Huang Hsiang Construction Co (皇翔建設) has joined the trend of expanding into the hospitality industry and cutting dependence on property development to cope with a sluggish housing market.
The Taipei-based company made known its intentions to diversify its sources of income at a shareholders’ meeting, where the company attributed its lackluster showing last year to a series of unfavorable government policies.
“We aim to set up three hotels run by international brands in the coming three years to guarantee long-term regular income,” Huang Hsiang chairman Liao Nian-ji (廖年吉) told shareholders, who approved a cash dividend of NT$1.2 per share.
Only NT$0.2 of the payout will come from NT$91 million (US$2.8 million) in net income last year, or earnings per share of NT$0.28 per share, a plunge of 95 percent from earnings per share of NT$5.6 in 2014. The statutory reserve is to fund the rest of the payout scheme.
Huang Hsiang has entered a partnership with US hospitality provider Marriott International Inc to operate two five-star hotels in Taipei’s Shilin (士林) and Datong (大同) districts.
The developer has also inked a leasing contract with Japan’s Fujita Kanko Inc, allowing the hotel chain to set up a Hotel Gracery outlet in the capital’s Zhongcheng District (中正) .
Built on a 1,216 ping (4012.8m2), plot of land, the planned hotel in Shilin is to feature 150 guest rooms that could open for business in the third quarter of next year, Liao said, adding that his company won the superfices right for the land a few years earlier.
The developer is waiting for approval for a planned hotel on another 1,376 ping plot, on the former site of a bus station in Datong, a Huang Hsiang spokeswoman Yu Yuh-hwa (游玉華) said.
The hotel might begin operations in 2019 under the brand name Renaissance, she said.
The hotel in Zhongcheng is to have 248 rooms and will be aimed at business travelers given its location, Yu said.
The four-star hotel could start operations in 2019, generating stable rental yields of between 5 percent and 6 percent for Huang Hsiang.
From this quarter onward, the builder has started to benefit from the delivery of housing projects in Taoyuan from previous years. That explained why the company posted NT$3.05 billion in revenue last month with cumulative revenues rising above NT$10 billion for the first five months, more than 15 times of the amount during the same period last year, Yu said.
However, Huang Hsiang has no intention of launching new housing projects this year on expectations the market will remain gloomy for the next two years, Liao said.
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