HK&S HOTELS plans to shift to a high capital efficiency growth model, expand strategic cooperation, and reduce wholly-owned holdings

The parent company of Peninsula Hotels, Hong Kong Shanghai Hotels (045), announced a new execution and transformation strategy for 2035. The group will optimize its capital utilization model and adopt a more asset-efficient "Asset Right" strategy to expand its global footprint. CEO Eric Wu stated that the group plans to shift towards a high capital efficiency growth model, increase the proportion of strategic partnerships, and reduce full ownership, accelerating global layout and sharing operational risks through partners. Currently, 25% of the group's hotels operate under a joint venture model, and it will continue to expand cooperative models, extending its resort and branded residential footprint, aiming for a balanced global regional layout by 2035. Last Year Earned 320 Million, Returned to Profitability The group's performance in 2025 returned to profitability, with a full-year profit attributable to shareholders of HKD 320 million, reversing a loss of HKD 943 million in 2024; basic profit was HKD 105 million, compared to a loss of HKD 176 million in the previous year. The group's total revenue was HKD 7.98 billion, and after deducting the sale of Peninsula residences in London, core operating revenue was HKD 7.58 billion, an increase of 11% year-on-year. Among them, hotel business revenue rose 13% to HKD 5.63 billion, commercial property increased 5% to HKD 930 million, and the Peak Tram, retail, and other businesses rose 6% to HKD 1.02 billion. No final dividend will be distributed. Average Room Rate of Peninsula Hotels in Greater China Fell 5% During the period, the average room rate of Peninsula Hotels in Greater China was HKD 4,053, a year-on-year decrease of 4.8%. The average revenue per available room was HKD 2,644, an increase of 8% year-on-year, and the occupancy rate rose by 7 percentage points to 65%. Benefiting from the recovery of inbound tourism and the visa-free policy in mainland China, room and banquet performance remained stable, but dining was weak due to cautious consumer spending. In other regions of Asia, the average room rate was HKD 4,053, a year-on-year decrease of 4.8%, while the average revenue per available room increased by 18.9% to HKD 2,624, with an occupancy rate of 66%, and the Tokyo Peninsula set a historical high. In Europe, the average room rate was HKD 12,584, a year-on-year increase of 3.8%, with an average revenue per available room of HKD 7,151, up 13.8%, and an occupancy rate of 57%. In the United States, the average room rate was HKD 7,889, an increase of 7.3%, with an average revenue per available room of HKD 5,394, up 12.9%, and an occupancy rate of 68%. Regarding geopolitical situations, Eric Wu indicated that the impact of conflicts in the Middle East still needs to be observed. The group's asset distribution is balanced, providing strong risk resistance capability, and the overall business impact is controllable. If Performance Continues to Improve, Dividend Resumption Not Ruled Out In terms of capital planning, the group stated that it will invest 4% of its revenue annually in asset replacement and will promote large-scale optimization and upgrades in the future. Taking advantage of the 100th anniversary of the Hong Kong Peninsula Hotel in 2028, it will fully renovate and transform flagship properties while also starting renovations at the Tokyo hotel and upgrades to Paris rooms. In the Greater China market, Eric Wu noted that due to geopolitical factors and the slow recovery of long-distance travel, short-term demand performance is uneven. Hong Kong faces competition from nearby cities, but large events are gradually taking place, and long-distance customer sources are warming up. The group will further release the potential of existing assets, optimize operational performance, and extend the Peninsula brand from hotels to lifestyle experiences, travel, and other fields, deeply cultivating high-end customer groups In terms of dividend policy, the group stated that it will flexibly adjust based on profit performance and cash flow conditions. If performance continues to improve, it does not rule out the possibility of resuming dividend payments