#8173998 - 04/16/15 11:43 AM
Subways can be profitable.... when done right
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phoenixrage
Post Master Supreme
Registered: 01/15/08
Posts: 50785
Loc: People's Republic of Ontario
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http://money.cnn.com/2015/03/30/news/hong-kong-mtr-subway-property/
The city's subway is the face of the Mass Transit Railway Corporation (MTR) -- a publicly traded company that pulled in $5.2 billion in revenue last year. With a $2 billion annual profit, the Hong Kong's subway is an anomaly among major rail networks. New York's subway, for example, suffers from chronic funding gaps and will spend nearly $2.5 billion in 2015 to service its debt. How does Hong Kong's train and bus network manage to clear its mind-boggling margins? First off, this is one impressive subway system. Even with more than 5 million daily commuters, MTR trains boast a 99.9% on-time arrival rate. Fares are notoriously cheap ($.50 to $3), but cover roughly 175% of the system's operating costs. But the company's real profits are derived from a lesser-known side of the business: property development. Some 50 major properties across Hong Kong are owned, developed or managed by MTR, including two of the city's tallest skyscrapers. "Sometimes critics say it's a property development firm doing a side business of rail," said Tim Hau, a professor at University of Hong Kong's School of Economics and Finance. Here's how it works: MTR enjoys a special relationship with the Hong Kong government, which is also its majority shareholder. The government provides land -- at no cost -- for use by the train operator, and MTR is then allowed to develop the areas above and around its stations. Related: Taking a ride on the world's most envied metro system MTR often builds shopping malls right on top of stations -- it owns 13. Last year, rents at the malls went up by an average of 14%. Below ground, each subway stop is jam-packed with retail outlets, which all pay rent to MTR or have a profit-sharing agreement in place. You can find every kind of retail in the stations -- even Michelin-starred dim sum restaurants. Wong Sau Lan has been managing one such restaurant, called Tim Ho Wan, for the past two years. She said the restaurant's MTR outlet, located in a subway station that serves the central business district, is twice as popular as its flagship restaurant. For the 14 hours that Tim Ho Wan is open each day, people will, on average, wait 40 minutes for the MTR dining experience. MTR is now exporting its model abroad. It's already been commissioned to build and run lines in China, the United Kingdom, Sweden and Australia, and more projects are in the works. "They'll go wherever there's a profit," said Hau. "There aren't that many viable competitors in the world."
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#8174105 - 04/16/15 12:42 PM
Re: Subways can be profitable.... when done right
[Re: zaius]
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TheRealCSnapper
Post Master Supreme
Registered: 12/05/02
Posts: 31955
Loc: Toronto, Canada
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i the MTR, despite how inexpensive it is to take a taxi in HK, i'll ALWASY prefer to take MTR.
it's fast, wait time is next to nothing, outside of rush hours, it's actually bearable. but most importantly, it's what they mentioned in the article. they made the station a point of interest. if you're meeting for dinner, chances are you're going to a place above a station, and attached to world class shopping malls.
i also think the car culture is nothing like that of canada. and people doesn't travel the distance we do here. the HK urban sprawl doesn't sprawl out that much,
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#8174312 - 04/16/15 02:16 PM
Re: Subways can be profitable.... when done right
[Re: TheRealCSnapper]
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Choco 'Nuck
Proud Member of BLM
Post Master Supreme
Registered: 07/10/01
Posts: 17568
Loc: Somewhere out there
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Sell the TTC just like Hydro. Instead, they only sell them things that make a shitload of profit
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#8174375 - 04/16/15 02:42 PM
Re: Subways can be profitable.... when done right
[Re: TheRealCSnapper]
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iamfob
Post Master Supreme
Registered: 09/06/02
Posts: 24697
Loc: Out There
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i the MTR, despite how inexpensive it is to take a taxi in HK, i'll ALWASY prefer to take MTR. it's fast, wait time is next to nothing, outside of rush hours, it's actually bearable. but most importantly, it's what they mentioned in the article. they made the station a point of interest. if you're meeting for dinner, chances are you're going to a place above a station, and attached to world class shopping malls. i also think the car culture is nothing like that of canada. and people doesn't travel the distance we do here. the HK urban sprawl doesn't sprawl out that much,
this!
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#8184298 - 04/23/15 10:27 PM
Re: Subways can be profitable.... when done right
[Re: phoenixrage]
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Screamin Type ARGH!
High Value Poster
Post Master Supreme
Registered: 02/20/01
Posts: 47668
Loc: T.O. - Canaduh
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http://money.cnn.com/2015/03/30/news/hong-kong-mtr-subway-property/ The city's subway is the face of the Mass Transit Railway Corporation (MTR) -- a publicly traded company that pulled in $5.2 billion in revenue last year. With a $2 billion annual profit, the Hong Kong's subway is an anomaly among major rail networks. New York's subway, for example, suffers from chronic funding gaps and will spend nearly $2.5 billion in 2015 to service its debt. How does Hong Kong's train and bus network manage to clear its mind-boggling margins? First off, this is one impressive subway system. Even with more than 5 million daily commuters, MTR trains boast a 99.9% on-time arrival rate. Fares are notoriously cheap ($.50 to $3), but cover roughly 175% of the system's operating costs. But the company's real profits are derived from a lesser-known side of the business: property development. Some 50 major properties across Hong Kong are owned, developed or managed by MTR, including two of the city's tallest skyscrapers. "Sometimes critics say it's a property development firm doing a side business of rail," said Tim Hau, a professor at University of Hong Kong's School of Economics and Finance. Here's how it works: MTR enjoys a special relationship with the Hong Kong government, which is also its majority shareholder. The government provides land -- at no cost -- for use by the train operator, and MTR is then allowed to develop the areas above and around its stations. Related: Taking a ride on the world's most envied metro system MTR often builds shopping malls right on top of stations -- it owns 13. Last year, rents at the malls went up by an average of 14%. Below ground, each subway stop is jam-packed with retail outlets, which all pay rent to MTR or have a profit-sharing agreement in place. You can find every kind of retail in the stations -- even Michelin-starred dim sum restaurants. Wong Sau Lan has been managing one such restaurant, called Tim Ho Wan, for the past two years. She said the restaurant's MTR outlet, located in a subway station that serves the central business district, is twice as popular as its flagship restaurant. For the 14 hours that Tim Ho Wan is open each day, people will, on average, wait 40 minutes for the MTR dining experience. MTR is now exporting its model abroad. It's already been commissioned to build and run lines in China, the United Kingdom, Sweden and Australia, and more projects are in the works. "They'll go wherever there's a profit," said Hau. "There aren't that many viable competitors in the world."
*boom*
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