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MTR ad revenue grows over 70% in 2021, digital transformation on ad formats underway

MTR ad revenue grows over 70% in 2021, digital transformation on ad formats underway

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Hong Kong's railway operator announced its annual results for the financial year ended on 31 December 2021. According to its report, the advertising revenue across its stations in Hong Kong increased by 73.3% to HK$894 million (US$114.27 million) last year, up from HK$516 million (US$65.95 million) in 2020. The company said the increase was the results of the gradual recovery in the domestic retail market. It added that the adspend rose in the second half of the year as the pandemic remained under relative control during these six months, while the Hong Kong government rolled out the consumption voucher scheme in H2 2021. The scheme also stimulated local consumer spending. The company will also continue its digital transformation of advertising media in the upcoming year. 

To drive revenue, MTR said it will continue to design on-target sales packages and deepen the integration with the MTR Mobile app to provide more O2O solutions for advertisers.

The company will also continue the digital transformation of its advertising media by launching new digital formats and customising digital solutions with real-time dynamic content.

Such offerings can help the company capture a sizeable share of increased spending by advertisers.

However, the surge in advertising revenue could not offset the decrease in revenue in other station commercial business in the city. The total revenue of station commercial business was HK$32.08 billion (US$410 million), down from HK$32.69 billion (US$420.26 million).  

This was mainly attributable to the loss of rental revenue resulting from the ongoing suspension of cross-boundary rail services and station closures, rental concessions granted to other station shop tenants who were affected by the pandemic, and less favourable rental reversion rates. Rental revenue from station shops decreased by 21.1% to HK$15.94 billion (US$204.94 million). To retain and attract tenants, MTR continued to offer flexible or shorter-term leases particularly to small to medium tenants. Rental reversion and average occupancy rates in 2021 for station retail were about 17.0% and 98.0%, respectively. However, rental reversions for duty free shops were adversely affected due to the challenging market conditions.

Moreover, MTR's telecommunications revenue was HK$631 million (US$80.64 million) in 2021, representing a 1.4% decrease compared to 2020. In September 2021, MTR completed the installation of a new commercial telecom system at 31 stations. It also continued to help telecom operators launch 5G services. As of the end of 2021, 5G services were available at 70 stations.

In addition, a new business line, a data centre located at a partnership site in Tseung Kwan O, will be ready for service in the first quarter of 2022.

"At the time of writing, Omicron was driving a fifth wave of COVID-19 infections in Hong Kong, presenting severe challenges to people’s day-to-day activities and creating adverse impacts on local patronage. While local patronage at the end of 2021 was beginning to approach pre-pandemic levels, overall fare revenue will continue to suffer as long as boundary closures and anti-pandemic measures remain in place," said Jacob Kam, CEO of MTR Corporations.

"Boundary closures, travel restrictions and the resulting drop in tourism – particularly from Mainland China – have inevitable impacts on rental reversions by suppressing retail traffic and consumer spending. Regardless of the situation, we will ensure our preparedness for the eventual reopening of travel while adhering to the highest standards of anti-pandemic practice," he added.

(Photo courtesy: 123rf)

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