The redevelopment will cost Mandarin Oriental about $5.09b in a span of six years.
The Excelsior Hotel will shut down by March 2019 as it faces conversion into a mixed-used commercial building, owner Mandarin Oriental Hotel Group revealed.
Back in June 2017, the group went into a thorough review of the long-term strategic options for the site which is located in the Causeway Bay District. They have agreed to convert the hotel into a mixed-used commercial building with a gross floor area of around 63,500 sq m.
“The decision reflects strong commercial property values in Hong Kong and the expected higher yield associated with a commercial building at a time when the hotel requires significant investment,” the firm said.
The redevelopment scheme which is estimated to cost $5.09b (US$650m) is eyed for completion in six years’ time. The firm noted that it will be funded through an appropriate mix of external debt and cash reserves.
Based on current assumptions and market information, the group thinks that the reclassification of the four-star hotel would lead to an accounting gain of some $22.71b (US$2.9b).
“We will ensure there are plenty of opportunities over the next few months for local and international guests to visit the property and celebrate 45 years of memories,” Mandarin Oriental Hotel Group James Riley commented.
Mandarin Oriental recognizes that their earnings could be lowered for the mean time during The Excelsior’s redevelopment. However, they believe that they could soon get a boost from the re-opening of its hotels in London and Madrid which are currently under renovation.
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