HSH and Qatari Diar have agreed to re-develop the building that currently houses the Centre International de Conferences on Avenue Kleber into The Peninsula Paris hotel.

Upon completion of which the hotel and ancillary facilities will be managed by a subsidiary of HSH for a period of 30 years with an automatic renewal of a further 20 years, subject to meeting certain performance criteria.

The estimated total re-development project cost is expected to be financed through a combination of commercial borrowings and the resources of Qatari Diar and HSH in proportion to their respective shareholdings. Under the Shareholders Agreement, HSH's expected commitment to the re-development cost is approximately Euro 50 million (approximately HK$512 million).

Re-development of the hotel is scheduled to commence in the second quarter of 2009, following vacant possession of the building with completion expected by the end of the first quarter of 2012.

The Honourable Sir Michael Kadoorie, Chairman of HSH, commented, "Paris is a strategic destination for the Group and The Peninsula Paris most importantly will mark the Company's first hotel in Europe. This hotel will complement our existing group of hotels which are all located in prime locations in gateway cities, and will follow the launch of The Peninsula Tokyo in 2007 and later this year, the opening of The Peninsula Shanghai.

"Our Peninsula brand already enjoys high recognition within the global community. We hope that The Peninsula Paris will bring a new level of distinction to the Paris luxury hotel market. It is housed in a historic, magnificent building which will be a very special experience for our guests.

"We are very pleased to be partnering with Qatari Diar on this hotel, who share our vision of creating The Peninsula Paris as a landmark European hotel.

"HSH has a track record of over 100 years of developing and managing iconic luxury hotels and we believe that together with Qatari Diar, we will create a new standard in the Paris luxury hotel market. This is an exciting partnership for both Qatari Diar and HSH and we look forward to the future opening of The Peninsula Paris."

The property's facilities will include 200 guestrooms and suites, all featuring the Group's proprietary in-room technology system. Underpinning a superior product will be the quality service for which The Peninsula Hotels is known.

Located on Avenue Kleber, the building was originally constructed and opened in 1908 as the Majestic Hotel and is currently used as the Centre International de Conferences by the French Ministry of Foreign Affairs.