampened shoppers' consumption sentiment.''

Local consumers choosing to shop across the border had also dealt a severe blow to retail business, he said.

``Continued deflation has also hit Sincere's total turnover as the selling price of our products has fallen.''

The lower product prices had contributed to the 2 per cent cut in gross profit in the March-July period.

Ma said he expected the retail sector to remain sluggish in the second half of the year due to cut-throat price competition among retailers.

``We expect the retail sector will only show improvement a year later,'' he said.

``If the retail sector remains weak, it will be difficult for the company to make a net profit. We target to trim our expenditure to narrow our losses.''

Ma said the company planned to design a range of European-style furniture to boost retail sales.

``As Sincere ranks No1 in furniture sales in the department store industry, we are confident that the business will boost our revenue.''

The furniture will be made in China and would be ready for sale in the company's Central department store in the fourth quarter.

``If sales of our own designed furniture are satisfactory, we will also sell our products in some mainland cities, including Beijing, Shanghai and Guangzhou,'' Ma said.

Sincere operates four department stores in Hong Kong and is involved in four luxury apartment projects in London.

Ma expected the company would pocket about HK$300 billion from the property investments in Britain in the next fiscal year.

The company will negotiate new leases for its Mong Kok and Central stores this year and Ma says rents could drop by as much as 40 per cent from the current level.

Sincere reported a net loss of HK$58 million for the year ended February 28, down from a loss of HK$268 million in the previous fiscal year.

While turnover plunged 21 per cent to HK$369 million for the year, sales revenue from the department store operation dropped 10 per cent to HK$405 million.

Sincere shares closed unchanged at 26 HK cents yesterday.    -  3 August 2002    The Standard    

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