Sales rose 19.1 per cent to US$1 billion on robust demand for tourist beds and food and beverage at the company's 49-strong hotels in Hong Kong, the mainland, Singapore, Malaysia and the rest of Asia-Pacific.

'The performance exceeded the good times in 1996 and 1997,' executive director Giovanni Angelini said yesterday. 'I don't see it will be much less this year based on the trading figures in the first two months of this year.'

The group's flagship properties in Hong Kong - a Shangri-La hotel each in Tsim Sha Tsui and Admiralty - had raised their average room rate 13 per cent this year after a 14 per cent increase to HK$2,196 a night last year, Mr Angelini said.

Revenue per available room - the yield of hotels - of the two Hong Kong properties was 18 per cent higher at HK$1,726 last year.

Compared with other cities such as New York, London and Paris, 'Hong Kong's room rates still have space to grow', Mr Angelini said.

The group's average room rate rose 12 per cent between January and February to HK$1,100, a gain that he expected would translate into a full-year growth rate of 12 per cent to 15 per cent this year.

Last year, revenue per available room at Shangri-La hotels grew in double digits in all markets but Fiji, which was rocked by political unrest.

The growth leader was Singapore, at 25 per cent growth to US$123, followed by Malaysia's 21 per cent growth to US$65.

Eight hotels, mostly in the mainland, are due to receive their first guests this year and Shangri-La Asia chief financial officer Madhu Rao said their start-up operating losses, costs and depreciation charges would be offset by the strong operating performance of existing hotels.

Mr Angelini said that Shangri-La, in addition to its continuous search for new projects in Europe and the United States, was planning to move into the budget hotel sector in Hong Kong, the mainland and India.

Shangri-La would take over the management of the three-star Novotel Century Harbourview hotel in Western district when its existing management contract with Accor of France expires at the end of this year.

Shangri-La bought a 30 per cent stake in Novotel in September last year for HK$588.38 million.

The final dividend remained the same at 10 HK cents per share. A 30 per cent increase in the interim dividend makes the full-year payout 15 per cent higher at 23 HK cents per share. Earnings per share rose 29.8 per cent to 7.97 US cents.

Shares of Shangri-La fell 2.13 per cent to close at HK$18.40 yesterday before the results were released.

Shangri-La is held by the Kerry Group, which also controls SCMP Group, publisher of the South China Morning Post.

Compared with other cities such as New York, London and Paris, Hong Kong's room rates still have space to grow