HONG KONG -- Hongkong and Shanghai Hotels, operator of the upmarket Peninsula chain, said Friday that it will suspend construction on its planned $130 million Yangon property for a year.
"Due to the unfortunate situation in Myanmar, we have agreed with our partners to temporarily suspend construction at The Peninsula Yangon for 12 months," Clement Kwok, chief executive of the Hong Kong-listed hotel operator, told shareholders gathered for their annual meeting on Friday. "We will continue to monitor the situation in Myanmar and sincerely hope to resume our project as soon as the situation stabilizes."
The Southeast Asian nation has been mired in bloody turmoil since the military staged a coup on Feb. 1 to overthrow the democratically elected government of Aung San Suu Kyi.
The hotel company's Yangon project involves the redevelopment of the former colonial-style downtown headquarters of Myanmar Railway Co. into an 88-room luxury hotel.
Hongkong and Shanghai Hotels owns 70% of the project, with the rest held by the two listed companies under Serge Pun & Associates, a leading private conglomerate in Myanmar -- Yoma Strategic Investments and First Myanmar Investment. The hotel is one element of a landmark SPA commercial development called Yoma Central.
"The Yoma Central project is suspended temporarily and all parties continue to be committed to the project," a spokesperson said Friday.
Lynne Mulholland, director of group corporate affairs at the Hong Kong company, said the suspension of work was agreed "in the past month."
"It is too early to give a set of specific conditions [needed for a resumption]," she said. "Safety and security is the top priority."
As of August, the company had projected the project's completion in 2022. In its annual report published in March, it said, "We have noted the recent violence and chaos with great concern and we continue to evaluate both the immediate actions required and the longer-term decisions that need to be made in respect of this project."
The project's price tag was initially pegged at $90 million in 2014.
The overall outlook for the 10-hotel chain remains bleak amid the pandemic and negligible international travel.
"We believe the hotels division will continue to face challenges over the summer months and for the rest of the year," Kwok said Friday, while saying he is "cautiously optimistic" about mainland China and the U.S.
In the quarter to March 31, occupancy at the chain's flagship Hong Kong hotel was just 30%, though this was double the rate seen a year before. Average room rates slid 40% to 2,642 Hong Kong dollars ($340).
Room rates for the group's hotels elsewhere in Asia and in Western countries slid 12% and 16% respectively, with occupancy rates of 20% and 22%.
Peninsula's rivals are hard pressed too. The Bangkok-listed arm of the Shangri-La Hotels and Resorts group reported a net loss of 84.02 million baht ($2.67 million) on a 84% fall in revenue to 77.03 million baht. Its joint venture Traders Yangon hotel saw revenue fall 94% to 5.65 million baht.
Mandarin Oriental International, listed in London and Singapore, recorded an underlying loss of $41 million for the first quarter.
The Jardine Matheson group company said it expected a further loss in the second quarter, with conditions remaining "extremely challenging due to the continuing impact of COVID-19 and ongoing actions by governments to control it."
It noted, however, that business was returning in the U.S. and mainland China, helped by "strong local consumption in a large domestic market."