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 inadequate returns.

The move would leave 568 hotel employees jobless and remove a familiar landmark from the heart of Kowloon's prime tourist district.

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 historical numbers.

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 year.

"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 redevelopment."

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

Hyatt 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 redevelopment plan.

``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 been set.

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 tourists.

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 said.

``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 owner.

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

The 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.

Associated International's 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 future."

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 it."

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 Sito   South China Morning Post 8 Jan 2004   

 


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