The Mutiara Beach Resort Penang, which will be rebranded as InterContinental Resort Penang, has been closed for the past 29 months to accommodate a major renovation exercise.
Chairman Tan Sri Megat Najmuddin Megat Khas said that the decision to only have hotel rooms was made recently following a discussion with Syed Mokhtar.
"Tradewinds will now retain the hotel rooms and not have any serviced residences as the cost of building the product will not commensurate with the returns on investment," Megat Najmuddin told Business Times.
Tradewinds had planned to reduce the inventory of the 438-room property to 220 rooms and include 80 units of luxury residences. Cost at the time was estimated at around RM100 milion.
The residences were earmarked to be sold at around RM500 per sq ft and leased back.
Officials of the company had then expected the hotel to reopen at the end of 2008.
However, due to longer-than-anticipated delay in obtaining planning approvals and rising cost of materials, these plans have been abandoned.
Accordingly, the hotel will now only need some structural work and interior design work. Work on this is expected to begin by year-end and be ready for operation in mid-2009.
A sum of RM100 million is expected to be spent on the hotel, given the increase in cost and to convert the property to a luxury standard.
Megat Najmuddin said that Tradewinds was also working on obtaining financing for the project.
On whether the closure of the hotel for over two years is having an impact on group business, he said the hotel was previously only marginally profitable.
Tradewinds Corp's hotel portfolio includes Crowne Plaza Mutiara Kuala Lumpur, Hotel Istana, Hilton Petaling Jaya and Mutiara Johor Baru.
In the six months ended June 30 2008, the hotel division raked in RM159.07 million in revenue, or 70 per cent of the group's revenue of RM227.49 million.
By New Straits Times (by Vasantha Ganesan)
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