The Excelsior Hotel in Causeway Bay. Photo: Google Maps

One of the smallest jewels in the Mandarin Oriental International hotel chain is suddenly worth a bonanza – seemingly more than the entire company.

Shares in the hotel group, owned by Jardine Matheson, staged the biggest jump in nearly nine years after it confirmed that it has received a proposal to acquire the Excelsior Hotel, the group’s only four-star hotel.

On Monday, shares of Mandarin Oriental International closed at US$2.65. The value of the company has more than doubled over the last 12 months and is worth US$3.33 billion at the current share price.

Local papers reported that at least five bidders including Sun Hung Kai Properties, which owns the World Trade Centre just near the Excelsior, plus Hysan Development, the biggest landlord in the bustling Causeway Bay district, and a joint venture between Chinese Estates and China Evergrande have made offers of around HK$30 billion (US$3.8 billion).

That would value the 848-room hotel at HK$35 million per room, or HK$43,860 per square foot based on its total floor area of 684,000 square feet.

“These will form the basis for further consideration of the company’s strategic options. A further announcement will be made as required. No assumption should be made at this time regarding whether the property will or will not be sold,” the Singapore-listed hotel operator said in the statement.

The Excelsior is an odd item in the Mandarin Oriental empire – it sits on the first land parcel sold in 1841 when Hong Kong became a British colony. Jardine Matheson originally built a warehouse on the block before opening a hotel in 1973, located on Gloucester Road overlooking the Royal Hong Kong Yacht Club and Victoria Park.

Two years ago, the Excelsior Hotel secured approval from the Buildings Department to convert the hotel into a 26-storey commercial building.

But it’s doubtful that the Excelsior would remain as a hotel, if it is sold, given the market gives a much higher valuation to commercial office developers than hotel operators. Many of the latter, such as Hong Kong and Shanghai Hotels Ltd and Shangri-la Hotel and Resorts, have traded under book value.

Given the flood of Chinese enterprises setting up an “overseas arm” in Hong Kong, assets in key business areas have seen a strong take-up demand. All the big four state-owned banks, for example, like Industrial and Commercial Bank of China, have signature buildings in Central.

In May, Henderson Land, owned by tycoon Lee Shau-kee, paid a record HK$23.28 billion for a government plot on Murray Road in Central – it was billed as the most expensive piece of real estate in downtown.

Mandarin Oriental runs 29 hotels under its prestigious brand in 20 countries. If it sells the Excelsior, the group would be able to cash out and reinvest in a strong pipeline of hotels under development. Just last week, the chain said it will manage a luxury hotel project in the heart of Beijing, close to Tiananmen Square, that is expected to open in 2018.