Hong Kong and Shanghai Hotels (0045) expects a stabilized performance this year after the situation improved in the second half of last year.
The occupancy rate grew 3 percentage points to 81 percent for the fourth quarter last year from a year earlier, while the average room rate rose 1 percent to HK$5,148. Revenue per available room increased 5 percent last quarter to HK$4,147.
"The retail tourism market in Hong Kong last year was very uncertain, but we are seeing more stability now compared with last year," said managing director and chief executive Clement Kwok King-man.
In its clubs and services division, HSH is planning to spend about HK$600 million to increase the capacity of the Peak Tram after it renewed its operating rights for 10 years from January 2016.
"We will increase the capacity to 200 passengers per train," said Martyn Sawyer, group director of properties. "We will close the services short term for a month in 2019 and three months in 2020."
The proposal is not finalized and needs approval from the government, emphasized Kwok.
HSH saw underlying net profit drop 12 percent year on year to HK$606 million last year, dragged by the partial closure of the Peninsula Beijing for renovation.
Net profit fell 33 percent to HK$675 million, including a 90 percent slump in fair value gain on investment properties from HK$277 million in 2015 to HK$29 million last year.
Underlying earnings per share was 39 HK cents, while earnings per share was 43 HK cents. A final dividend of 15 HK cents per share was declared.
Italian luxury brand Prada (1913) gave up its store at The Peninsula in Tsim Sha Tsui last December. Kwok didn't reveal the current rent situation of the store, but said the firm always has a long-term relationship with tenants.
HSH may also consider opening more free-standing boutiques outside its hotel, said Kwok.
HSH acquired the rest of the 50 percent leasehold of the Peninsula London last year. Kwok said the construction cost will be about 600 million (HK$5.77 billion), and believed it could be covered by the sale of residential apartments.