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Interview with Mr. Clement Kwok, Managing Director and Chief Executive Officer of Hongkong and Shanghai Hotels : “A passion for excellence”

Managing Director and Chief Executive Officer of Hongkong and Shanghai Hotels, owner of the prestigious Peninsula hotels, Clement Kwok joined the group in 2002. At the head of this emblematic figure of Asian luxury, he pursues a development strategy based on both prudence and excellence. Last October, Hongkong & Shanghai Hotels opened the ninth Peninsula in Shanghai, which provided an opportunity to take a look with Clement Kwok at the present of the hotel industry in Asia and the future of a group that will establish itself in Paris in 2012.

HTR : Shanghai, Beijing as well as Tokyo : some locations in Asia are suffering from oversupply in the luxury segment. How do you deal with this increasing competition that has an impact on the ADR and OR of your hotels and on the global results of your group? C. K. :

I would like to think that we have competitive advantage arising from the locations of our properties, the care and effort that has gone into the design of our facilities, the service provided by our staff who know that the Company cares for them and in turn, create a family feeling for our guests. However, the most important principle underlying all of these is the leadership from our Chairman, Sir Michael Kadoorie, who instills in the Group the challenge for perfection and creativity, a vision for the Peninsula brand and what it represents, and a passion for excellence in this industry. It is this leadership from the top that paves the way for the quality in the Group.Clement Kwok : It is not unusual for a key gateway city to have the presence of several major luxury hotel brands to cater to the demands of that particular clientele, people who expect a high level of services and facilities. Such competition is normal. Once Hong Kong & Shanghai Hotels establishes a foothold in a location of choice, our commitment to that city is very long-term: we look beyond the usual investment horizon of five, ten or even twenty years. We think in terms of fifty years. With this vision in mind, we will look long term beyond short term fluctuations in demand and supply.HTR : Are you confident in a rapid recovery of the Asian key gateway cities? What will help these destinations to overcome the current difficulties? C. K. : In recent months we have seen some signs of recovery in the Asian economies where we operate; however, we remain cautiously optimistic as it is impossible to predict the extent and the duration of the economic downturn which will continue to impact corporate travel and in turn, on hotel occupancy and rates. However, I believe there will continue to be demand for truly iconic destination ho-tels such as those of the Peninsula group. The most important factors to sustain and improve demand in these key cities are of course their economic strength and their ability to attract business and investment, as well as the attractiveness of their offerings to tourists. Political stability and strong safety and security for travellers are also key factors.HTR : Hong Kong & Shanghai Hotels is back in Shanghai after 60 years. Are you proud of this return in a booming city? Is it a very particular hotel for your group? Will this property be very different among the large luxury supply in Shanghai?C. K. : I would say that the development and the opening of The Peninsula Shanghai has been the most important event during my tenure with the Company. The opening of this hotel marks the return of the Company, and its controlling shareholders the Kadoorie family, to one of the two founding locations of its businesses. Due to this, as well as the huge importance of Shanghai in the continuing economic development of China, we have, not surprisingly, put a huge amount of effort into designing and creating a hotel which we believe will become recognised as one of the best in the world. We hope to share this product with many guests from all over the world and hope they will fall in love with it, as I have done.HTR : Would you like to add other hotels in Beijing and Shanghai or do you have a “single hotel per destination” policy? Like (or unlike) most of your competitors, do you see Chinese secondary cities as a good (or wrong) opportunity for the development of your group? C. K. : Hong Kong and Shanghai Hotels is currently present in three major Chinese cities - Hong Kong, Beijing and Shanghai. We will continue to pursue a policy of having only one Peninsula hotel in each city, so as to keep the brand pure. In due course, we will consider hotel projects in other developing cities in China. There is tremendous growth and increasing affluence in many secondary Chinese cities and undoubtedly we will look to expand Peninsula's presence in due course. However, much will depend on timing and what opportunities come along. HTR : Peninsula has a very careful strategy of development, especially in comparison with your asiatic competitors Mandarin Oriental and Shangri-La that are opening hotels all over the world through management contracts. Why this prudent but successful strategy? Are you planning to be more active in the future ? C. K. : Our philosophy is to concentrate all our resources on a small number of projects at any one time, so as to try and create the best possible designs and products. Generally, we believe in taking significant ownership interests in our hotels and not management contract-only arrangements, hence we also have to plan out the profile for the use of our capital. At present, our financial and human resources are focused on the Paris hotel project. As for expansion plans, I believe that we should continue to focus our attention on the product we know best - grand luxury hotels in cities which are either important business and lei-sure destinations, or key gateway cities around the world. It has been an important objective of ours to have a presence in Europe and hopefully The Peninsula Paris would be a start here, with more to come. Our interest would ex-tend to cities which meet the above description and which we believe will be leading cities in the world with future growth potential, always provided that we would only be interested in the most prime sites.HTR : Could you tell us a bit more about the spirit and positioning of the Peninsula Paris ? C. K. : The Peninsula Paris is a joint venture with Qatari Diar Real Estate Investment Company. We are now in the process of re-developing the historic building which is located on Avenue Kleber, near the Arc de Triomphe. Design and construction of this hotel is underway and we have already appointed the architect, interior designer and project manager. Completion is scheduled for the first quarter of 2012 and the hotel would feature approximately 200 guestrooms and suites. We hope this hotel would become a grand, landmark property and stand the test of time.HTR : How will you deal with the increasing competition in Paris with well established market leaders and with newcomers that come from Asia, just like Peninsula? Do you fear that Paris could experience an oversupply of luxury hotels?

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