The Hongkong and Shanghai Hotels (45) H1 2024 earnings summary

Executive summary

• The Peninsula London officially opened in June 2024, marking a major milestone with strong initial sales of branded residences and positive guest reviews; The Peninsula Istanbul also continued its ramp-up and received industry accolades.

• Group revenue surged 89% year-over-year to HK$4.6 billion, mainly due to HK$1.7 billion from the sale of four Peninsula-branded London Residences and new hotel openings.

• Despite revenue growth, the group reported a net loss of HK$448 million and an underlying loss of HK$257 million, impacted by higher depreciation, financing charges, and property revaluation losses.

• Renovation at The Peninsula New York limited available inventory and affected revenue, though performance is improving as the project nears completion.

• CEO Clement Kwok announced retirement after 22 years, with succession planning underway.

Financial highlights

• Consolidated revenue rose 89% year-over-year to HK$4.6 billion, driven by Peninsula London residence sales and new hotel openings.

• EBITDA before pre-opening and project expenses increased 16% to HK$580 million; total EBITDA up 50% to HK$542 million.

• Excluding residential sales, EBITDA before non-recurring expenses fell from HK$498 million to HK$395 million.

• Depreciation increased by HK$100 million, mainly due to The Peninsula London.

• Net external borrowings decreased 7% to HK$14.1 billion; net debt to total assets at 25%.

Outlook and guidance

• Second half expected to be stronger, with high seasonality, continued ramp-up at London and Istanbul, and seasonal events boosting revenue.

• Ongoing concerns about weak Hong Kong tourism, slow return of long-haul travelers, and geopolitical tensions affecting demand.

• Focus remains on stabilizing new hotels, selling remaining Peninsula London residences, and investing in asset upgrades and sustainability initiatives.

• Demand for Repulse Bay residential apartments is returning, and commercial property renovations are planned.