HK&S Hotels (00045) announced that the board of directors expects the group to incur a net loss of approximately HKD 0.45 billion attributable to shareholders for the six months ending June 30, 2024, while it had a net profit of HKD 94 million attributable to shareholders for the same period last year. The performance of the group for the six months ending June 30, 2024, was lower than that of the previous year, mainly due to: 1. The total operating profit before interest, tax, depreciation, and amortization (excluding the interest, tax, depreciation, and amortization before operating profit from selling the Peninsula Residence London) decreased by about 22% due to the ongoing renovation of the New York Peninsula Hotel, and the new Peninsula hotels in London and Istanbul have yet to reach a stable operating stage, and the weakening market conditions in several other hotels. 2. Depreciation increased by about 40%, mainly due to the opening of the Peninsula London Hotel in September 2023. 3. The net financing costs increased by approximately 180%, which was due to the group no longer capitalizing the interest expenses related to the borrowing of the hotel project after the opening of the Peninsula London hotel and the high-interest rate. 4. For the six months ending June 30, 2024, the group incurred a net loss of approximately HKD 0.14 billion from the revaluation of investment properties, while it had a revaluation gain of HKD 0.222 billion for the same period last year.
Among the above factors, several hotel's operating performance was far below expectations. Interest costs rose due to higher interest rates and the time it took to recover proceeds from the sale of Peninsula Residence London. The group also incurred unexpected losses from the revaluation of its properties.