Hongkong & Shanghai Hotels reported a 31% rise on first half net profit on the year to HK$605m (£50m), as occupancy at its hotels rose.
The growth marks a return in performance for the luxury group, and in some properties trading is now close to pre-crisis levels.
The company said that by the second half of 2009, business had started to see gradual recovery, which continued in the first six months of 2010.
The company benefitted from a property revaluation gain of HK$547m, with underlying profits up 26% to HK$142m. The group said: "While average room rates generally fell, these were offset by increased occupancy resulting in increased revpar."
The bulk of the company's assets and earnings continue to be based in and derived from Hong Kong, where it said the economy had remained "strong" with prospects remaining positive due to the proximity of Hong Kong to mainland China. The group said that it had seen its flagship Peninsula Hong Kong recover to trading levels "not too far below the same period before the financial crisis in 2008".
Looking forward, the group said that it remained concerned about wider economic issues, with CEO and MD Clement K.M. Kwok commenting: "While we have seen a general improvement across all our businesses in the first half of the year, the outlook for the remainder of 2010 remains uncertain with general concerns about a possibility of a ‘double-dip recession' and different economic conditions and outlook in the various markets in which we operate."
Hongkong & Shanghai pursued its expansion strategy throughout the period, with the opening of the Peninsula Shanghai, taking it to nine hotels, all of which are aimed at the luxury market and over half of which are located in the Asian market.
Earlier this year Kwok told Business Week magazine that the brand would open a maximum of 15 properties globally in the next five to 10 years, with new hotels in China and a property in India.
The company is also developing its first hotel in Europe, the Peninsula Paris, which is 20% owned by the group in a joint venture with Qatari Diar. The property is being developed in a century old Beaux Art building located on Avenue Kleber, near the Arc de Triomphe and is expected to open in 2012.
Revenue for the hotels division was up 13% on the year, with the group commenting that most of the hotels recorded revenue increases exceeding 10%, with the highest increases of 28% and 23% being achieved by The Peninsula Manila and The Peninsula Beijing respectively. Revenue growth was lower for The Peninsula Chicago and The Peninsula Bangkok, at 3% and 9% respectively.
The group said that its US sites which took much of their business from overseas – in Beverly Hills and New York – saw improvement over the summer, with revenue up by 16% and 15% respectively. However, the Peninsula Chicago, which is more dependent on US domestic business, remained "well below the pre-crisis levels", with revenues increasing by 3%. The company said that the issue of labour costs remained "a major concern in the US, posing challenges for the profitability and margins of our businesses".
Revpar rose 25% in Hong Kong, 26% in the rest of Asia and 21% in the US.
Hongkong & Shanghai, which is controlled by Sir Michael Kadoorie and his family, further cut its gearing during the period, from 8% to 7%, maintaining its strong financial position, which it said would give it the resources "to grow our brand on the highly selective basis in line with our philosophy".
HA Perspective: You could not accuse the Peninsula owner of over borrowing. Like its fellow Hong Kong group Swire, low leverage is the name of the game.
This gives it a secure, if somewhat glacial, growth trajectory. At present, scale is not a significant issue in the luxury market: good properties in good locations perform well with or without a global brand.
When this changes, Peninsula will face the dilemma of either adopting somebody else's badge or see its properties under perform. But at this highest end of the market, such a day seems a long way off.