Hyatt Regency faces wrecking ball
The owner of the 723-room
Hyatt Regency Hong Kong hotel in Tsim Sha Tsui is considering knocking down
the 35-year-old building to make way for a retail-commercial complex, citing
The move would leave 568 hotel employees jobless
and remove a familiar landmark from the heart of Kowloon's prime tourist
Although the influx of mainland tourists has helped the local hospitality
industry rebound from last year's Sars epidemic, the five-star hotel's
principal clientele - US and Japanese tourists - have yet to return in their
Associated International Hotels, owner of the
18-storey property, withdrew it from tender in January after failing to
attract satisfactory offers. It valued the hotel, including its three-level
shopping arcade, at $3.25 billion in March last year.
A spokeswoman at Associated International Hotels
said the proposal aimed to increase investment returns from the property,
which contributed more than 65 per cent of its $334 million revenue last
"Operating a hotel is very expensive,"
she said, noting that the group was also concerned that the growing supply
of hotel rooms in Hong Kong would put further pressure on room rates.
Mainland tourists accounted for only 10 per cent of revenue, she said.
The hotel's management contract with Hyatt Regency
Asia-Pacific is scheduled to expire next year, but the group has no firm
timetable for the proposed redevelopment as the feasibility study is still
at a preliminary stage.
Pang Shui-kee, managing director of surveyors SK
Pang, estimated construction cost of the redevelopment at between $1,000 and
$1,200 per sq ft. Assuming a gross floor area of 645,000 sq ft, the total
investment would be $774 million.
Monthly rentals at street-level shops in Tsim Sha
Tsui are currently $200 to $600 per sq ft, depending on the size and quality
of the premises, he said. "Having a retail complex will probably
generate better investment returns."
Henrietta Ho, a marketing manager at Hyatt Regency
Hong Kong, said: "It was so sad when I heard about the
The recent surge in local hotel development plans
is primarily focused on budget properties designed to cater to swelling
numbers of mainland tourists.
Other five-star hotels pulled down in recent years
include the Furama Hotel in Central, which is being replaced by the AIG
Tower expected to be finished next year.
In 1995, Cheung Kong (Holdings) knocked down the
Hilton Hotel to build Cheung Kong Center.
Shares of Associated International rose 0.85 per
cent to $5.90 yesterday. It said its net profits rose 14.41 per cent to
$110.16 million for the year to March, due in part to an $18 million
write-back of provisions it made in the previous year. - by
Sandi Li SOUTH
CHINA MORNING POST 30 July 2004
Regency may be demolished for shops
Associated International Hotels is considering
demolishing the 18-storey Hyatt Regency hotel in Tsim Sha Tsui to make way
for a retail-and-office building.
The main board-listed company and parent Tian Teck
Land said on Thursday it is conducting studies and will draw up a detailed
``Having carefully examined different possible
renovation and redevelopment scenarios, the directors have decided to pursue
the possibility of redeveloping the property into a commercial building
comprising mainly retail components,'' the company said. No timetable has
Surveyors said Hyatt Regency Hong Kong on Nathan
Road has redevelopment potential - especially the retail component, which
might give a higher return and capitalise on the growing number of mainland
Midland Surveyors director Ronald Cheung estimated
reconstruction costs at between HK$1,000 and HK$2,000 per square foot. The
value of the retail component was estimated at HK$50,000 psf, compared to
HK$3,500 psf for the office sector.
Centaline Surveyors associate director James
Cheung said the redevelopment plan may attract major developers, as had been
the case when the hotel was offered for sale late last year.
At least six companies, including Cheung Kong
(Holdings), Sun Hung Kai Properties and Chinese Estates Holdings, lodged
bids before the sale was put on hold in January.
The highest bid was about HK$3.2 billion, well
short of the HK$3.6 billion the hotel's owner hoped to get.
The value of the hotel, in the heart of Tsim Sha
Tsui, had recently risen to between HK$4 billion and HK$5 billion, surveyors
``Demand for five-star hotels remains strong, but
when considering the prime location of Hyatt Regency and the positive
outlook for the retail property sector, a retail-and-office development is a
good alternative,'' Cheung said.
He said major developers may be interested in
making purchase offers or taking part on a joint-venture basis with the
The hotel has 723 rooms, a shopping arcade and
restaurants and covers a site measuring 43,525 square feet and has a floor
area of 645,000 sq ft.
The Hyatt Regency is Associated International's
main asset. The hotel is managed by Hyatt Corp, a Chicago-based company
privately owned by the Pritzker family.
Shares of Associated International rose 0.85 per
cent on Thursday to close at HK$5.90. -
by Raymond Wang HONG KONG STANDARD
30 July 2004
Hyatt Regency SCMP photo
Bidding for Hyatt Regency signals
return of confidence
Companies line up for the
prime hotel and retail complex in Tsim Sha Tsui
At least six companies have submitted bids in the tender sale of the
five-star Hyatt Regency Hong Kong in Tsim Sha Tsui in the latest sign of
growing property market confidence.
The winning bid for the 18-storey hotel is
expected to top $3 billion. The property has a gross floor area of 645,000
square feet, with a 723-room hotel and a three-storey shopping arcade
fronting on to Nathan, Peking and Lock roads.
Chinese Estates Holdings, which has made no secret of its appetite for large
shopping centres in densely populated areas, confirmed yesterday that it had
submitted an aggressive bid. The public tender closed at noon yesterday.
Other bidders for the property, owned by listed
Associated International Hotels, are believed to include the Fu family - the
former owners of the former Hotel Furama in Central - Cheung Kong (Holdings)
and Sun Hung Kai Properties. They were unavailable for comment.
Associated International and sole sales agent DTZ
Debenham Tie Leung declined to comment.
Analysts said the tender would become the latest
indicator of the outlook for the hotel and retail property markets.
most recent annual report, dated March 31 last year, valued the Hyatt
Regency, including the shopping arcade, at $3.25 billion.
Analysts predicted that a medium-sized developer
such as Chinese Estates, family-run enterprises and overseas funds would
offer more aggressive bids than big developers, which would prefer bigger
investments or choose to focus on government land sales.
Chinese Estates sales and leasing manager Michele
Lee Ming-ting said: "We submitted a very competitive price as we really
want to get it. It is a rare chance to get such a site in Tsim Sha Tsui, and
we don't foresee similar sites appearing in the market in the near
She said Chinese Estates had not decided what it
would do with the hotel, but did not rule out transforming it into a retail
complex. "The management agreement expires at the end of 2005," Ms
Lee said. "We still have plenty of time to decide the use if we can get
Pierre Wong, a sales director of Midland Realty's
commercial and retail division, estimated the value of the property at
between $3 billion and $3.5 billion. The market value of the hotel section
is estimated at $1.5 billion, or $1.5 million to $2 million per room.
The existing retail section is estimated at $1
billion to $1.5 billion, reflecting the market price of $60,000 to $80,000
per square foot for retail space in Nathan Road, according to Mr Wong.
In 2001, Chinese Estates, in partnership with Chow
Tai Fook Enterprises, the parent of New World Development, acquired the Sogo
building and department store in Causeway Bay for $3.53 billion.
The developer also bought a major commercial
building - the Tung Ying Building - in Tsim Sha Tsui for $1.1 billion last
year. - by Ernest Kong & Peggy
China Morning Post 8 Jan 2004