Covid19 hotel development analysis: Langham Hospitality Group [Infographic]
We examine how Langham Hospitality Group’s development plans are being affected by Covid19 with the help of facts and figures from the TOPHOTELPROJECTS construction database and the Hong Kong Stock Exchange.
Langham Hospitality Group (LHG) has had to face enormous challenges in recent months as the hotel company faces up to the far-reaching impact of Covid19 on the travel industry.
With properties across Asia, Australasia, North America and Europe, LHG has been left counting the cost as the novel coronavirus spread rapidly around the world. The business, which is behind high-profile brands like The Langham Hotels and Resorts and Cordis Hotels and Resorts, has also had to cope with the uncertain political climate in Hong Kong, where its headquarters are located.
LHG is a wholly owned subsidiary of Hong Kong-based property company Great Eagle. Founded in 1963, it has been listed on the Hong Kong Stock Exchange since 1972.
Here, we look at the current state of LHG’s development pipeline and examine how Great Eagle’s share price has changed over time in order to get a better understanding of how Covid19 may be affecting its plans.
LHG’s expansion strategy in numbers
By diving into the TOPHOTELPROJECTS construction database, we can see that LHG has no fewer than 22 projects in progress, with a further nine schemes on hold and one cancelled, as of 9 July 2020.
Interestingly, The Langham appears to be particularly active at the moment – the luxury brand has ten projects on the go, putting it just ahead of upscale brand Cordis Hotels & Resorts on eight. Langham Place and Eaton Hotel, meanwhile, have just two active developments apiece:
Of course, there are countless reasons why individual hotel projects may not come to fruition, but the fact that more than three in ten LHG schemes are currently either on hold or cancelled may well reflect the difficulties facing major hospitality groups as a result of Covid19. It’ll be fascinating to see if any of these projects are revived, or indeed more developments are mothballed, in the coming months as the realities of operating in a pandemic become clear.
Little sign of recovery for Great Eagle’s shares
The stock market offers a vital means of raising funds to expand for many companies, and so LHG will no doubt be keenly following the fluctuations in the share price of its parent company Great Eagle.
As it happens, Great Eagle was trading fairly consistently at around HK$27 (US$3.48) per share throughout late 2019 and early 2020; its share price stood at HK$26.80, for instance, on 20 January 2020. But that was before a big decline set in, with shares changing hands for as little as HK$19.32 on 23 March. After a brief rally in mid-April, they have since fallen further to just HK$18.10 on 21 July.
Admittedly, it’s impossible to know precisely to what extent markets are responding to Covid19, or if Hong Kong’s political difficulties are weighing more heavily in their calculations, but the key point here is that investors still seem very reluctant to back the company.
What next for LHG?
LHG has certainly endured plenty of turbulence in recent times, but there are nevertheless some grounds for optimism. On 3 June, for example, it announced plans for a major hotel and residences scheme in Australia; due to open at the end of 2021, The Langham, Gold Coast will feature 169 rooms and suites, while The Jewel Residences by The Langham will offer 170 serviced apartments.
All eyes will now be on LHG to see if this exciting project is simply a one-off, or merely the first in a raft of new developments as the hotel company looks to get its expansion plans back on track in spite of Covid19.