Plans to renovate and rebrand The Mutiara Beach Resort in Penang, which belongs to Tradewinds Corp Bhd (TCB), has been put off indefinitely.
The 20-year-old property, which has been closed for some 41 months now since 2006, was to be renovated and rebranded as an InterContinental Resort Penang.
TCB and InterContinental have now mutually terminated the management contract, its chief executive officer Shahrul Farez Hassan told Business Times.
"Both parties decided to terminate the contract early this year," he said.
However, he dismissed talks that it may sell the hotel located on a 4.05ha land in Jalan Teluk Bahang, Tanjung Bungah. He pointed out that the group plans to develop the hotel at a later stage.
"We are now relooking ... there are weaknesses in the market and we want to see when these weaknesses will abate," Shahrul added.
"Our strategy is to continue maintaining our hotel assets, especially in key areas," he said.
TCB, which owns eight other hotels in the country, is controlled by businessman Tan Sri Syed Mokhtar Al-Bukhary.
A year ago, TCB chairman Tan Sri Megat Najmuddin Megat Khas said that it had scrapped its initial plans to halve the room inventory and build luxury residences at the hotel.
It had instead decided to have only hotel rooms, as otherwise the return on investment will not commensurate with the cost of building the property.
TCB had planned to reduce the inventory of the 438-room property to 220 rooms and include 80 units of luxury residences. The cost at the time was estimated at around RM100 million.
The residences were to be sold at around RM500 per sq ft and leased back. The hotel was supposed to reopen at the end of 2008.
The reopening date was then changed to mid-2009.
TCB's hotel portfolio includes Crowne Plaza Mutiara Kuala Lumpur, Hotel Istana, Hilton Petaling Jaya and Mutiara Johor Baru.
By Business Times (by Vasantha Ganesan)
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