Why do you choose to invest in hotel properties when most international chains are moving to divest ownership and concentrate on management?

Other hotel groups have their strategies for their own business reasons.

At HSH, however, we prefer a strategy of owning and managing in order to protect the value of the Peninsula brand, which has very high equity. We believe that taking a shareholding in hotel developments gives us a voice in overall direction and decision-making, as well as remaining in control of the brand.

Does this place a limitation on the growth of your hotel portfolio?

We have never seen the necessity of expanding into every destination at once. We have taken a measured, prudent approach to expansion that encompasses a number of essential criteria:

• we will only enter a destination that can support a Peninsula product;
• we will wait until we find the right location, and a joint venture partner, where appropriate, who shares our business philosophy;
• the destination should be a strategic fit with the rest of the portfolio;
• we do not overextend either our financial or human resources.

We are also a long-term player - HSH has owned and managed hotels since 1866.

The brand has a strong presence in Asia and the US, but you do not yet have a presence in Europe. Why is that and are there plans to redress the situation?

Our Company has recently entered into a joint venture with Qatari Diar Real Estate Investment Company for the development of a Peninsula hotel in Paris, France.

Europe remains a priority for our Company.  As a mature market, prime locations are harder to come by and we will continue to assess potential opportunities.  We also continue to evaluate high potential projects around the world.

Apart from Europe, are you interested in the Middle East or India, both of which are emerging as attractive markets?

We continue to assess both the Middle East and Indian markets and do not discount either as potential for the future.

What other strategies do you have to improve revenue streams and add to shareholder value?

We believe that as well as growing the portfolio, we should examine ways to enhance our existing assets, either through introducing new concepts or redeveloping.

You mentioned that there is strong equity in the Peninsula brand. Do you have specific strategies for leveraging that brand equity?

Yes, we do. For example, we have established Peninsula Merchandising Limited, a business that has grown out of The Peninsula Boutique in our hotels.  Our first outlet was established at the Hong Kong International Airport and has been very popular with travellers. Our first overseas outlet was opened in 1994 in Tokyo and by the end of 2008 there were a total of 19 Peninsula Boutiques around the world.

Not only is this a revenue stream, it gives us a presence in cities where we do not currently have hotels, thereby raising awareness of the hotel brand in a cost-effective and remunerative way.

You have a very high reputation within the industry and among consumers, but you have a relatively small portfolio of hotels and a limited geographic footprint. To what do you ascribe this success?

A mix of factors. Being in the right location is essential as well as having the appropriate product for the destination.

We strive for excellence in every aspect of our hotels, innovating in the kinds of services and facilities we develop, always paying attention to details, providing a level of luxury that also represents value, and above all creating an unforgettable experience.

The key ingredient in this service industry has to be our staff and the way they interact with our guests. The staff provide the souls of the hotels, creating the ambience and in their personal approach offer a warmth that cannot be replicated.

Above all, we are never complacent, nor do we take the loyalty of our guests for granted and we appreciate their vote of confidence in us.

Many international hotels are opening in markets where you have a hotel presence: Hong Kong, Beijing, Chicago, Shanghai, Tokyo.  How do you view these competitive markets?

We welcome competition, it is healthy and keeps us on our toes.

We also believe that the more luxury hotel chains open in markets that we operate, the better for those destinations. It is a further recognition of the status of those cities globally.  In many cases, we are among the hotel leaders in those cities.

What progress have you made on The Peninsula Paris?

Re-development of The Peninsula Paris  is progressing on schedule, and is expected to open in 2012.

Are you pleased with the existing hotels' performance?

Yes. Our hotels have improved in yield across the board.  A great deal of our success can be attributed to the efforts of the hotel teams in attracting business and maintaining the quality of product and service.

Do you see any room for improvement?

There is always room for improvement and we are constantly on the alert for ways to better our services, or add value to guests' experience.

The Company has a number of office, residential and commercial properties in its portfolio. Are there any plans to expand this side of the business?

At the moment we have concentrated on improving the existing property assets to generate better returns.

For example, at The Repulse Bay Complex, which generates significant revenues for the Group, renovation of the Repulse Bay Arcade is ongoing and phase one has been completed with a revamped Verandah Restaurant, Spices Restaurant and a new Historical Gallery. 

Equally, the Peak Tower, which was completely revitalised in 2006, has given us additional commercial space, but most importantly, allowing us to bring new dining, entertainment and retail concepts to a major attraction in Hong Kong.

If the opportunity arose in the future to consider other viable projects that would benefit the Company and the shareholders, then we would consider them.

Would you consider selling any of your existing property assets as being non-core business?

We do not consider any of our assets as non-core. Our strategy is to assess each one, to see where we can maximise value ourselves, before we would consider a sale.

You say that staff are your greatest asset. How does that translate into career development?

Put simply, we invest in them and their future, which is our future.

Whilst we ensure that our salary packages are competitive, we have long recognised that this is an insufficient enticement to retain good staff.

We have introduced development programmes across the whole spectrum of the workforce, from key management to front-line staff, aimed at preparing our executives to step up to greater responsibility and/or giving them skills that enable them to do their jobs to the best of their ability.

As an example, during SARS in 2003, when the economic impact was immense on the Company and the industry, we took a conscious decision to keep our workforce intact during what we saw as a short-term situation. We valued their loyalty and commitment and it was an opportunity for management to display its loyalty and respect in return.

There is fierce competition for good staff with the increase in hotels in some of the markets where you operate. Have you lost any staff to the new deluxe hotels?

Our staff turnover rate remains low, even in the face of stiff competition for trained executives.

How do you plan to attract high quality staff for new Peninsula hotels?

We always look for the best talents and offer competitive salary and benefit packages.

For younger recruits who are looking for long term career development with the company, we have The Peninsula Ambassadors programme.  Launched in 2005, this programme solicits young local talents, and put them through a year of intensive, on-the-job training at other sister Peninsula hotels.  Upon "graduation" from this programme, the Peninsula Ambassadors return to the city to form a crucial part of our new hotel's opening team.

The first two Peninsula Ambassador programmes were successfully introduced to The Peninsula Tokyo (opened in Fall 2007) and The Peninsula Shanghai (opened in 2009).

Is there much opportunity to work in different Peninsula Hotels?

Cross-exposure for staff in our various hotels is an important part of our international strategy, and we undertake this on a regular basis. It is invaluable in broadening the horizons of our staff, and it helps build personal links between the hotels and their executives at different levels, improving communication and spurring creative ideas. The opportunity to move within the properties will also expand as we open more hotels.