Do Not Disturb by Michael Matthews
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My Billion-Dollar Hong Kong Hotel Baby
December 11, 2014 -- They told me I was mad--and now they say my Hong Kong hotel baby is worth a billion dollars.
This tale of real estate and Hong Kong hospitality starts in 1979 in New York. I had a secure job as director of marketing and sales for the Caribbean and Latin America at Hilton international. I had 17 hotels in my portfolio and my future with the company was virtually assured. I had a wonderful team working with me. My boss was great as was his boss.
But even though my boss' boss told me confidentially that the firm I was going to join was on the verge of bankruptcy--something I later found to be true--I went anyway.
And there I was, early in August, 1979, flying from New York to Hong Kong. I was on my way to take over the marketing and sales of a company called Regent International Hotels. The prime objective? Give birth to a monstrous 620-room baby called The Regent, Hong Kong.
I was staying at The Sheraton and, from my window, I could see the skeleton of The Regent. It was moored to the Kowloon side of Victoria Harbour, built out on a platform where the old Holt's Wharf used to be.
The "hotel" was naked, a bare and unadorned frame of concrete. And no matter how much I wanted to believe, how much I tried to imagine a luxury hotel, I just couldn't see it. I seriously thought of returning to New York.
That was until my new boss started rhapsodizing. He had the vision and the passion and he sold me on The Regent, Hong Kong all over again.
Amazing rooms like nothing anyone had ever seen! Bathrooms like nowhere else! Fantastic public areas overlooking the fabulous harbour! One-hundred-forty-six feet of windows stretching across the lobby! The most spectacular views of any hotel anywhere in the world!
I was the hotel's second employee. The first was my future assistant. That's where my new boss' vision collided with reality. As an employee of the hotel instead of Regent International, I would be paid from the hotel's pre-opening budget. That was important because there wasn't any money to pay me from Regent's accounts. As my former boss' boss had warned me, Regent was teetering on the edge of extinction. The skeleton of The Regent, Hong Kong was securely lashed to the side of Kowloon, but Regent International might sink into the harbour at any moment.
I blocked out the financial distress and spent the next two years marketing The Regent, Hong Kong to the world.
Our entire campaign was built around a provocative statement: "Once in every generation Hong Kong gets a great hotel." In 1928, we explained, it was the Peninsula. In 1963, The Mandarin Oriental. And in 1981, we boldly promised, it would be The Regent, Hong Kong.
The Peninsula and the Mandarin were to be our major competitors along with a newly opened Hyatt Regency and the Shangri-La. We analyzed where we thought our business would come from and we concluded it would be the "rag trade" followed by the plastics and toy industries. In a hotel-industry first, we located a salesperson in New York's Garment District, which was just a few blocks north of New York's wholesale toy industry. We advertised our hotel in publications such as Women's Wear Daily. (That decision prompted a call from John Fairchild, whose family created Women's Wear Daily. He wondered why we were advertising in WWD and then hastily added a salesperson to try and capture more hotel business for his publication.)
We did other things that made The Regent unique, not only in Hong Kong but in the entire hotel industry. One example: Only 20 of our 620 rooms would have twin beds (which were attractive to Japanese guests). The rest were outfitted with king beds even though only 20 percent of customers booked double occupancy. The big beds weren't for canoodling. They were for the convenience of our "garmentos," who used the big surface to spread out their fashion samples. That was something they couldn't do easily in the twin-bedded rooms favored by our entrenched competitors.
Our bathrooms had separate water closets, sunken soaking tubs and fabulous showers, all set in 120 square feet of marble. Our bedrooms had sensible lighting, business desks, armoires hiding the TV and, of course, amazing views. The bedrooms and bathrooms were serviced by a "butler."
We did not have a bar. The lobby lounge overlooking Victoria Harbour (above) served that purpose. We purchased a fleet of Daimler cars to ferry guests to and from the airport. We built a 10,000-square-foot ballroom with no pillars and you reached it via a white Carrara marble staircase. There was a pool and a spa, too, rarities for Hong Kong at the time.
We paid special attention to our dining options. We were told Hong Kongers didn't eat cheese and consumed very little meat. So we opened a steakhouse with a salad and cheese bar--and the restaurant was packed from Day One. Shortly after, we opened Lai Ching Heen and purchased jade and ivory settings to supplement the local cuisine. It immediately became the leading Cantonese restaurant in town. Plume, our "fine dining" restaurant, rapidly became the top table Hong Kong. The chefs of Lai Ching Heen and Plume both garnered Michelin stars.
And one other thing: Knowing New Yorkers were a huge proportion of our guests, we made sure we could offer them bagels for breakfast. Bagels were unknown in Hong Kong in the early 1980s and we quickly became known as "the bagel hotel." It differentiated us from the Mandarin Oriental, which picked up the sobriquet "croissant hotel" due to its largely British clientele.
In my humble opinion, The Regent, Hong Kong was an amazing hotel, purpose built to the needs of our guests and discerning locals. But you needn't take my word for it. For the first decade after we opened, most travel polls named The Regent, Hong Kong as the finest hotel in the world.
All that luxury and attention to detail cost $45 million to build in 1981. The investment was paid back in less than four years. And I stayed in Hong Kong for a total of 17 years.
Regent International became part of Four Seasons in 1992. The Regent, Hong Kong became a Four Seasons hotel. The Cheng family, who built and owned the hotel, sold it in 2001 for $345 million to InterContinental Hotels and the property was rebranded as the InterContinental Hong Kong. It's still a pretty good property and now houses restaurants fronted by Alain Ducasse and Nobu Matsuhisa. But it doesn't have global cachet anymore. It's isn't even among the Top Ten hotels in Hong Kong, according to reviewers on TripAdvisor.com.
And now InterContinental is pursuing an "asset-light strategy." That's lodging industry jargon for retaining the management contract but selling the hotel building to realize its real estate value. In the last 18 months, InterContinental has sold the Mark Hopkins in San Francisco for about $120 million; 80 percent of the Barclay in New York for about $240 million; and the InterContinental on Park Lane in London for around $450 million. This week it agreed to sell Le Grand in Paris for more than $400 million.
And my Hong Kong baby, which I marketed from the days it was a skeleton? InterContinental put it on the market last month for a reported $1 billion.
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