World’s Most Luxurious Hotel The 13 Macau is a Baroque-inspired $1.5 Billion Palace fighting off Financial Issues
Beneath the glitz and glamour of The 13 Hotel Macau lies troubling economic issues faced in the luxury industry as the company tries to refinance its loans
The world’s most luxurious hotel exists and it is based in Macau. The 13 Hotel is a Baroque-inspired ultra-luxurious hotel built at a cost of US$1.4 billion dollars. Really a series of connected villas rather than a hotel in the traditional sense, The 13 Hotel Macau is an ‘all-villa’ hotel with 200 suites, each with its own 24-hour butler, measuring 2000 to 30,000 square feet. So exclusive is The 13 Hotel touted to be that it even boasts the only outpost of L’Ambroisie, a three-Michelin star restaurant in Paris.
Considered to be one of the most expensive hotels ever built, guests of The 13 Hotel Macau can expect to arrive in a manner of pure swank and opulence, ferried by one of the thirty Rolls-Royce Phantoms owned by the hotel, a nice personal touch complementary to the ultra-luxe environment considering that each villa features a marble Roman bath set under a vaulted Baroque ceiling supported by and a crystal chandelier. Guests can even use the Rolls-Royce Phantoms where available to visit any of Macau’s fine dining establishments, casinos or simply appear at business meetings in pure class. BUT, beneath the glitz and glamour, lies troubling drama emblematic of the greater financial woes faced by the luxury industry.
World’s Most Luxurious Hotel The 13 Macau is a Baroque-inspired $1.5 Billion Palace fighting off Financial Issues especially if loan extensions are not granted.
On 28 June, The 13 Holdings Limited (formerly known as Louis XIII Holdings) reported audited consolidated earnings results for the full year ended March 31, 2017. Though their revenue for the period was only down 10% from that of last year due to fewer hospitality, entertainment, and construction businesses contracts awarded (HKD 6,127,109,000 compared to HKD 6,811,519,000), the biggest warning signs were signaled by loss per basic and diluted share was 4.9 cents compared to 21.7 cents per share a year ago and total debt ratio which vastly exceeded available cash reserves.
According to Bloomberg, this was the fourth straight year of net losses for 13 Holdings. The company now total debt of about HK$4.5 billion, more than 10 times its bank balances and cash of HK$323.6 million, according to its filing. Meanwhile 13 Holdings is trying to change conditions of its loans as the company struggles to get the licenses necessary to run The 13 Hotel in Macau’s Cotai Strip.
It was first slated to open December 2016 but when the month arrived, it was pushed back to “the first quarter of 2017”, as the first quarter rolled around, The 13 Holding Limited announced another push back to “end of July 2017”. This news comes amid a delay in occupation permit issuance by the Macau government projected for end 2016 but only issued on 29 March 2017 and now the company is now in the process of obtaining necessary licences for the operation and pre-opening preparation of The 13 Hotel.
While bankruptcy is not on the cards yet, failure to re-negotiate or extend loan especially with a bank loan of HK$3 billion outstanding “requires the opening of the group’s hotel in Macau to be no later than July 31”. Additionally, The 13 Holdings group is also negotiating with a lender for the extension of a maturity date on a borrowing of HK$300 million outstanding as of March 31, which falls due on July 12. Though the company is confident that the unidentified lender will approve an extension for repayment up to 1 April 2018, this is only open to approval if The 13 Holdings can secure additional funding. This is a multi-billion dollar bet made on many variables beyond the control of key executives at The 13 Holdings, if nothing goes to plan and all lenders refuse to extend deadlines on outstanding loans… you get the idea.
Among the key executives, Stephen Hung, a flamboyant Chinese billionaire and joint chairman of the company. The former investment banker made the news when he visited Rolls-Royce headquarters in England in 2014 to place the order for a fleet of specially bespoke Rolls-Royce Phantoms for use as The 13 Hotel’s limousine fleet costing US$20 million.
Macau, widely considered to be the world’s biggest gambling hub is in the middle of a three-year gambling slump which comes as China’s anti-graft campaign continues and amid globally softened markets.