Shangri-La net rises 35pc as room rates surge

PUBLISHED : Saturday, 02 September, 2006, 12:00am
UPDATED : Saturday, 02 September, 2006, 12:00am

Shangri-La Asia, which operates 49 hotels and luxury resorts mostly across the region, said first-half earnings rose 35.4 per cent on rising room rates and sales.

For the first six months of this year, net profit jumped to US$82 million from US$60.55 million a year earlier, said the operator of the four-star Traders and five-star Shangri-La hotels controlled by the Kerry Group.

Kerry also controls the SCMP Group, which publishes the South China Morning Post.

Earnings per share rose 29 per cent to 3.241 US cents from 2.514 US cents, on a 20 per cent jump in turnover to US$469.98 million.

Across the company, room rates rose 16 per cent year on year in the first half. On a weighted-average basis, occupancy at Shangri-La's own hotels across all markets remained unchanged at 72 per cent.

'We may end the year with 19 to 20 per cent growth in rates over last year,' chief executive Giovanni Angelini said, citing the traditional seasonal strength in the second half.

The firm is growing rapidly in the mainland market, which contributed 34 per cent of both revenue and profit in the first half, up from last year's 31 per cent of turnover and 27 per cent of profit.

The average rates in the mainland rose 16 per cent to US$125 per night, although occupancy dipped to 68 per cent from 71 per cent.

In Hong Kong, occupancy rose to 80 per cent from 74 per cent a year ago. The average nightly room rate rose to US$277 from US$241.

'China's GDP is growing at 9 to 10 per cent a year and we see our room rates rising fairly close to that [pace],' Mr Angelini said.

China will remain the company's growth driver. Group-wide, Shangri-La has 23 new properties under development, 16 self-owned, which will add 8,657 hotel rooms to its total. Of those rooms, 84 per cent will be in the mainland.

Shangri-La aims to expand to 38,000 or 39,000 rooms by 2011 from 24,000, according to chief financial officer Madhu Rao.

The company said yesterday it would open a 204-room hotel in Tokyo by 2009, its first in Japan.

Capital expenditure rose to about US$275 million in the first half after the company paid US$120 million for a historic mansion in Paris that it would convert into its first hotel in Europe.Stripping out the acquisition cost, capital expenditure for the full year should remain in the US$225 million to US$250 million range, Mr Rao said.

The firm will pay a dividend of 13 HK cents a share.

Shangri-La's shares yesterday fell 1.3 per cent to close at HK$15.20.