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Three Things you should know about Shangri-La Asia

One of my favourite hotels in Singapore is definitely the luxurious Shangri-La Hotel, part of the Shangri-La Asia Limited group (SGX:S07). With its elegant façade, beautiful gardens and impeccable service, it’s not surprising to discover it is regularly voted one of the best hotels in the world.

But while Singapore’s Shangri-La hotel now boasts 88 serene sisters in its group, the company’s story is not all about riches and wealth.

The group’s humble beginnings stretch back to 1923, when a boy named Robert Kuok Hock Nien was born in Johor Bahru, Malaya. His family, originally from Fujian, China, had established a small provision shop, Tong Seng & Co. trading in rice, sugar and flour, and business was good. Robert and his older brother Philip were sent to the Johor Bahru English College and in 1939, Robert left to travel to Singapore, to attend the prestigious Raffles College.

However, the Japanese occupation of Singapore during the Second World War was to cut short Kuok’s education. Instead, he started work as a clerk in the rice-trading department of Japanese industrial conglomerate Mitsubishi, where he learned Japanese. With the help of the Japanese military, the company soon monopolised the rice trade in Malaya.

Sugar King

After the war, Kuok headed back to Malaya, armed with the skills he had learned from his Japanese employers.

In 1949, Robert founded Kuok Brothers Sdn. Bhd., together with his two brothers and a cousin, trading in agricultural commodities. However, heavy competition coupled with low margins was making the rice trade less attractive. Kuok turned his sights to sugar and after spending some time in England learning about the commodities market, he headed back to the newly independent Malaysia.

In 1959, Kuok founded Malayan Sugar Manufacturing Co. Bhd. with two Japanese business partners. The company invested heavily in sugar refineries, producing approximately 10% of the world’s production and gaining Kuok his nickname of “Sugar King”.

Kuok decided it was time to expand his interests, and the Kuok group added flour milling and trading, as well as palm-oil production to its empire.

Shangri-La Hotels & Resorts

It wasn’t until 1971, that Kuok made his first venture into real estate, with the purchase of a hotel property in Singapore that was to become to our luxurious Shangri-La Hotel.

The Kuok Group initially turned its hotel’s management over to Western International Hotels. But by 1981 when the group had opened its Shangri-La Hotel in Kowloon, Hong Kong, things had changed. The Group decided to cover direct hotel management as well, founding Shangri-La Hotels & Resorts, to be run by ex-Western employees David Hayden and Robert Hutchison.

China

The public’s appetite for luxury hotels had been well and truly whetted, and the group now set its sights on China. Interestingly, Kuok chose to avoid the big cities and rather target an area where his hotel would be the first and only luxury hotel. In 1984, the Kuok group opened its first Shangri-La hotel in Hangzhou, a city on the east coast of China.

Traders

The group quickly realised it would be useful to offer a mid-range brand in addition to its Shangri-La luxury, and in 1989, launched its first Traders hotel, offering quality, comfort and excellent service at a lower price-point. It was hoped that in the long term the Traders hotels would help develop the market for luxury hotel services, in readiness for the Group’s introduction of its Shangri-La brand.

By the mid-nineties, the group had built further properties in China, and added hotels in Hong Kong, the Philippines, Indonesia and Fiji to its portfolio.

Shangri-La Asia Limited

In 1995, the group set up Shangri-La Asia Ltd to take over its hotel properties and listed it on the Hong Kong, as well as Singapore Stock Exchanges. Then, in 1997, Shangri-La Asia Ltd. additionally took over Kuok’s hotel management company Shangri-La Hotels and Resorts to create an integrated hotel management group.

But did you know…

  1. The Shangri-La hotel gets its name from the fictional, mystical, earthly paradise described in James Hilton’s 1933 novel, Lost Horizons, which was said to cast a spell over all who reside there.
  2. Robert Kuok currently features at position #110 in the Forbes list of the world’s billionaires and has been the richest man in South East Asia since 2002.
  3. During Robert Kuok’s time at Raffles College he was a classmate of future Malaysian Prime Ministers Tun Abdul Razak and Tun Hussein Onn, as well as Lee Kuan Yew.

Despite the difficulties encountered by hotel groups during the 2000s when terrorist attacks in New York, as well as the SARS outbreak put tourists, as well as business travellers putting off travelling, the Shangri-La Asia Ltd group emerged generally unscathed. This could be partly due to its sensible expansion plans, but also Robert Kuok’s forward-thinking decision to build in smaller Chinese cities, which allowed the group to profit greatly from China’s fast-growing economy.

Today, the Shangri-La Asia Ltd. group has added Kerry Hotels and the Hotel Jen hotel chains to its world-class hotel group, and introduced its distinctive Asian standards of hospitality and luxury to countries not only in Asia, but also the Middle East, Canada and Europe.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Alison Hunt doesn’t own shares in any companies mentioned.