The Buildings Department has approved the redevelopment of the 42-year-old Excelsior Hotel, a wholly owned subsidiary of Mandarin Oriental International Group, into a commercial building, Wen Wei Po reported.
In place of the four-star Excelsior, a Causeway Bay landmark, a 26-storey commercial building will be constructed over the four-storey basement at 281 Gloucester Road, the department said.
The project, approved in February, will involve a floor area of 684,006 square feet and is expected to generate rent of at least HK$65 per square foot, taking the World Trade Center next door as a reference, the newspaper said.
An industry observer was quoted as saying that the recent drop in the growth of tourist numbers has slowed the growth of the hotel business, leading hotel operators to try to boost their competitiveness by turning hotels into office buildings.
A spokeswoman for Mandarin Oriental said the company has no timetable for the redevelopment of the Excelsior, and the hotel has no problem with cash flow.
The hotel, opened in 1973, has 863 rooms and 21 suites, most of which enjoy a view of Victoria Harbor. It was redecorated in 2005 and is now valued at about HK$20 billion.
According to its website, the hotel’s room charges range from HK$1,580 to HK$12,800 per night.
Last year, its occupancy rate reached 85 percent, down 4 percentage points from 2013, its owner’s annual report says.
In the past, the Excelsior was a favorite choice for many US and European tourists, but it has recently been occupied mainly by mainland Chinese, an elderly resident of the area surnamed Li told Apple Daily.
Li said he sometimes stays at the hotel but feels that it is no longer the place it used to be. Perhaps it’s a good decision to tear it down to ease the overcrowding in the area, he said.
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