Hong Kong and Shanghai Hotels (HSH) are getting ready to build their twelfth luxury hotel project, in Myanmar
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HSH is a Hong Kong listed public company, majority owned by the family of Michael Kadoorie, descendants of his grandfather Elly Kadoorie who immigrated to China in 1880 and established himself initially in business in Shanghai. Elly and his two sons, and grandson Michael, went on to built two hugely successful and enduring businesses.
The first is China Light & Power, also publicly traded in Hong Kong, which today still holds the franchise to run the power generation and distribution business in Hong Kong and other parts of Asia. This entity is controlled 35% by the Kadoorie family through CLP Holdings and their stake is currently worth over US$6.5 billion, held on behalf of Michael Kadoorie, who serves as Chairman and his sister Rita and her husband Ronald James McAulay who is a director of CLP.
The second major business is of course the hotel company itself, which is a hotel business, a real estate business and also operates a number of other businesses as well. Its flagship property is Hong Kong’s famous Peninsula Hotel, which is one of the most luxurious hotels in the world and which has just gone through a significant refurbishment programme. The hotel has its own helipad, and runs a fleet of fourteen Rolls Royce cars to ferry its customers around. The Kadoorie family’s holding in HSH is worth today more than US$1 billion and Michael Kadoorie serves as its Chairman.
In recent years the hotel side of the business has expanded internationally, and currently there are nine Peninsula hotels operating in key markets around the world. These include, five more in Asia: in Shanghai, Beijing, Tokyo, Bangkok and Manila. Then three in the United States: in New York, Chicago and Beverly Hills. They all display the same commitment to apparently effortless luxury as the flagship property in Hong Kong.
A tenth Peninsula Hotel, will soon be opening, this August, in Paris in a beaux arts building first built a hundred years ago, and now being completely restored at vast, even astronomical, expense, that blew well past its reconstruction budgets at 19 Rue Kleber – in a historic location where Henry Kissinger once signed the Vietnam peace agreement.
An agreement was also signed last summer, with a local partner in the UK, to establish a new Peninsula Hotel in London as well, which will be located in a new development at Grosvenor Place in exclusive Belgravia.
Finally just today HSH announced another new joint venture has been signed, to create a twelfth Peninsula Hotel in Myanmar in Yangon, the largest city and former official capital of the country once known as Burma. Mr Clement K.M. Kwok, Managing Director and Chief Executive Officer of HSH and Mr Serge Pun, Chairman of Yoma Strategic Holdings Ltd, their local partner there, signed the agreement together.
HSH also operates several resorts and also likes to own an office tower close to some of its hotels, as it has in Hong Kong with the tower it built behind the hotel and is doing in Paris, having bought the building at 21 Avenue Kleber next door outright. Some of its hotels it owns outright too, such as in Hong Kong and New York, and some it operates in majority joint ventures, and in a couple with only a minority ownership stake in the property itself. In Paris and Beverly Hills, for example, HSH owns 20% interests in the hotels’ bricks and mortar (though in Paris 100% of the office component).
This is a pragmatic approach; there are some hotel chains who prefer not to own any of the bricks and mortar of the properties they manage. Other companies like to take ownership as well; it is a function of capital structure, investment time horizons and expertise one must think.
Finally, in addition HSH owns residential apartment buildings, operates resorts, leisure clubs and golf courses, has the franchise for the very cute Peak Tramway going up the Hong Kong mountainside, and operates wholesaling and retailing of food and beverage products.
The new joint venture will seek to redevelop and restore the former Myanmar Railway Company headquarters into the new Peninsula Hotel Yangon. The heritage building dates from the 1880’s and is one of the oldest existing colonial buildings in Yangon. It is located a kilometre north of the Yangon River and adjacent to the tourist attraction known as Scott’s Market.
Taken together it is all an edifyingly eclectic mix, but the recurring themes of hospitality runs through many of the separate components of HSH, and of course CLP is quintessentially a public utility company, albeit a profitable one to be sure. And, the unifying element really between both groupings must be the concept of providing service, and doing so gladly and with a good heart, for the sake of your customers over the long term, so they are happy to stay with you. That is not a bad philosophy at all.
The Hong Kong and Shanghai Hotel company opened the Hong Kong Peninsula Hotel in 1928, some time after the Kadoorie family had purchased a major stake in the company. The company itself goes as far back as 1866, however.
About Michael Kadoorie and his family
Sir Michael David Kadoorie, who is 72, was educated at Kowloon Junior School in Hong Kong as well as at Institut le Rosey in Switzerland.
His father Lawrence Kadoorie and his uncle Horace Kadoorie expanded and diversified the Kadoorie family’s businesses once these had moved to Hong Kong in 1949, after the revolution in China. Their father Elly Kadoorie, Michaael’s grandfather, had died in Shanghai in 1944 after a long and illustrious business career.
Lawrence Kadoorie was married to Muriel Gubbay, the daughter of Hebrew scholar David Sassoon Gubbay, and part of the Sassoon family. They had two children, Michael and his sister Rita.
Michael is married to Betty, who is from Cuba and they have three children, Natalie, Bettina and a son Phillip who is 21. Natalie who is 28 became engaged to be married just two months ago.
Michael Kadoorie has made it clear that part of the privilege of wealth that has come to his children also entails obligations to serve.
In an interview with the South China Morning Post in December he said that each of his three children will be groomed to be a leader of the corporate goliath – but will only be given the job if they really want it.
“In the last three months, the Chinese deputy premier [Li Yuanchao] asked me whether I had any children and whether they would be interested in continuing the business, ” Kadoorie said. “I assured him they will be groomed, as I was, to follow my father.”