Leofoo Development Co’s (六福) stock has soared nearly 15 percent this week, bucking the tourism sector’s 2.66 percent decline, after it won regulatory approval to rebuild a old hotel in Taipei which could significantly boost its value.
The Hsinchu-based tourism group closed up another 0.54 percent to NT$7.45 yesterday, while the TAIEX shed 0.82 percent to 10,474.61 points amid jitters over the US-China trade dispute.
The stock advanced even though the company reported losses of NT$84.41 million (US$2.71 million) in the first quarter, thanks to the approval of its plan to regenerate its 47-year-old Leofoo Hotel (六福客棧) at the intersection of Songjiang Road and Changchun Road in Taipei.
The group, which also operates the Courtyard by Marriott Taipei (六福萬怡), Leofoo Resort (六福莊), Leofoo Residences (六福居), Leofoo Village Theme Park (六福村) and other recreational facilities, might see Leofoo Hotel’s property value swell to NT$6 billion or higher, property analysts said.
The facility sits on a 380 ping (1,254m2) lot and qualifies for favorable development terms to encourage regeneration of old and dangerous buildings, analysts said.
The project might see its floor area ratio jump 620 percent, allowing Leofoo to construct a 20-story building with 6,000 ping of floor space, REPro Knight Frank researcher Andy Huang (黃舒衛) said.
The property’s value could surge to NT$7 billion if Leofoo decides to build an upscale unit, Huang said.
Leofoo said it has not drawn an agenda for the renewal project and has to seek a building permit within six months or apply for an extension.
Last year, the group was in talks with potential partners at home and abroad to renovate the 226-room hotel for fear that urban renewal bids could drag on.
The conglomerate has sought to strengthen its balance sheets and diversify its income sources by pulling out of contracts for new ventures and closing down unprofitable venues.
It shut Westin Taipei (台北威斯汀六福皇宮) in December last year and terminated a contract to build a resort hotel in Tainan months earlier.
The portfolio adjustments are intended to help the group withstand the structural challenges for the hospitality and leisure industry in Taiwan, Leofoo Development chairman Lulu Chuang (莊豐如) has said.
The company has instead focused on expanding into the fast-growing packaged food market to boost sales.
Meanwhile, tourist visits at Leofoo Village Theme Park rose 22 percent in the first quarter and could hit 1.6 million people this year, or up 14 percent from last year, it said.
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