Eastern & Oriental Hotel

The Eastern & Oriental Hotel has been bankrupt, occupied by the Japanese military, abandoned during a workers’ strike, and left to decay for half a century while George Town emptied around it. It changed hands five times between 1938 and 1994. Each new owner lacked the capital to restore it — and, crucially, the desperation to tear it down.

From Isfahan to the Straits

The Sarkies brothers — Martin, Tigran, Aviet, and Arshak — were descendants of the Armenian merchant community of New Julfa in Isfahan, Persia. Their original family name was Ter Woskanian; “Sarkies” was their father’s first name, adopted as surname in the tradition of the diaspora. Educated at the Armenian College in Calcutta, they followed centuries-old trade routes that had carried Armenian merchants from Isfahan through India to the Straits Settlements.

Tigran was twenty-three when he leased a compound house on Light Street, George Town, from tin magnate Khaw Sim Bee in 1884. He called it the Eastern Hotel. Within a year, his brother Martin had acquired the competing Hotel de l’Europe at 10 Farquhar Street, renaming it the Oriental Hotel. By 1889, the two properties merged under a single name: the Eastern & Oriental Hotel.

The E&O became the social epicentre of British Malaya’s commercial elite — hosting royalty, literary figures, and colonial administrators who arrived by steamer from Calcutta, Hong Kong, and London. The Sarkies pioneered a distinctive “chit” credit system, allowing wealthy guests to dine and lodge on account. The practice built extraordinary loyalty among the rubber and tin barons who constituted their core clientele but sowed the seeds of the family’s financial destruction.

The brothers did not stop at Penang. Tigran founded Raffles Hotel in Singapore in 1887. Aviet established the Strand Hotel in Rangoon in 1901. Martin’s son Lucas founded Hotel Oranje — now Hotel Majapahit — in Surabaya in 1910. Together they built what historians call Asia’s first hotel chain, operating simultaneously in four countries from a community in Penang that never exceeded approximately 180 Armenians across 150 years of settlement.

Arshak, the youngest and most flamboyant brother, ran the E&O from approximately 1894. He added a 45-room north wing in 1907 and completed the Victory Annexe in 1923 — an architectural showpiece with domes and minarets celebrating the Allied victory in the Great War. The hotel reached 130 rooms, the largest in Penang. Arshak was, by contemporary accounts, “gregarious and generous to a fault,” operating the hotel “more for the pleasure of entertaining his friends than to make money.” His hospitality was legendary; his bookkeeping was not.

The Great Bankruptcy

The 1930 commodity crash destroyed the economic class that had sustained the E&O’s lavish operations. Arshak had accumulated approximately 14,000 Straits dollars in personal entertainment debts alone. Total liabilities reached 3.5 million Straits dollars owed to 195 individual creditors — the largest bankruptcy in colonial Straits Settlements history. After the crash, Arshak tore up guests’ outstanding accounts, knowing the debts were unrecoverable. He died on 9 January 1931, the last of the four brothers. None had surviving sons in the hotel business.

Raffles Hotel Limited was incorporated in February 1933 to manage the empire’s remnants. In 1938, the E&O was sold to the owner of a rival Penang hotel for just 120,954 Straits dollars — a fire-sale price that reflected how completely the brand had fallen from its years as the premier address in colonial Malaya.

Occupation and the Lost Decades

When Japanese forces captured Penang in December 1941, they requisitioned the E&O and renamed it “Penang Haitan Ryokan” — a private club for military officers. All crockery, glassware, cutlery, silver, and linen were stolen or destroyed. Hotel records were burned, making approximately 3,000 shares of stock permanently untraceable. After liberation in September 1945, the owners filed a 409,431 Malayan dollar war damage claim. The government settled for 69,000 dollars in 1955 — seventeen cents on the dollar — leaving the property chronically undercapitalised.

In 1951, the Choong family — wealthy Penang Chinese merchants — bought out shareholders for approximately 1.7 million Malayan dollars, overcoming opposition from one major holdout. Under their ownership, the E&O gained what sources describe as “a more oriental touch”: Chinese cuisine entered the restaurant for the first time, air conditioning was installed in select rooms, and weekly dances resumed. The hotel turned modest profits but received no major capital investment.

The Choong era ended abruptly in 1965 when a workers’ strike paralysed operations. On 1 August, the hotel “fell silent in dark” — an event described as “an even bigger catastrophe than the Japanese occupation.” Seven weeks later, businessman Chan Eng Hock purchased the property for just under 3 million Malayan dollars, borrowing one-third from a Choong family company. Chan re-hired staff, built a swimming pool, and briefly restored the hotel’s social cachet — restaurant tables carried a three-week waiting list.

But George Town itself was dying. The federal government revoked Penang’s free port status in 1969, triggering 16.4 percent unemployment. The port relocated from George Town to Seberang Perai in 1974. Population fell from 260,000 in 1970 to 181,000 by 2000. The Rent Control Act of 1966 froze rents on pre-1948 buildings across approximately 14,600 premises, eliminating landlords’ incentive to maintain heritage structures while paradoxically preventing demolition by making redevelopment uneconomic.

In 1973, Chan formed an alliance with Singapore-based Jack Chia-MPH Ltd, which acquired 87.5 percent equity for 7 million Malaysian dollars. The new owners opened Sarkies Corner coffee house but made a devastating heritage decision in 1981: they demolished the original Victory Annexe — Arshak Sarkies’ 1918 architectural pride with its domes and minarets. A replacement ballroom, touted as “the biggest in Malaysia,” was built and then boarded up. Partial renovations begun in 1982 were shelved when recession hit. By the early 1990s, the E&O was affordable enough for a college student — the ultimate indictment of a property once called “the Premier Hotel East of Suez.”

The Restoration Gamble

The turnaround came through Dato’ Seri Terry Tham Ka Hon, who in 1994 acquired Jack Chia Enterprise Berhad and its 90.7 percent hotel stake, renaming the listed entity Eastern & Oriental Berhad. Tham’s vision was considered “seemingly mad” by contemporaries, though the Raffles Hotel precedent — Singapore’s celebrated $160 million restoration completed in 1991 — proved colonial heritage hotels could function as luxury properties.

The hotel closed in 1996 for what was planned as an eighteen-month renovation. It became a painful five-year project, extended by the 1997 Asian Financial Crisis and the sheer scale of deterioration discovered inside the walls. The front wing received genuine restoration, but the 1929 New Wing was gutted and reconstructed, and the mid-century shopping annexe was levelled. Management sold original bathroom fittings, patterned floor tiles, teak doors, and reportedly the grand lobby staircase — decisions that dismayed heritage advocates but reflected the economic reality of a restoration with no disclosed budget surviving a regional financial crisis.

The E&O reopened on 3 April 2001 as a 100-suite heritage luxury hotel with the largest average room size in Penang. The conversion from conventional rooms to an all-suite configuration was the decisive repositioning: the E&O would compete on space, heritage, and narrative rather than amenities and chain-hotel loyalty programmes.

Heritage Anchor

George Town’s inscription as a UNESCO World Heritage Site in 2008 retrospectively validated the restoration gamble. The E&O, situated within the heritage buffer zone, gained renewed global visibility precisely as international heritage tourism accelerated across Southeast Asia.

In 2013, the Victory Annexe — designed by GDP Architects on the site of the demolished original — opened with 132 suites in a fifteen-storey tower. Total capacity reached 232 all-suite rooms. A further nine-month Heritage Wing refurbishment in 2019 refreshed all 100 suites, completing the third major renovation cycle — only three months before COVID-19 shut the industry down.

The pandemic hit Penang’s hospitality sector with particular severity. The Malaysian hotel industry lost RM9 billion in 2021 alone. Multiple Penang hotels closed permanently. The E&O’s occupancy dropped to 18.2 percent, with the Heritage Wing having reopened only in December 2019. The hotel survived through parent company financial support, pivoting Sarkies restaurant from buffet to unlimited a la carte at RM99 nett, and deep room rate discounts. Competitors that lacked E&O Berhad’s diversified property portfolio could not absorb the losses.

The hotel’s current steward is Dato’ Seri Tee Eng Ho, co-founder of construction group Kerjaya Prospek. Tee acquired Sime Darby’s remaining 10.89 percent stake in March 2021 for RM93.5 million at 60 sen per share — a 74 percent discount from Sime Darby’s original 2011 purchase price of RM2.30. Independent adviser BDO Capital called the mandatory general offer “not fair and not reasonable,” valuing the company at RM2.12 per share. Tee became Executive Chairman with approximately 49.74 percent of the company. The hotel now serves as the heritage anchor for a property empire with a RM1.85 billion market capitalisation and a RM60 billion land reclamation pipeline in Penang — the 760-acre Andaman Island project that will provide development visibility through at least 2040.

Under General Manager Alison Fraser — the first woman to lead the hotel in its 140-year history — the E&O competes not on modern amenities or global chain loyalty programmes but on narrative and authenticity. Against Shangri-La Rasa Sayang on the beach and the newly opened 298-room Iconic Marjorie Hotel backed by Marriott, the E&O holds one advantage that cannot be replicated: it is the only seafront luxury hotel within the George Town UNESCO World Heritage Site.

Institutional Survival

The Eastern & Oriental is not a founder-led brand. The Sarkies brothers did not build a dynasty — they built a name, and that name proved far more durable than any single family or owner could be. Eight ownership changes in 141 years. Five existential crises: bankruptcy, military occupation, a fifty-year economic decline, a five-year restoration closure through a financial crisis, and a global pandemic. Yet the building was never demolished, and the name was never abandoned.

The hotel’s survival through the lost decades — 1945 to 1996 — owed less to strategic brilliance than to a paradox of neglect. George Town’s Rent Control Act made demolition uneconomic. Serial owners who lacked restoration capital also lacked the desperation to tear the building down. The E&O endured because at no point did it become more profitable to destroy than to simply hold. By the time a developer with conviction arrived, the building had accumulated enough heritage weight that restoration was not merely viable but inevitable.

Today, Heritage Wing suites command RM1,200 to RM1,800 per night. Chinese tourist arrivals to Penang surged 219 percent in 2024. The hospitality segment generates RM104.4 million in annual revenue at a 24.7 percent operating margin. Institutional survival, it turns out, is itself a competitive moat — no competitor can manufacture 141 years of continuous history on the Straits of Malacca.

Last updated: March 15, 2026