HK&S HOTELS: The long-distance leisure travel market in Hong Kong is improving, expected to see ongoing consumption competition from Shenzhen and other regions

HK&S HOTELS (00045.HK) mentioned in its annual performance announcement that the long-distance leisure travel market in Hong Kong is showing signs of improvement, and it is expected to benefit from hosting more major events in the future. However, competition from local consumption in places like Shenzhen is expected to continue.

CEO Eric Wu stated at the earnings meeting that due to competition from consumption in mainland China and local consumers tightening their spending, the performance of the dining business remains weak. Despite the luxury brand retail market being sluggish, the overall performance of its retail malls remains relatively stable. He noted that the performance of the Peninsula Hotel in Hong Kong during the Lunar New Year period was encouraging.

Regarding the conflict in the Middle East, Eric Wu believes it is still too early to discuss the impact of the war situation on global tourism and the hotel industry, but the group is prepared to respond to geopolitical risks, with a relatively balanced global asset portfolio, currently comprising 50% in Asia and 25% each in Europe and the United States. As for the long-stalled Yangon Peninsula Hotel project, he stated that they are still closely monitoring the local situation and do not plan to restart the project for the time being.

He also mentioned that 25% of HK&S HOTELS' hotels are operated under a partnership model, and the group recognizes that effectively utilizing capital and seeking suitable partners globally for joint operations is an effective way to accelerate capacity, expand the brand, and introduce the brand to more consumers.

CFO Keith Robertson stated that the group allocates about 4% of its total revenue each year for capital expenditures, and this year, the related funds may be used for renovations of the Hong Kong and Tokyo Peninsula Hotels. As for whether dividends will be resumed in the future, he explained that the dividend strategy depends on cash flow, financing costs, the global macroeconomic environment, and business prospects, and the group will continue to review this strategy