Tang Shing-Bor, known in Hong Kong as the “Shop King” has hit a patch of legal trouble after failing to pay more than HK$12 million ($1.5 million) in rent, according to local news reports.
The owners of a building at 182 Nathan Road in the city’s Tsim Sha Tsui area filed a lawsuit to the Hong Kong High Court on August 12th against Win Time Sing Technology Shenzhen Co, Ltd, a mainland company owned by Tang, after the private firm stopped paying rent in October last year, with outstanding payments reaching HK$12 million with interest.
The property houses the Minimal Hotel – part of an eponymous chain – that is managed by the Living Group, a unit of the Stan Group, a real estate firm helmed by Tang’s youngest son Stan.
Hotels Sink the Shop King
After Tang reportedly suspended rent payments on the 22,000 square foot property last year, the owners, four family members of the late Shek Kam Fai, an ex-policeman turned gaming parlour boss known as “the King of Mahjong,” last December sent a lawyer’s letter to the defendant requesting payment of the unpaid rent, which totalled HK$1.15 million each month.
The Tang family had taken a five year lease on the 49-room hotel just steps away from Wharf’s Harbour City shopping mall and Sun Hung Kai’s Elements in Kowloon in February of 2019, as the Shop King’s youngest son set out to build his own hotel chain just before social unrest, and later the coronavirus pandemic, began driving down visitor numbers in Hong Kong.
Without guests to pay for hotel rooms in his son’s hostelries, the elder Tang has since the beginning of this year put up for sale an estimated HK$6.5 billion in properties, including assets acquired less than one year ago. The reversal in the family’s hospitality plans was punctuated in April of this year when Tang Shing-bor forfeited an HK$32.8 million deposit to cancel a hotel acquisition which he had agreed to in July of last year.
In the latest of his attempts at asset liquidation, the Shop King was reported last week to have put up for sale Phase 2 of the Brilliant Cold Storage Tower on Wing Yip Street in Kwai Chung with a HK$2 billion asking price. The property joins the ranks of other assets Tang is looking to sell, including five industrial buildings in Sai Kung going for HK$2.5 billion collectively and another industrial site in Fanling priced at HK$820 million.
In a sign of deepening financial strain, Tang has also put on the market for HK$450 million a property near Prince Edward train station in Kowloon, with that tender being conducted at a 20 percent discount from the earlier HK$600 million asking price for the 5,654 square foot site, according to an SCMP report.
The drive to raise cash has been linked to Stan Tang’s rapidly expanding hotel business, which has stretched his real estate magnate dad’s resources. The Living Group, of which the Minimal Hotel is a part, belongs to the Stan Group and oversees nine different hospitality brands in Hong Kong with 3,300 rooms and 20 restaurants between them.
Hotels Struggle to Stay Afloat
Hong Kong hotel occupancy stood at 44 percent in June according to government data, after having fallen to 29 percent in February, with June’s number representing around half the occupancy level recorded one year earlier. The hospitality industry is seen as having little prospect for recovery this year after total overnight visitors dropped 91.2 percent in the first half of 2020 compared to the previous year.
Regional investment volume into income-producing hotel properties in the first half of 2020 experienced a 60 percent year-on-year decline according to an August Savills’ research report.
Revenue per available room – a common hotel industry performance measure – has declined by 58.8 percent between the second half of 2019 and the first six months of this year, the Savills’ report also noted.