The management of The Peninsula Bangkok luxury hotel is being challenged by its co-owners, who claim the Peninsula group has not generated any profit for the property’s shareholders in more than 20 years of operation. The iconic 370-room-and-suite riverside property is owned by an affiliate of Hongkong and Shanghai Hotels, Limited, and the Phataraprasit family, split 50/50.
Pradit Phataraprasit, who represents the Phataraprasit family and is the CEO of the Phataraprasit family holding company Winvestment Ltd, said this week, “During the Peninsula group’s more than 20-year tenure as the hotel management company, they have not been able to return any profit to the hotel’s shareholders.”
Winvestment has taken its argument to a Thai court, which has sided with them, authorising the Thai partners to begin the process of terminating the property’s long-standing hotel management contract with the Peninsula group. The Thai court said it believes a “serious and material conflict of interest exists in the dual shareholdings” and found that the Hongkong and Shanghai Hotels (HSH) businesses were keeping the monetary benefits and the profits exclusively within their group.
“We believe it reasonable that we now ask for their management contract to be terminated, and thereby also resolve a glaring conflict of interest,” Pradit Phataraprasit said. “The court has agreed that it is illegal for the Peninsula group to block our move.”
Phataraprasit said 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.
In a statement to LATTE, HSH acknowledged the Phataraprasit shareholders were aiming to terminate Peninsula’s management contract of The Peninsula Bangkok, saying it “strongly objected” to the verdict by the Thai court, which ruled its subsidiary should not have been permitted to vote on a resolution regarding the termination of The Peninsula’s hotel management agreement.
“HSH will vigorously defend its rights. Pending the outcome of the appeal and other legal processes which are ongoing, The Peninsula Bangkok continues to be operated by The Peninsula under the hotel management agreement which continues to be legally binding.”
HSH Chief Operating Officer Peter Borer said, “Having been involved with The Peninsula Bangkok since its inception in 1998, I can confirm that we have always acted with integrity, in the best interests of the joint venture as a whole, supporting both shareholders and in compliance with the shareholders agreement and the hotel management agreement.
“Over the past decade, the hotel’s financial performance has been affected by political uncertainties and a challenging luxury hotel market in Bangkok, but as a group with a long-term investment philosophy, we have always remained committed to Thailand.
“Despite this difficult market, The Peninsula Bangkok performance has consistently performed well in its competitive set and this hotel has received many awards and accolades over the years, including the ‘World’s Best Hotel’ by the readers of Travel + Leisure. The daily operations of the hotel are not currently affected pending the final outcome of the legal actions,” Borer added.