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00:00What are you guys doing and why?
00:01Well, it's so much more than a rebrand.
00:02I think for us, we've got three distinctive hotels in the Chinese mainland, Chengdu, Shanghai, and of course here in Hong Kong.
00:10They've all got a global reputation.
00:12We've recently been awarded four Michelin keys recently, and the upper house here, of course, is in the top five of the world's 50 best hotels.
00:21So there's that global recognition that we have.
00:23And as we look ahead, we've got four, as you rightly say, four openings coming up in the next four years.
00:28Three hotels and one branded residence.
00:31So we feel it's a natural evolution for us to unify the hotels under one brand, upper house hotels.
00:37What's the real reason for it, though?
00:40Because, again, you had the opposite house in Beijing.
00:43I believe it is closed now.
00:44That's correct.
00:45You have East as well over the Indigo Mall.
00:47So you had these different brands.
00:48What's the core reason why you feel that you should rebrand under one upper house?
00:53Because you had a different house brand.
00:56Right, right.
00:56That's correct.
00:57Well, the East hotels are not changing.
00:59They're still there.
01:01But the house collective, it's really been the drive has been these upcoming openings and the branded residences in Bangkok.
01:10And as we grow, the naming convention is, frankly, more straightforward if it's called upper house hotels.
01:19That's really what's been driving it.
01:20And we're looking ahead towards this expansion and feel that this is the right time to do it.
01:24How much is it going to cost, this expansion?
01:27Have you secured the money for that?
01:29What's the ROI looking like?
01:31Well, as the asset-like management company, we don't carry the cost.
01:35So I think our biggest cost is time.
01:37It takes a long time to get deals signed.
01:40It takes a long time to build and open hotels.
01:43And we don't see revenues coming in until the hotels open.
01:46So for us...
01:47What's the timeline on those properties?
01:49So Shenzhen is our next property.
01:51It opens in Q2, 2007.
01:54That will be the upper house Shenzhen.
01:55And then Xi'an is in 28, part of a much larger retail-led Swire Properties development.
02:03And then we have a remarkable opportunity in Shibuya in Tokyo, which will open in 2029.
02:09So where is the priority then?
02:11It looks like you're going Bangkok and Tokyo in addition to what you just talked about with China.
02:15And you're partnering with Norman Foster Partners as well, which have the iconic buildings around Asia.
02:21The one over my right shoulder, HSBC, the Chet Blackhawk Airport, the Beijing Capital Airport.
02:26So Norman Foster has his fingerprints all over Asia.
02:30He's going to be doing your building over Lupini Park.
02:33The value of the business in Bangkok, that's correct, yeah.
02:34Well, I think to your point about where we're going, I think our strategy is very much from South Korea to Australia,
02:40that Asia-Pacific corridor.
02:42But China, greater China, Chinese mainland is our backyard.
02:46We will always be focused there.
02:48And that's why we're looking and excited about Shenzhen and Xi'an.
02:50We've also got prospects in Guangzhou and elsewhere in Shanghai with Swire Properties.
02:56And elsewhere in the Southeast Asian markets, of course, are very interesting.
03:00Ho Chi Minh, Singapore, elsewhere in Bangkok for a possible other hotel.
03:04So the region is bright.
03:08And the foster building in Bangkok, of course, is beautiful.
03:13It's a great location.
03:14It's being developed by Swire Properties and a joint venture with a local developer.
03:17We're bringing our brand, and hopefully it'll do well.
03:21How different is it to run a sort of residence asset compared to a hotel, for example?
03:29And why are you going into that, just as a sort of strategy perspective?
03:33Well, I think fundamentally it's people's homes, right?
03:35So whereas a hotel, you're there for two or three days in a branded residence, it's your home.
03:40And I think that's why branded residences have become popular, because there's a high level of trust and integrity.
03:46You know, it's a sector that's grown over 200% in the last 10 years.
03:49And 79% of those openings were actually hospitality brands, which I think tells you a lot about where hospitality brings value, and aspirational value, frankly, to those.
03:59But it's very different to a hotel, and it's people's homes.
04:02There's a whole amenity program, which goes alongside it, and a whole curation of events and so on.
04:08Residents will get access to other privileges across the group, too.
04:10So we've put together an exciting portfolio and proposition for those buyers.
04:19What opportunity does this rebadge give you as far as capitalizing on the trends that are happening right now?
04:25In particular, in mainland China, we do know, as people hold on to their prices a little tighter, they're going for more experience-oriented stays in hotels.
04:35So how does that translate on the mainland to REVPAR, revenue per available room, and how you redesigned your offerings?
04:44So we've really saw during COVID how aspirational travelers in the Chinese mainland were looking for different types of experiences away from the popular international brands.
04:54And people looked for experiences like we offered in Chengdu at the Tempo House, which is a remarkable property.
04:59And that's continued for sure. To your point about REVPAR, we've seen demand for rooms grow, both in the Chinese mainland as well as here in Hong Kong.
05:11The cadence of average rate is not as good. I think there is sensitivity around willingness to pay.
05:18It's a biased market at the end of the day, but we've seen demand over last year for room nights, which is encouraging.
05:24And we expect that to continue into 2026.
05:26I was going to ask, and I'm glad you brought up it slightly. I wonder if you could elaborate on that as well.
05:31At your price point, is there actually weakness coming through as far as consumption or willingness to consume, share of pocket, all those things?
05:41Yeah, I think probably most recently seen during Golden Week.
05:44I mean, it was a remarkable seven days for Hong Kong and a remarkable period for Chinese tourism as a whole.
05:48I think it's fair to say that the luxury sector probably didn't do as well as the other hotels in the city and the retail sector.
05:55I think there is, to your point, some sensitivity about willingness to spend.
05:58Right.
05:59But I think that going into next year, we are starting to see at this time of the year, which is traditionally big season, we are seeing rates grow again, which is encouraging.
06:10And we'll see that go into January.
06:13So, yeah, we're optimistic about certainly about occupancy.
06:17And according to demand, we'll have to adjust rates accordingly.
06:20Okay.
06:21Well, I was going to get to that as well.
06:23Has it gotten to a point where you need to be more deliberate around pricing strategy?
06:26Absolutely.
06:27Absolutely.
06:28I think, you know, at the end of the day, we have a business to run and it's all very well, you know, holding on to average rate.
06:33But, you know, overheads are increasing.
06:36That's been a fact that the industry has been dealing with, whether that be utilities or staffing.
06:40So margins are under pressure.
06:42So we have to fill rooms.
06:44And it's a perishable product.
06:45We only sell it once.
06:46That's right.
06:47So you can't sit on your hands.
06:50So that's we I think we've been finding the sweet spot, though, in terms of occupancy and rate in the last in the last year.
06:57And we and now we back ourselves, you know, going into this rebranding and with the with the recognition that we've had.
07:04You know, I think we're in a we're in a strong place to do well next year.
07:07Are you noticing that to an F&B within your properties?
07:12F&B is a tough, a tough game.
07:14It's tougher.
07:15Yeah, I think certainly since since since COVID, you know, dining patterns have changed.
07:20I think it's expensive to eat out.
07:22I think, frankly speaking, you know, going out to eat anywhere is is not cheap.
07:27And so, yeah, we've seen we've seen evening business being difficult to, you know, to fill restaurants like like we used to lunch and tea and all day dining is is very strong.
07:40OK, we have that's interesting.
07:42We have and bar business is very strong.
07:44I think certainly that sort of social side of of of F&B is is definitely strong.
07:50Our bar in the upper house, for example, does extremely well.
07:53But yes, it's certainly, you know, F&B, you know, landlord rents are going up.
07:59You know, cost of labor is going up.
08:01It's it's margins are being squeezed.
08:04So then capex and investment into restaurant fit outsings for accessories is is is difficult.
08:10We are continuing to invest in our restaurants, though, through through through through ownership.
08:13And and whether that's in Shanghai or here, we you know, we've got plans to do to do more in F&B, but cautiously with with with with investment.
08:23One last question in Hong Kong.
08:24The I mean, we've seen the tourist flow to your point that you just alluded to there this last golden week.
08:30I mean, you've mentioned some of the things you're seeing.
08:33I'm wondering what your clients are seeing, the people that you talk to.
08:36It's that this fantastic property you have just a couple of hundred meters, really, from where we are right now.
08:40What is there? How would they describe Hong Kong?
08:43Is Hong Kong back?
08:45It's remarkable, really, because I think people that haven't been here for a while say things like, well, it's never changed.
08:50You know, it's like it's like how I remember it.
08:53People that are coming for the first time are saying, my goodness, this is a remarkable city.
08:56You know, I should have come 10 years ago.
08:58So overall, David, it's definitely positive.
09:00I think that the events that are happening in town, of course, have have really made headlines.
09:04And the infrastructure, the facilities that the city offers is only going to make sort of better tension,
09:12more what we call red dates, where we can hopefully sell out a bit more.
09:16So I think I think I think the future looks bright.
09:18And our customers are telling us that it's a dynamic city and Temple Street market's been rejuvenated.
09:24You know, shopping's still a big thing here.
09:26So that's definitely positive.
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