Mandarin Oriental International Ltd., the owners of the Excelsior Hotel in Hong Kong, have received interest from possible buyers for the valuable piece of waterfront property that overlooks Victoria Harbor in the city’s Causeway Bay, in what some experts and analysts are calling a test of the demand for Hong Kong’s commercial real estate in the face of soaring prices.
Mandarin Oriental International Ltd. first announced in June that it would be testing the market for potentially selling the Excelsior Hotel, a four-star hotel that also serves as the Mandarin Oriental Hotel Group’s headquarters. The government has approved redevelopment of this site for a commercial building with gross floor space that totals 684,000 square feet.
The location of the hotel, which sits at 281 Gloucester Road in Hong Kong, is significant because it was the first plot of land sold at auction after Hong Kong became a British Colony in 1841. The hotel first opened in that space in 1973, a time in which it ranked as the first hospitality property in Hong Kong that featured more than 1,000 rooms.
Hong Kong business publications have reported that there were at least five bids for the Excelsior Hotel property, which is valued at $3.8 billion, with one of those bids coming from a Chinese-backed consortium Sun Hung Kai Properties Ltd. and Hysan Development Co. Mandarin Oriental has acknowledge that it has received offers while also saying that no decision has as of yet been made on whether the property will be sold.
In all likelihood, the strength of the proposals will determine whether the company moves forward with plans to sell. At this time, there’s no way to tell what will become of it.
If the company does indeed to decide to sell the hotel, it could be a lesson in the immediate future of the hospitality industry in Hong Kong. A Bloomberg Intelligence analyst has found that Hong Kong will struggle to capture high end, transient Chinese tourists over the next 20 years because there has been such recent growth in the number of available rooms and accommodations in the city. Hotel rooms in Hong Kong will also likely fall due to Chinese travelers looking at other Asian or further flung destinations for their vacations.
Mandarin Oriental operates a total of 30 hotels and eight residential properties in 20 countries and territories spread throughout the world. The Excelsior Hotel has the distinction of being a four-star hotel, which makes it the lone Mandarin Oriental holding that is not classified as a five star property.