Good afternoon, ladies and gentlemen. Welcome to The Hongkong and Shanghai Hotels 2025 interim results presentation. My name is Aiden, General Manager, Corporate Finance and Investor Relations for the company. The result announcements were posted on the stock exchange website earlier this afternoon. Our presentation will begin by our Senior Management Team, followed by a Q&A session. You're welcome to submit your questions at any time using the Q&A box on your screen. Today, we are pleased to welcome the following speakers: Mr. Benjamin Vuchot, Chief Executive Officer, Ms. Christobelle Liao , Chief Corporate and Governance Officer, Mr. Keith Robinson, Chief Financial Officer, and Mr. Gareth Roberts, Chief Operating Officer. We'd now like to invite our CEO, Mr. Benjamin Vuchot, to begin our presentation.
Thank you very much, Aiden. Good afternoon, ladies and gentlemen. Having now spent five months with the company as CEO, I am pleased to deliver this presentation on the company's results for the first half of 2025. In the period under review, I'm delighted to share that our company delivered operational results that exceeded our expectations. We saw strong RevPAR growth in most hotels and solid operating metrics at The Repulse Bay and the Peak Complex in Hong Kong. Operating revenue and EBITDA growth were significant, which I will explain further shortly. Our underlying loss improved compared to last year, and we reported better net cash from recurring operating activities. We also have a stable net debt-to-total assets ratio. In the second half of 2025, we will continue to focus on enhancing operational and financial performance.
The marketing of the remaining six London residences remains one of our key priorities, but we have commenced a strategic review, which we expect to complete by the end of 2025, to sharpen our medium and long-term strategy. We will announce more details in early 2026. So next, I will share the highlights for the first half of 2025. Given the strong operational results, revenue from operations increased by 13% year- on- year. Operating EBITDA, excluding the sales of Peninsula London Residences, increased by 63% compared to the same period last year. Our net cash generated from recurring operating activities improved significantly by almost 10x from HKD 38 million in 2024 to HKD 366 million in 2025. The Group's financial positions remain strong, with the net external debt-to-total assets ratios of 25%. And the financial health of the Group is reinforced by our credit rating.
In 2025, we have maintained an A rating with the Japan Credit Rating Agency Limited and also received an A rating from Rating and Investment Information, Inc. Now moving to our divisions. In our hotel division, the operational results were strong despite facing weaker demand in the Greater China Hotels. Most regions reported double-digit RevPAR growth during the first half. For example, RevPAR growth in Other Asia, Europe, and U.S. was 27%, 21%, and 12%, respectively. RevPAR growth in Greater China was stable, however. A number of hotel properties stood out in their first half performance, and I'd like to share some of them. The Peninsula Tokyo was a significant success story, reporting historically high rates. In New York, we're pleased to see the renovation that happened last year yielding strong results. And the recently opened Peninsula London and the Peninsula Istanbul Hotels are showing great progress.
They achieved revenue growth of 8% and 31%, respectively, as they ramp up to stabilize performance. Our second division, our Commercial Property Division, the performance was also robust. Our largest commercial property, The Repulse Bay in Hong Kong, had a 6% increase in revenues, whereas The Peak Tower enjoyed an 11% revenue growth. With regards to the Peninsula London Residences, I'm pleased to share that we have now released the remaining six residences for sale. In our third division, The Peak Tram, Retail, and others, the revenue growth was also solid, especially for The Peak Tram, which continues to be a leading tourist attraction in Hong Kong, with revenue increasing by 17% compared to last year. Another highlight in this division is the opening of our new concept for retail at the Hong Kong International Airport for the Peninsula Boutique. This happened earlier this year and was very well received.
I mentioned briefly the release of the last six units of our Peninsula London Residences, but just to give you a bit of more context, the Peninsula London complex comprises of a 190-room hotel and 24 Peninsula-branded residences, which are considered to be among the highest quality property available in the London market. Of the 24 residences, the sales of 17 have been completed as of the 30th of June 2025, and another one was completed in July 2025. So the final six residences are now being released for sale. We put a lot of efforts in completing also some show flats, and I'm happy to share some of the design of these apartments on the screen here. Now, more from a market perspective, today's high-end travelers are seeking unique experiences and hyper-personalization, and this is something that the Peninsula does very well.
We are crafting incredible experiences for our guests even beyond the hotel. For example, earlier this year, we hosted a Japan driving experience, which showcased the spectacular Japanese countryside while offering a driving adventure, and at the same time, guests could experience our world-renowned Peninsula service. I will now hand over to Keith to discuss the financial results and details, and we'll come back to you afterwards.
Thank you, Benjamin. Good afternoon, everybody. During the first half of 2025, revenue from operations increased by 13% to HKD 3.3 billion, attributable to the strong performance achieved by the Peninsula Tokyo, Peninsula New York, following its major renovation, and the significant revenue growth achieved by the Peninsula London. Total revenue, however, decreased by 29% compared to HKD 4.6 billion due to no London residential sales in the period compared to the prior year. Operating EBITDA, excluding the sales of Peninsula London Residences, increased by 63% to HKD 643 million. After considering residential sales and non-recurring expenses, EBITDA increased by 19% year- on- year. Although EBITDA improved, the Group reported an underlying loss of HKD 216 million, mainly driven by depreciation, particularly in London and net financing charges. The underlying loss was less than last year by 16%. Now I will turn to divisional performance.
The hotels themselves reported a 14% increase in combined revenue. The increase in revenue was due to several factors: the strong demand at The Peninsula Tokyo, which recorded an 8% increase in occupancy, and a 19% increase in revenue. Encouraging results of The Peninsula New York, RevPAR increased by 9% following the renovation in 2024. The revenue growth of the two new hotels in London and Istanbul of 8% and 31%, respectively, as they continue to ramp up to stabilized earnings. Due to the strong flow-through, EBITDA in the hotels division improved by 81% to $466 million. Excluding the non-recurring revenue from Peninsula London Residences sales, commercial properties revenue increased by 5%. The revenue growth was primarily driven by The Repulse Bay complex, which had a 97% occupancy in the residential apartments as of the second quarter of 2025, and the increase in fees achieved by the Sky Terrace.
Because of the strong flow-through, EBITDA in the commercial properties division increased by 27%. Revenue of The Peak Tram, Retail, and Other Services division increased by 15% to HKD 343 million, mainly attributable to the strong performance of The Peak Tram. Next, I will talk you through the cash flow summary. As mentioned in the highlights, we are pleased to see a significant improvement in net cash inflow from operations of almost 10 times, from HKD 38 million in 2024 to HKD 366 million in 2025, excluding the sales of London residences. Net cash inflow, after normal capital expenditure, decreased to HKD 366 million from HKD 1.7 billion last year. The sale of the remaining six residences in London is expected to further improve our cash flow position in the future.
Regarding project-related cash flows, total cash outflow for projects for the period was HKD 331 million, which was mainly due to the finalization of the Peninsula London project, followed by the Peninsula Istanbul joint venture and the Peninsula New York major renovation. Net cash inflow before financing for the period amounted to HKD 35 million. Moving on to the balance sheet, our net borrowings, excluding lease and other liabilities, increased by HKD 1.2 billion to HKD 13.7 billion. The increase in net borrowings was primarily due to the unfavorable exchange impact on the translation of non-Hong Kong dollar debt balances, attributable to the appreciation of the foreign currencies against the Hong Kong dollar. Net debt-to-total assets remained stable at a healthy level of 25%, and undrawn committed facilities amounted to HKD 2.7 billion. Our weighted average interest rate was at 4.27% after taking hedging activities into account.
This reflects a 42 basis points decrease compared to December last year. 56% of total debt had fixed interest rate. The Group issued its debut private Samurai bond offering on the 6th of June 2025 for JPY 16 billion, with the longest tenor up to six years. The bond issuance has the benefit of diversifying the Group's funding channels by engaging long-term institutional investors in the Japanese bond market. The Group has also successfully refinanced its British Pound Green Club loan in the amount of GBP 425 million with a group of nine banks. Drawdown of this facility was executed on the 10th of July 2025. Following this drawdown, the Group's average duration for committed facilities increased to two years from 1.4 years. 62% of the Group's total committed facilities was classified as green loans or sustainability-linked loans.
The Group is committed to sustainable luxury and will continuously look for opportunities to establish green financing. At the end of June 2025, as mentioned earlier, the Group is rated A from both the Japan Credit Rating Agency, Ltd. and Rating and Investment Information, Inc. for long-term foreign currency and local currency-denominated debts. We will continue to closely monitor overall debt and cash flow positions to maintain sufficient financial headroom. Now I will hand you over to Gareth to talk about the operations. Thank you.
Many thanks, Keith, and good afternoon, everybody. I'll share the hotel highlights by region, starting with Greater China. The Peninsula Hong Kong experienced stable results in terms of revenue and RevPAR compared to the same period in 2024, while occupancy increased by double digits. Hong Kong is experiencing tourist arrivals from long-haul markets, including the U.S. and Europe, but this recovery is not yet being seen in the luxury market. Shenzhen, as a convenient and affordable air hub and experiential city destination, continues to attract affluent Chinese mainland domestic travelers as well as Hong Kong residents, and this affected our food and beverage revenues. We implemented various unique experiences and promotional events to entice visitors and residents alike to visit the hotel. The performance of our hotels in the mainland is mixed.
The Peninsula Shanghai experienced a challenging first two months of 2025 before and during Chinese New Year, although it recovered during the rest of the first half. While Chinese domestic consumers have become more price-sensitive and reluctant to spend on travel or luxuries, we benefited from the positive impact of the visa-free travel to China for many international markets, with the Middle East and Russia being particularly strong. As a result, the overall performance for the first half was relatively stable, with flat RevPAR growth. The Peninsula Beijing reported a challenging first half of 2025 compared to the same period in 2024, which had seen historically high RevPAR. Flight capacity in Beijing has not yet recovered, and this has affected long-haul leisure travel to Beijing, and the U.S.-China trade war, coupled with geopolitical tensions, affected travel from the United States.
RevPAR decreased by 9% compared to the same period last year. The Peninsula Tokyo reported a strong momentum in 2025, with a 20% increase in RevPAR compared to the first half of last year. This was driven by robust international group business in March and April, as well as the traditionally strong sakura season at the end of March. The Peninsula Bangkok started the year with a strong January performance compared to the same period last year and reported over a 10% increase in RevPAR. However, this tapered off with a decline in bookings from the Greater China market following negative news reports about the kidnapping incidents at the Thailand-Myanmar border in February. In addition, the major earthquake, which affected Bangkok in March, led to cancellations and negatively impacted international travel to the country.
While we were relieved that there were no casualties or significant damage to our property or guests, the earthquake affected our financial results as we had to spend a significant sum on repairing non-structural damage. The Peninsula Manila had a satisfactory performance in the first half. Looking to the United States, The Peninsula New York reported a positive first half of 2025, enjoying strong results with revenue increased by 54% following our significant renovation in 2024 of the guestrooms, the lobby, rooftop bar, and public areas. The new renovation has received positive reviews from guests and media and had the effect of attracting many first-time guests as well as loyal patrons of the hotel, and we have continued to work on driving the rates. Food and beverage revenues were strong and good results from catering.
Our geographic mix at this property has become increasingly domestic, with fewer numbers of international guests as compared to previous years due to the current U.S. policies, which have affected inbound travel. The rest of the U.S. hotels performed well. Our outlook for the rest of the year is positive. Moving on to Europe, now in its second full year of operation, the Peninsula London is gaining market share, although it reported a slow start to the beginning of the year, with Ramadan affecting business from the Middle East. The hotel was quick to positively catch up towards the second quarter and captured the higher demand season, with the city featuring exciting events such as the Chelsea Flower Show, Ascot, and Wimbledon. Revenue increased by 8% compared to the same period last year.
In Istanbul, the hotel reported a positive first half in its second year of full operation, with a 31% increase in revenue, and is gaining strong market share despite the challenges in the market, including visitor arrivals to the country being impacted by geopolitical tensions in the region and news of an earthquake in April 2025. Next, I'll hand it to Christobelle to talk through the commercial properties, Peak Tram, and retail performance.
Thank you, Gareth. The Repulse Bay enjoyed a positive first half compared to the previous year, with revenue increasing by 6%. Residential revenue and occupancy improved at 101 Repulse Bay and de Ricou following a minor refurbishment of 14 apartments, and we're pleased to see demand from local moves and expatriates who are returning or moving to Hong Kong. We have undertaken an extensive renovation of the retail arcade, which is expected to be completed by September this year, with the aim of offering unique and enhanced facilities to guests and retail tenants. We're also carrying out different activation events to revitalize the arcade. We're cautiously optimistic about the second half of 2025, with positive leasing renewals for the summer, and our long-term outlook is positive. The Peak Tower experienced a strong first half compared to the previous year. Revenue at the Peak Tower improved by 11%.
We introduced a variety of new dining and retail options to enhance The Peak Tower's appeal as a destination. We are working closely with Hong Kong Tourism Board to enhance Hong Kong's image overseas and we also collaborated with Disney on a first-ever Mickey Keep It Real campaign to attract family visitors. Visitor numbers to Sky Terrace 428 continued to improve compared to the previous year due to successful sales of combo tickets with The Peak Tram. At The Landmark in Vietnam, revenue and occupancy for the offices declined compared to the same period last year, while residential revenue and occupancy improved. The joint venture partnership and land use right of the property will expire in January 2026. We have had several meetings with our partners to evaluate the future of the property.
However, based on the current situation and Vietnamese legislation, there is no possibility of extending the joint venture or the land use right. The joint venture will proceed to dissolution after the end of its term, with the land and the building being handed back in accordance with the joint venture terms and the prevailing legislation. We extend our profound gratitude to all of our colleagues, and it is thanks to their dedication which has been instrumental to the success of our operations over the years. We are committed to ensuring a smooth and supportive transition for our employees. Business of the Peak Tram had been robust, with record patronage achieved during Golden Week holidays in May. Revenue increased by 17% compared to last year. At Peninsula Merchandising, revenue increased by 7% compared to the previous year.
A key highlight was the opening of our transformed retail space at the Hong Kong International Airport. We also launched a new Hong Kong souvenir collection and other new product categories, which have seen positive results. I'll now hand over to Benjamin to discuss the outlook of our company.
Thank you, Christobelle. For the outlook of the full year 2025 and the second half, we are cautiously optimistic about the outlook for our group. The second half is expected to bring a mix of opportunities and challenges. We believe that the demand for unique, personalized, and sustainable luxury experiences remains and remains robust around the world. High-end travelers are seeking exclusive urban retreats and culturally immersive experiences, and we are determined to defend the unique positioning of the Peninsula brand in offering unique and personalized experiences combined with the utmost commitment to service excellence. In the hotel divisions, we are also cautiously optimistic for the second half, which is traditionally a high season in many markets. The new Peninsula London and Peninsula Istanbul hotels are truly spectacular and have significantly enhanced our brand presence in Europe.
We believe that most of our operations will perform well, considering the traditional high season in autumn and festive winter season, and foresee that our Peninsula hotels in Paris, in Tokyo, and in Beverly Hills will remain particularly strong. Our newly renovated hotel in New York will continue to yield positive results. However, the general instability created by geopolitical concerns and trade tensions, which is challenging for tourism-related businesses, calls for prudent and careful management. We believe that this will continue to negatively impact our hotels in Greater China, although a major anniversary event, which will be celebrated in Beijing in October, could lead to an uptick in business in that city. In Hong Kong, the long-haul market for leisure travelers is improving, and it's our great hope that the Hong Kong Tourism Board continues this momentum with an objective to attract more high-end visitors.
We expect Hong Kong residents will continue to transit across the border to Shenzhen, and this may affect our food and beverage revenues, so we endeavor to continue to devise innovative solutions to entice them to stay in Hong Kong. On the commercial property side, we expect to see continued demand for the residential apartments at The Repulse Bay from both the local and expatriate markets, with satisfactory lease renewals occurring in the summer months. The Peak continues to be an attractive and unique experience for visitors, especially those from the China mainland and other parts of Asia, and we are working on a variety of unique and exclusive activations at The Peak Tower and The Peak Tram.
So we're now happy to answer questions, but before we do that, I would like to thank the team for the incredible work they have put together in delivering the first half results, but also for welcoming me so warmly to the company. So now over to questions and answers. Thank you.
Thank you, Benjamin. We'll now move on to the Q&A session. We have our first question. The first question is, what is the company's strategy to sell the remaining six Peninsula London Residences?
As I mentioned, the complex of Peninsula London is truly unique. The 190 rooms and the success we've had in the hotels, combined with the sales of the 17 units, has been incredibly encouraging. And we have held back six units that we are now releasing to the market, and we are going to put together a couple of initiatives to actively market those six units. One of them is that we will be completing by the end of September the renovation of three units, which will be fully furnished, and that, I think, truly displays what those residences have to offer in that market. And that, I think, combined with additional activities in promoting more actively the existence of those apartments, is going to be very important.
I was in London a couple of times over the last five months, and I was actually very happy, but also shocked that the market believes that we've sold out all those residences because we've had so much success in that. So the fact that we are now releasing the last tranche of those residences, I think, gives a very strong signal, and we're very happy to continue to market those with the same success that we've had since we launched the project.
Thank you. Second question, what is the company's strategy to improve EBITDA margin, cash flow, and dividend opportunity in the future?
I'm happy to take this question together with Keith, but I want to highlight the efforts that have been achieved in the first half of the year in both driving top line, but also being much more prudent in the way we engage costs, whether it's operating costs, but also capital expenditure. And Keith, maybe you can highlight a little bit more on our strategy going forward.
Yeah, I think just to add to that, it is a twofold approach. It is to maintain that top line revenue, if not improve that top line revenue, but we've had an increasing focus during the past six months on looking at the cost base and looking at driving margins in both rooms, F&B, and in cost in general, and fixed cost in general, to drive that EBITDA. And you see it coming through, obviously, in the H1 numbers that have been presented to you today. So it's a case of carrying that on into H2 to ensure that we actively manage, asset manage the hotels and the assets to make sure we drive that bottom line performance and it continues throughout the portfolio of assets.
Thank you, Keith. Next question, with exiting that Landmark, what is the company's geographical strategy in the future?
I mean, being headquartered in Hong Kong and our history has been rooted in Asia, I think the recent developments, particularly in Europe with the opening of Peninsula London and Peninsula Istanbul, combined with the presence we have had in the United States for over decades, now gives us a much more stable and diversified portfolio across the various continents, so 50% of our hotels are in Asia and 25% in Europe, 25% in the U.S. And while the Landmark decision, which is really a regretted decision, is reducing marginally our footprint in Southeast Asia, I think the efforts in expanding further and balancing better our geographical portfolio will pay off for the future. And so the impact for the years to come of the contribution of the Landmark project is actually quite marginal.
Thank you. What is the company's average daily rate strategy for the Greater China hotels?
I'll hand this question over to Gareth to talk to us a little bit more about our focus on revenue management and also understanding the change in landscape in consumer spending and consumer habits in Greater China.
Thank you. No, in mainland China, obviously, it's a very unique market, and the revenue strategy that we have to employ there differs from that that we have in other parts of the world. The channel mix that we have for the Peninsulas in Beijing and Shanghai is focused a lot on the online travel agents, and so that means we work very closely with those partners. However, we also have our preferred travel partners, which is PenClub, and we work very closely with those partners to drive those bookings. They're through the major consortia, and this is also balancing it with our direct bookings through our online and our website through our digital marketing efforts. So it is quite well balanced, but in mainland China, it does skew a little bit more towards the online travel agents.
Thank you, Gareth. We have one more final question. Does the company have any plan to sell existing assets to reduce the debt level for the company?
At this stage, as I've recently joined the company, it's really an opportunity to take stock of how the business is running and what constitutes truly our business. We are engaging into a strategic review of the overall business and understanding really where the strengths are and where we have opportunities, and we'll be happy to share the results of this strategic review in due course in the first or second quarter of 2026.
Thank you, Benjamin. This now concludes our 2025 interim results. Thank you.
Thank you.