Chip Eng Seng unit serves termination notice for Park Hotel Alexandra operator

CHIP Eng Seng Corporation's wholly-owned subsidiary CEL-Alexandra (CELA) served a termination notice on Park Hotel Group Management, the operator of the hotel that is fully owned by CELA.

Park Hotel Alexandra is located at 323 Alexandra Road and has been in operation since 2015.

In a filing to the Singapore Exchange on Friday (Feb 25), the company said CELA has given 6 months' termination notice to Park Hotel Group Management, pursuant to the terms of the hotel management agreement. Under the terms of the agreement, Park Hotel Group Management is obliged to "peacefully vacate and surrender" the hotel to CELA on the expiry of the termination.

After the expiry of the termination notice, Chip Eng Seng said Park Hotel Alexandra will be temporarily closed for refurbishment and will be rebranded. A new operator will be appointed to manage the hotel under the new brand.

Chip Eng Seng said it expects the hotel to reopen for business under the new brand around Q1 2023, adding that it will make further announcements when there are any material developments.

The costs and expenses to be incurred in connection with the termination of the hotel management agreement and the subsequent temporary closure of the hotel for refurbishment will reduce the revenue contribution from CELA to the group for the current fiscal year ending Dec 31.

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However, this reduction in contribution is not expected to significantly impact Chip Eng Seng's net tangible assets and earnings per share for FY2022.

Shares of Chip Eng Seng closed at S$0.46 on Friday, up 2.2 per cent or S$0.01.