South Shore still determined to find buyer for The 13 Hotel

South Shore Holdings Limited has indicated that it will continue to seek prospective buyers for its The 13 and execute a sale as soon as possible as a way to improve the group’s liquidity and financial position.

The company has evaluated the value of the Hotel as HK$4.1 billion as of March 31 2020, using a valuation that included the hotel property, right-of-use assets, plant and equipment and other assets.

The valuation was made according to income estimates predicting an average daily room rate this of HK$2,800 to HK$15,680, an occupancy rate between 2.5 per cent and 10 per cent, and some HK$39.6 million in sales revenue.

The 13 Hotel closed in Mid-march of this year due to the pandemic and has remained closed since then, with an attempt to sell the ownership of the property for HK$750 million falling through.

However, South Shore believes that the occupancy rate and average daily revenue of the Hotel would gradually pick up to pre-COVID-19 in 2021/22 in expectation of the Mainland China government resuming the issue of visas to Macau for mainland residents to boost the tourism and hospitality industry in Macau after the pandemic.

‘It is normal for a start-up hotel operation to have low occupancy and room rates. This situation has been compounded by the pandemic. However, as the Hotel represents an ultra-luxury ‘one of a kind’ experience (not being part of any chain of hotels or commoditized brand), Management considers it holds a superior and unique position in the market,’ South Shore considered.

South Shore’s hotel segment recorded total liabilities of approximately HK$5.26 billion for the financial year ended on March 31, including a liability portion of convertible bonds and other bank borrowings for the hotel development, with some HK$994 million in losses reported by the segment.