Hong Kong’s Star Ferry has sailed into dire financial straits. The local uproar suggests that allowing the Victoria Harbour icon to sink is an unthinkable outcome even as the city reels from nearly three years of protests and pandemic-induced isolation. Keeping the Wharf empire-owned boats afloat would preserve a slice of history and provide some hope for the future.
The 142-year-old ferry service’s general manager, David Chow, said this week the company was struggling to pay wages after ringing up some HK$70 million ($9 million) of losses since summer 2019 because of political protests and Covid-19 lockdowns in the city. Hong Kong’s efforts to follow China’s Covid-zero policies have largely killed the tourist trade since 2020, and a recent Omicron outbreak is keeping commuters home too.
The ferry service, which generates revenue from its harbour crossings and pier rents as well as charters to tourist groups, is part of Wharf Real Estate Investment, which also owns the city’s popular Times Square and Harbour City shopping malls. Wheelock & Co, controlled by the Woo family, holds 43% and Wharf Holdings, its listed developer, has another 4%.
Wharf and its predecessors have owned the Star Ferry since 1898. Debt now exceeds the value of assets, the company’s general manager said, according to a March 16 report in the South China Morning Post.
Support for maintaining Hong Kong’s heritage has grown in recent years. Tycoon Adrian Cheng is using his New World Development conglomerate to spruce up the city’s derelict State Theatre in North Point. Elsewhere, the Peak Tram, part of the Kadoorie family empire alongside the Peninsula Hotel chain, is undergoing extensive renovation.
Neither enterprise is entirely altruistic: Cheng is also redeveloping land around the theatre while the tram, buttressed by property at both ends, is profitable in normal times.
The Star Ferry, which generates roughly half its revenue from piers, last turned a profit in 2017 from its basic business, per old website pages retrieved by Breakingviews. That same year, Star Ferry was bundled into a new Wharf company for Hong Kong assets including trophy shopping malls, since when it has barely merited a mention in the financial results.
With government help, it could do more to boost rental revenue from the piers, whose prime central location cries out as a dining and drinking destination, even if visitors don’t pay 50 cents to ride across the harbour.
Whether the Woo family, Wharf’s controller, bought and subsidised the Star Ferry itself or the company did so, few investors would probably baulk. Failing that, tenants of Hong Kong’s harbourside skyscrapers may have ideas of their own.
Visitors to UBS, Morgan Stanley and Credit Suisse, among others, can drift off during dull meetings watching the distinctive white-and-green boats. With that much financial oversight, surely there’s a way to throw the Star Ferry a lifeline. (Reuters/Jennifer Hughes)