BANGKOK 28 October 2019: Peninsula Bangkok’s Thai partner is confident a Thai court ruling has opened the way to begin procedures to terminate a long-standing hotel management contract with Hong Kong-based Peninsula group.
In a statement released last Thursday, the Thai partner paraphrased the Thai court ruling saying “a serious and material conflict of interest exists in the dual shareholdings of the Hongkong and Shanghai Hotels, Limited, through various affiliated companies, in both the hotel property as well as in the hotel management company, and which enables the Peninsula group to create a network of connections among their businesses to keep the monetary benefits and the profits exclusively within their group.” *
The Hongkong and Shanghai Hotels, Limited, through an affiliated company, own 50% of the Peninsula Bangkok hotel, and the Phataraprasit family own the other 50%, the statement read.
The Phataraprasit family holding company WinvestmentLtd’s chief executive officer, PraditPhataraprasit said: “During the Peninsula group’s more than 20-year tenure as the hotel management company, there has not been a single year in which they have been able to return a profit to the hotel’s shareholders.
“We believe it reasonable that we now ask for their management contract to be terminated, and thereby also resolve a glaring conflict of interest. The court has agreed that it is illegal for the Peninsula group to block our move.”
The Peninsula Bangkok was opened in 1998 directly opposite Bangkok’s Mandarin Oriental hotel, on the Chao Phraya River. Considered one of the most valuable riverside properties in Bangkok, the 37-floor riverside hotel has 370 rooms and four restaurants.
According to Pradit, terminating the management contract of the Peninsula group through “normal boardroom discussion” was impossible because the Peninsula group is also a 50% shareholder of the hotel with a voting majority on the board.
“They have a dual position as the management company operating the hotel as well as being the controlling shareholder responsible for holding the management company accountable for its performance. They prevent action from being taken against their own management company, and insist that it is not underperforming,” he said.
The Hongkong and Shanghai Hotels, Ltd. has appealed the ruling and says that “despite this difficult market, The Peninsula Bangkok performance has consistently performed well in its competitive set…”
Through a statement, the Hongkong and Shanghai Hotels, Ltd. has said that “the hotel’s financial performance has been affected by political uncertainties and a challenging luxury hotel market in Bangkok”, but that the group has “a long-term investment philosophy…”
Pradit said, “Our venture with the Peninsula group has been a severe disappointment for my family, and all the more so because we were cautioned by friends about entering the venture after the Peninsula group had exited their previous, unsuccessful hotel venture in Thailand on less than amicable terms.”
The Phataraprasit family are owners of one of Thailand’s largest retailing and retail development groups that include the iconic Siam Paragon among its properties, as well as being owners of the country’s largest fresh fruit and vegetable trading platforms.
*[Thonburi Civil Court, Black Case No. PorNor 107/2562]
