Hotel Planning and Development

Executive Summary An investment in the lodging industry requires certain amount of analyses on the industry and the investment itself on acquiring an existing facility or developing a completely new one. To start a completely new hotel in Hong Kong, which is a city with robust economy and prosperous developments in hotels, we should carefully decide the locations and hotel types by considering potential risk.

To distinguish our hotel and also to avoid entering a fierce competition, we decided to build the first urban resort hotel located at the Junction of Hung Luen Road and Wa Shun Street, Hung Hom Bay Reclamation, Kowloon.With the key aims to build a hotel attracting guests seeking for a rest and relaxation and providing acceptable return in investment, we chose to use the brand of Banyan Tree which is the leading international boutique resort operator. We are targeting the guests who are looking for relief and comfort with high spending power. In order to ensure the feasibility of the hotel development plan, thorough analyses have been conducted including the Site and Location Evaluation, Area and Neighborhood analyses and Hotel Market Analysis.

Recommendations on facilities, amenities and services are suggested based on the findings. Moreover, ADR, occupancy and financial performance are projected. The development cost and effort are expensive. However, high risk high return, it is believed that the proposed resort hotel would generate considerable return.

2 Part 1 - Site and Location Evaluation Site Evaluation The proposed site is located at the junction of Hung Luen Road and Wa Shun Street, Hung Hom Bay Reclamation, Kowloon. The site is located in the east of Hung Hom District.The site serves mainly residential purposes mixed with some industrial buildings in the north. It is bounded by the Cross Harbour Tunnel portal and Hong Chong Road to the south west, existing developed areas of Hung Hom to the north and west, and the Hung Hom industrial area to the north east. The proposed hotel site faced the Victoria Harbour.

It is just 10m next to the Hung Hom pier linking with “the 500-metre long promenade that tourists can have a greater enjoyment of the public area” according to Mrs Lam, the Secretary for Development said on the opening to the promenade (HKSAR, 2011).This 500-metre long promenade linking the harbour frontages of Tsim Sha Tsui and Hung Hom has opened up a section of the Hung Hom waterfront, the footbridge next to Salisbury Road link up the Tsim Sha Tsui Promenade and Star Avenue. In addition, this four-kilometre long waterfront promenade stretched from the Star Ferry Pier in Tsim Sha Tsui to Laguna Verde in Hung Hom. We considered the subject site to be advantageous for resort hotel operations for the following reasons: 3 -High accessibility of travelling around the city from the New Territories to the Hong Kong Island as well as the Kowloon side with East and West Rail and ShaTin to Central Link.- Located at the waterfront area with spectacular harbour view.

The residential surrounding creates a less commercial but relaxing and quiet environment for the guests.- The future development of the transportation, Kai Tak cruise terminal, urban renewal generate revenue to the area with more guests coming for relax.- It is around 20 metres next to the harbour which is the closer distance between hotel.Tourists can enjoy and exciting fireworks displays at the harbour during festivals.

The 500-metre long promenade provide spectacular view of the next side of the harbour to the public and link up the Star Avenue as well as Laguna Verde in Hung Hom through the four-kilometre long waterfront promenade. On the other hand, we were aware of that the subject site had the disadvantage which the site is a secondary location of business district that affects hotel’s revenue gaining from the profitable business segment.Site Characteristics Size and Shape: 1. 623 hectare of the site area in irregular shape along the 4 waterfront area with spectacular harbour view and high visibility. Access: 490.

90 metres distance from Hung Hom Station can access to MTR East and West Rails, through-train services to Guangzhou and Shen Zhen, Also, the future transportation development of Sha Tin-to-Central Link (Appendix 1) train service with total length of 18 km, will connect the Northeast New Territories and Hong Kong Island via East Kowloon. This Hung Hom station is just 5 minutes walk from the proposed hotel.It is four stations away from Kai Tak Station which is another business generator with booming cruise tourism. Moreover, the proposed hotel site is 1. 5 km from harbour-crossing tunnel running from Hung Hom to Hong Kong Island. Utilities: The site was served by all typical and municipal utilities, including sewer water, electricity, telephone, natural gas, internet connection, cable television, etc.

Zoning The site is zoned “Comprehensive Development Area” under the approved Hung Hom outline Zoning Plan of the Town planning ordinance, Chapter 131 (HKSAR, 2011).According to the Special Condition stated on the Information Statement regarding the site (2011), the total gross floor area of buildings shall be between 41795 & 62492 square metres with height not exceed 75 metres above the Hong Kong Principal Datum (HKSAR,2011). Machine rooms, air-conditioning units, water tanks, 5 stairhoods and similar roof-top structures may be erected or placed on the roof of the building so as to exceed the above height limit. And, the total gross floor area of the Government Accommodation to be erected, constructed and provided in accordance with these Conditions shall not be less than 10,750 square metres.Besides, the total gross floor area of the building designed, constructed and to be used for the purposes of ancillary accommodation shall not exceed 20,697 square metres; the total gross floor area of the building designed, constructed and to be used for the purposes of retail shops, restaurants, pubs or fast food shops or a combination of any of these purposes shall not exceed 7,627 square metres; the total site coverage of any building on the site shall not exceed 80 percent of the area of the site.

Set back The Purchaser shall not cut away, remove or set back any Government land adjacent to or adjoining the lot or carry out any building-up, filling-in or any slope treatment works of any kind whatsoever on any Government land except with the prior written consent of the Director who may, at his sole discretion, give his consent subject to such terms and conditions as he sees fit, including the grant of additional Government land as an extension to the lot at such premium as he may determine.Part 2 -Area and Neighborhood Analyses Area analysis -Relevant Demographic and Social Statistics According to Census and Statistics Department of Hong Kong (2011), the population, age and household income data for the two district areas of Yau Tsim Mong and Kowloon City where Hung Hom located are as follow: Districts Yau Tsim Mong Kowloon City Population 304900 365800 Median age 39 40 Median Monthly Household Income (HK$) 16500 19800 Area Analysis -Tourism Hong Kong offers a host of memorable tourist attractions within its compact area, like the Peak, Victoria Harbour and the Big Buddha among the most awe-inspiring.Tourists are amazed by the diverse contrasts and close proximity of stunning cityscapes and soaring mountains. There are also heritage and cultural sites such as Kau Sai Chau in Sai Kung. Apart from that, there are plenty of extensive green countrysides. Entertainment, Shopping centers and international restaurants are sufficient and famous in Hong Kong.

These features act as advantages distinguishing Hong Kong from another nearby city such as Macau. We have specifically chosen Hung Hom as the location of our hotel.Hung Hom, although not a specific tourism site, offered a variety of attractions from outdoor recreations, educational institutes to coliseum that drew travelers to the country and 7 district. For outdoor recreational opportunities, there are two parks nearby which named Tai Wan Shan Park and Hutchison Park.

The Tai Wan Park is accompanied by a swimming pool nearby with a 150 degree harbour view. Guests could browse the view of Lei Yue Mun and Kowloon. And for the Hutchison Park, traditional Chinese architectures and water birds are gifts for tourists in the park!Moreover, there are lots of educational institutes including the Hong Kong Polytechnic University which is located in Hung Hom. Hong Kong Coliseum is a famous place for both local and international organizers holding concerts and events. Not only local citizens, but also tourists would be attracted to the place for the events. Neighborhood analysis -Transportation Analysis The proposed hotel site has a pretty good accessibility and with plenty of transportation options by road, railways and sea.

Roads and Railway (Appendix 2): The proposed hotel site is located at the junction of Hung Luen Road and Wa Shun Street in Hung Hom Bay, Kowloon.Although Hung Luen Road is a secondary road, it is connected to a primary and boarder main road, Cheong Tung Road South with only 118 metres away. Moreover, the hotel site is about 490. 90 metres distance from Hung Hom Station, which is easily accessed to 8 MTR East and West Rails, through-train services to Guangzhou and the future Sha Tin-to-Central cross-harbour train service, which is targeted to open in 2020. Bus Terminus and Piers (Appendix 3): The site for hotel development is a very convenient location with both road and sea transportation choices.There is a cross border bus terminus located approximately 63.

64 metre away from the proposed hotel site and it is quite convenient for tourists from mainland China to come to the hotel by road transport. Around 138. 87 metre away from the proposed hotel site, there is also another bus terminus which allows guests to take buses to travel to other parts in Hong Kong. Besides, there are two ferry piers near the proposed hotel site, which are approximately 36. 36 metre and 140. 89 metre away respectively.

It is another choice of transportation other than the road.Proposed Public Transport Interchange (Appendix 4): The large piece of land in the proposed hotel site is set by the Hong Kong Government as a public transport interchange, also known as PTI in the development proposal plan which may further increase the accessibility of the site. It is planned to develop spaces for buses, taxies and minibuses and to park and also for tracks to load and unload. For detailed, this public transport station which include a minimum of 10 bus bays, 1 double-width green minibus bay or 2 single-width green minibus bays, 1 double-width taxi bay or 2 single-width taxi bays, 1 double-width general oading and unloading bay. Besides, 9 there will be areas reserved for the ancillary facilities for the bus and green minibus operator(s), and also regulator’s kiosks for green minibus.

The following is a map showing the proposed public transport interchange right at the site. Neighborhood analysis - Surroundings The land around the proposed hotel site is 80 to 90 percent developed. The neighborhood surrounding the hotel site is mainly a residential area for middle to high income class residents. There are numerous residential communities nearby, such as Whampoa Garden which is a large scale residence and is located around 190.

1 metres away and also Hung Hom Peninsula with only 72. 73 metres in distance.Moreover, Royal Peninsula is about 272. 72 metres and the Metropolis Residence, which is located approximately 290. 91 metres away from the proposed hotel site.

The average selling price for the residence is approximately HK$7000 to HK$8500 per square foot. The proposed hotel is located in this site have the advantages of quiet living environment, better air quality because the hotel site is away from the busy traffic areas and is facing beautiful harbour view of HK Island’s North-east part.There are few shopping malls near the proposed hotel site, like the Whampoa in the Whampoa Garden are about 150 metres away from the hotel site and the Metropolis Mall is around 309. 09 metres away from the hotel. However, the above two malls are 10 selling product brands of middle classes and prices and some commodities.

There is lack of shopping malls selling luxury goods of international brands in the area. Neighborhood analysis - Commercial Development In accordance to the information from the Lands Department (Appendix 5), there is only one commercial development planned for the neighborhood surrounding area near the proposed hotel site.A 147,500-square-foot commercial land adjacent to the proposed hotel site is sold to Wheelock Properties Limited (WPL) for HK$4. 03 billion or HK$6,827 per square foot. The development, with a total gross foot area of 590,000 square feet, will comprise two Grade A office buildings overlooking the Victoria Harbour. A Neighborhood Area Map (Appendix 6) is attached in the appendix, illustrating the location of the proposed hotel site in relation to Hung Hom road and other surroundings in Hung Hom.