Clement Kwok FCPA is used to handling crises. Since joining The Hongkong and Shanghai Hotels, Limited in 2002 as Managing Director and Chief Executive Officer, he has steered the hotel group through numerous challenges. Events such as the severe acute respiratory syndrome outbreak in 2003, the Global Financial Crisis from 2007 to 2009, the Tōhoku earthquake and tsunami in Japan in 2011, and the 2019 Hong Kong protests, he says, always come with a domino effect, and with it, fewer travellers and a drop in hotel bookings. “We’re in a business that’s very susceptible to shocks in the world,” says Kwok. “I always say: ‘when the world sneezes, we’re the ones who catch the flu.’”
But these experiences have given Kwok the business acumen, foresight and confidence to lay the necessary financial and operational groundwork to ensure the business is able to withstand any potential shocks. Over the last two years, he’s been leading the hotel group through its biggest challenge to date – the COVID-19 pandemic.
Indeed, the pandemic continues to pose challenges for global tourism. According to the United Nations World Tourism Organization World Tourism Barometer published last month, the pandemic is expected to cost the global tourism industry close to US$2 trillion in lost revenue this year. The figure, which is roughly the same amount lost in 2020, makes the tourism sector one of the hardest hit sectors by the pandemic. The report warned that uneven vaccination rates around the world, along with the emergence of the Omicron COVID-19 variant discovered last month, will add complexities to the industry’s recovery.
The global travel decline has led to severe losses in Hong Kong’s tourism industry, which has long been a strategic pillar industry in the city, given its significant contribution to the local economy. This is according to Analysing Hong Kong’s inbound tourism: The impact of the COVID-19 pandemic, a paper released last month by the International Association of Traffic and Safety Sciences. The city had broad international appeal before the pandemic and social unrest, the study notes, attracting 65.1 million tourists in 2018. It also reported that the tourism industry accounted for 5 percent of Hong Kong’s gross domestic product in 2018 and employed a quarter of a million people that year. Given the reliance on tourism, the paper says, the coronavirus pandemic has led to major impacts on Hong Kong’s economy, especially in related sectors such as retailing, catering, and hotel services.
Despite the impact, Kwok says that long-term planning, and developing a business built on always putting customers, employees and service first, has helped the hotel group to weather the storm. “We are owners and operators of very high quality assets,” explains Kwok, referring to their diverse portfolio of luxury hotels, commercial properties, clubs and services across Asia, Europe and North America. “This means that we are looking into the long term. You can’t invest in projects like these with a short-term horizon, so we make investments where we are assessing a return over 20, 30 or even 50 years. You need to have the staying power, the willpower and the ability to maintain all of this.”
The Hongkong and Shanghai Hotels, Limited was incorporated in 1866. It is the owner and operator of some of the world’s finest luxury hotels under The Peninsula brand, with The Peninsula Hong Kong, built in 1928, as its flagship and others in Manila, New York, Beijing, Beverly Hills, Bangkok, Chicago, Tokyo, Shanghai and Paris. The company, one of the first companies to be listed on the Hong Kong Stock Exchange, also owns tourism assets including The Peak Tram and The Peak Tower, and real estate such as The Repulse Bay Complex and St. John’s Building in Hong Kong. Outside of Hong Kong, the group owns real estate such as The Landmark in Ho Chi Minh City, 21 avenue Kléber in Paris, and Quail Lodge & Golf Club in California.
As CEO, Kwok makes key decisions related to the group’s operations and developments within its Group Management Board, which he chairs. “These decisions cover everything in the company, from financial, marketing and legal matters, to project developments,” he elaborates. The Group Management Board is composed of himself, the chief operating officer for their hotels, the group director for their non-hotel properties, the chief financial officer, the head of legal, two group general managers, the head office support function for operations, the group head of human resources and the group head of tech. “I see myself as a conductor of an orchestra. Of course, you have people with different specialties – some people play the violin, some play the double bass – but they all have to be conducted or led by somebody. That’s the role I play.”
Kwok has led the development of five of the group’s hotels over the past two decades. He founded, negotiated and led the construction of hotels including The Peninsula Tokyo, The Peninsula Shanghai, The Peninsula Paris, and is currently working on hotels in London and Istanbul. “Five hotels may not seem like a lot in almost 20 years, but it is when you take into consideration our attention to detail and the level to which we are designing these hotels. We are essentially creating each one to potentially be among the best hotels in the world. We’re not just slapping on our name on the door of somebody else’s hotel – these are completely built and financed by us.”
Since becoming Managing Director and Chief Executive Officer of The Hongkong and Shanghai Hotels, Limited in 2002, Clement Kwok FCPA has led the construction and developments of five of the group’s hotels.
“We make investments where we are assessing a return over 20, 30 or even 50 years. You need to have the staying power, the willpower and the ability to maintain all of this.”
Growing amid uncertainty
With properties spread across three continents, Kwok says the pandemic has affected each and every location, with its hotels in Paris, Tokyo, Bangkok, Manila and Hong Kong continuing to bear the brunt. Though many cities have loosened restrictions or begun to allow fully vaccinated travellers from overseas, Hong Kong’s ever-changing travel restrictions and strict quarantine measures, coupled with the uncertainty surrounding the coronavirus itself, continue to pose challenges for the group.
“If you look at Hong Kong’s tourist arrival numbers, they’re essentially non-existent. You basically have to be a Hong Kong resident to even enter the city,” he explains. “No one’s going to do a three-week quarantine to go on holiday. Business people might enter, but only if it’s absolutely essential. So our Hong Kong business is among the most affected because of the city’s measures.” The group’s business has, however, shown recovery this year amid increased domestic travel in Mainland China and in the United States. “Our hotels in the U.S. are doing well, because there are few restrictions in place,” adds Kwok. “But then, we see higher COVID-19 cases over there. So there’s no right or wrong at this point.”
Despite the ongoing challenges, The Peninsula Hong Kong saw 8 percent growth in revenue compared to same period last year, according to the group’s interim results for the six months ended 30 June 2021. Kwok attributes to this its hardworking staff, proper financial planning and its brand name. “Firstly, with our history and reputation, most Hongkongers know The Peninsula or have some sort of attachment to it. The idea of having a staycation at our hotel is still appealing to many people,” notes Kwok, adding that their food and beverage business has been strong because of its eight restaurants, and its retail shops, which continue to attract customers.
Kwok says their hotel’s staff members’ combined efforts, perseverance and loyalty to the hotel, in spite of the current business environment, has played a big part in their stability. “Our resilience really comes from our staff, who have continued working very hard to offer service to the highest of levels for the staycation business,” he says. “We as employers make a conscious effort to treat them well, so it is their sense of belonging and trust in The Peninsula that has made them want to stay.”
Indeed, Kwok considers improving upon the values, practices and culture within the company to be one of his biggest achievements. “We always try to be as fair and as transparent as possible in the way our people make decisions and the way in which we do things. I feel that this fairness and transparency has pervaded through the organization,” he explains. So when it comes to addressing employee-related issues, Kwok says the hotel ensures staff members are carefully heard and have a voice. “Fairness is making sure that when it comes to solving an issue or making a decision, that you obtain as much information as you can and hear both sides of the story. Often, if there are two sides that don’t agree, we put them together at the same table and give them both a fair hearing,” he says. “People must see that you’re a fair person yourself; that you’re able to make fair judgements that are free of bias. This is important when running a company or in running anything.”
The right financial planning, Kwok adds, has helped the group throughout the pandemic. “We’d been saving our resources for future growth,” he says. “We had a lot of capital on our balance sheet and many of our investors were asking for extra dividends or to return some capital to them. But we chose to keep that capital for use in the company. This turned out to be the right move.”
Despite the preparations and forecasts, Kwok says the sheer scale of the pandemic, and how it continues to unfold, was beyond what they could have prepared for. “I don’t think anyone in the world before COVID-19 did any downsize sensitivity analyses to the extent of what has occurred – you don’t normally do a downsize scenario based on losing more than half of your global income,” he notes. “However, we have always had a conservative capital structure. We kept this because of who we are – we want to maintain a conservative balance sheet.”
This preparation has also allowed them to continue the construction of its two new hotels. “The extent of this COVID shock is unbelievable, quite frankly, but we’re still growing, and we’re now focusing on London and Istanbul. At the same time, we’re maintaining more than adequate funding despite the current situation. I’m proud of this.”
Kwok began his career as an auditor at Price Waterhouse in the United Kingdom in 1980. He then worked in investment banking and then as finance director of MTR Corporation Limited before taking on his current role.
“There’s no course that teaches people how to become a CEO; it is something that is born out of your own personal aspirations and the way that you develop yourself personally.”
A financial foundation
Kwok began his career at Price Waterhouse in the United Kingdom in 1980, where he trained as an auditor for four years.
The role, he notes, provided him with well-needed exposure. “There aren’t many opportunities to work with so many different companies in such a short space of time as a fresh graduate,” he says. “During my first few years as an auditor, I must have visited more than 20 companies.” His training also taught him about the importance of being a responsible professional. “The experience you receive as an accountant or auditor really teaches you to pay a lot of attention to detail, to be reliable, and to always deliver everything to a high standard,” Kwok adds. “Whatever field you’re in, these skills will always stand you in good stead.”
He then moved to the investment banking sector, joining Barclays de Zoete Wedd in 1984, before returning to Hong Kong in 1986 to work at Schroders Asia. He was introduced to the world of initial public offerings and acquisitions, and learned how to plan ahead and make decisions. “The nature of auditing involves looking backwards. We’re testing systems to ensure that controls are in place. The information you’re getting is mainly backward-looking – information such as the accounts; things that have already happened,” explains Kwok. “When you step into the world of investment banking, you are handling deals that are current. Your client might come along and say they want to list their company on a stock exchange, acquire, or dispose of another company. So my time as a banker gave me exposure into deals being done and being part of making decisions on the go.”
Kwok then brought his experience to MTR Corporation Limited, joining as finance director in 1996. During his six years there, he gained an understanding on the importance of corporate management. “MTR Corporation is a very well-managed company with very good internal practices and corporate governance. The MTR Corporation had a good corporate management model, which taught me a lot,” he says, noting how he had to manage multiple ongoing projects. “They have major project divisions; they build infrastructure such as tunnels and bridges. So for me, understanding their procedures for contracting, tendering and managing projects was a great learning experience.”
He credits his CPA skills and solid financial grounding for providing him with the know-how to guide the growth of a luxury hotel and property group. “Finance is such a fundamental part of business. As a CPA, you have the necessary skills to understand accounts and process financial transactions. You can apply these skills, along with your work experience, to running a business and making business decisions.”
But to become a successful CEO, Kwok adds, requires a combination of hard skills, communication skills and strength of character, acquired and refined over many years of experience. “A leader is someone who has good judgement, is able to make decisions well, is fair, is able to influence people, and communicate. They have to be someone who can stick their necks out and take positions on things and still have people respect and support them,” he explains. “There’s no course that teaches people how to become a CEO; it is something that is born out of your own personal aspirations and the way that you develop yourself personally. Everything you do becomes a part of it – the people you talk to, the people you choose to be around and what you learn when you meet people. But you should have the confidence in yourself, especially in your grounding as a CPA. You have both technical skills and work experience.”
The key to success also involves staying active and excellent time management, which is reflected in what Kwok does outside of work. “I’m a very active person, so I do everything from scuba diving, skiing and golf. As you can see by my golf balls over there, I love the sport,” Kwok laughs, pointing to more than a hundred white and yellow golf balls neatly stacked in rows behind a countertop full of trophies in his office. He stresses the importance of maintaining a good work-life balance despite a busy schedule. “I try to fill up every minute of every day. When I go to sleep at night, I like to think about what I did and what I achieved that day. It’s important to maximize your time.”
Giving only the best
Kwok remains sanguine that the company’s business will continue to grow and that the industry will make an even stronger recovery as soon as local travel restrictions are relaxed. “So far, we have seen that the rebound has been very strong in places where the restrictions have been removed. We are very confident that people’s desire to travel remains the same,” he highlights.
Though this might mean less frequent trips compared with pre-pandemic times, he notes that there is a great demand for luxury holidays, and with it, a demand for high-end luxury hotels. “The basic principles of luxury don’t really change,” he says. “Things like personalization, high quality service, knowing our customer, and space – simply because space is luxurious. There will always be a desire for a super luxury product like ours. So it’s important for us to continue offering our services and products to the highest standards.”
The Hongkong and Shanghai Hotels, Limited was incorporated in 1866. It is the owner and operator of some of the world’s finest luxury hotels under The Peninsula brand, with The Peninsula Hong Kong, built in 1928, as its flagship and others in Manila, New York, Beijing, Beverly Hills, Bangkok, Chicago, Tokyo, Shanghai and Paris. The group is currently building hotels in London and Istanbul.