Langham Hospitality spreads its wings

1Langham Hospitality Group, a wholly owned subsidiary of Great Eagle, is about to embark on a new era of expansion after Robert Warman was appointed chief executive last month.

Leveraging his experience in the global luxury hospitality industry, Warman’s mission is to enlarge Langham Hospitality’s portfolio of 23 hotels to 500 over the next 10 years through acquisitions and management contracts.

Before joining the company, he was the president and chief operating officer of Capella Hotel Group and co-chairman of Capella’s Asia board, providing strategic guidance on operations and property acquisition activities since 2001.

Warman also served for 18 years in operational and executive roles at the Ritz-Carlton chain of luxury hotels.

The hotel division was the second-largest income source for Great Eagle last year, after the income distribution from Champion Reit. But earnings before interest, taxes and amortisation – ebita, widely used as a measure of profitability and efficiency – of the hotel division fell 35.7 per cent year on year to HK$672.9 million last year. How will you turn around the hotel business?

The drop is because of the impact of the rebranding and reopening expenses in North America, where ebita dropped 79.9 per cent last year. We had rebranded the newly acquired hotel in New York as a Langham Place, we opened The Langham Chicago and rebranded the hotel in Toronto to our own Eaton brand.

After the completion of the rebranding and preopening exercise, we have already seen our operating income increase substantially so far this year from what we reported in 2013.

In this year’s first quarter, overall revenue increased 27 per cent from the same time last year.

In Hong Kong, the group still retains a large interest (57.22 per cent) in the three Hong Kong hotels after they were spun off in a business trust in May last year. We will continue receiving management fees and contributions from the trust, Langham Hospitality Investments.

The three hotels are The Langham in Tsim Sha Tsui, Langham Place in Mong Kok and Eaton in Jordan.

Will the hotel division perform better this year?

This year, performance will absolutely be better than in 2013. Any new hotel, whether rebranded or brand new property, will go through a little bit of repositioning in the marketplace in the first year before generating significant improvement in the second year of operation.

In China, we will open three hotels in Datong , Haining and Qingdao this year. Next year, we will open three more – in Hainan province, Qingdao and Dubai.

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Source: Sandy Li (2014). Langham Hospitality spreads its wings, South China Morning Post 1 published Apr 22, 2014. Viewed Apr 23, 2014.