Hongkong and Shanghai Hotels Back in the Black: Luxury Demand Resilient, Flagship Renovations Underway
First-half profit swings positive on broad RevPAR gains, while a HKD 2.1B investment program targets Peninsula flagships under Vision 2035.
0045.HK · Earnings Call · 2026-08-05
Return to Profitability
The Hongkong and Shanghai Hotels (0045.HK) reported a striking turnaround in its 2026 interim results: profit attributable to shareholders of HKD 23 million versus a loss of HKD 289 million in the same period last year. The recovery was driven by strong double-digit RevPAR growth in Greater China (+29%), the United States (+16%), and Europe (+11%), supported by higher occupancy, improved average room rates, and continued disciplined cost management across the portfolio. As CEO Christobelle Liao put it, “we're pleased to announce that the first half of 2026 marked another step forward in our recovery and growth journey. While the broader travel environment stayed uneven through the first half, demand at the top of the market proved resilient.” — Yi Ching Liao, Chief Executive Officer · 2026-08-05 The group's EBITDA increased 20% to HKD 770 million, with revenue from operations up 8% to HKD 3.5 billion. CFO Keith Robertson highlighted the flow-through: "Since first half of 2024, revenue has grown at a compound annual growth rate of 10%. ... EBITDA has grown at a compound annual growth rate of 40%." “EBITDA increased 20% to HKD 770 million and lower financing costs and improved contributions from JVs and associates further supported the earnings.” — Keith Robertson, Chief Financial Officer · 2026-08-05 The company's cash generation strengthened too, with net operating cash flow before working capital movements rising 22% to HKD 727 million.Strategic Investment and Vision 2035
Central to the narrative is the company's "Vision 2035: Perform and Transform" strategy, which gained concrete momentum with the Board approving aggregate investment of over HKD 2 billion for renovations at Peninsula Tokyo and Peninsula London's sister property, The Peninsula Hong Kong. These investments aim to "enhance guest experiences, modernize key facilities and reinforce the long-term competitiveness of both hotels whilst preserving the heritage and character of what defines the Peninsula brand." The company is also focused on protecting brand quality in any asset-light expansion, with the CEO noting that "selection of any new locations or new hotels is really about getting the right location, the right partners, meeting the criteria that we have set internally." The Vision 2035 agenda also includes expanding through selective partnerships rather than just owning assets. CFO Robertson added, "When it comes to expansion, I think our approach has always been to grow intentionally. Any new opportunity must meet our financial, strategic and our brand criteria."The company's Commercial properties division, particularly The Repulse Bay, remains a stable earnings base at 97% residential occupancy, while residential sales at Peninsula London—20 of 24 units sold—continue to contribute, albeit at low margins due to the capital-intensive nature of the project.We do expect EBITDA to grow... they will grow substantively, we hope, over the coming years.