Mandarin Oriental has terminated the sale of the Excelsior, Hong Kong Hotel just a week after going on the market as too-low bids sent stock prices down 30 percent. The Causeway Bay shopping district hotel next to the Victoria Harbor on Lot No.1—the first plot sold at auction after Hong Kong became a British Colony in 1841—has reportedly been valued at up to $4.4 billion.
“As the proposals have not provided the basis for the sale of the property at the current time, the company is continuing to review all options, including those that may result in redevelopment of the property into a commercial building,” Mandarin Oriental said in a statement. The number or size of the bids were undisclosed, with a spokeswoman from Mandarin Oriental International citing confidentiality.
Mandarin Oriental's shares sank as much as 32 percent to $1.39 in Wednesday morning trade. Its parent, trading company Jardine Matheson Holdings, also saw low shares.
On Sept. 18, the asking price was reportedly $3.8 billion for the hotel. The company had planned to sell the property in order to take advantage of record prices and to reduce its reliance on Hong Kong's competitive market. Mandarin Oriental's presence mainly spreads just as far as Hong Kong although the company operates hotels and residences worldwide. However, 54 percent of Mandarin Oriental International's EBITDA is gained from its properties in Hong Kong and Macau. This strategy has shown to be ineffective for the group, as big-spending mainland tourists—Mandarin Oriental International's target guests—have been visiting London, Paris and Tokyo more often than Hong Kong.
The hotel group originally had plans to sell the property, which is in disrepair, for office redevelopment, capitalizing on the revival of interest in Hong Kong office space. As of now, Mandarin Oriental may be forced to restore The Excelsior before settling on a buyer in order to make the sale.