• Thu
  • Aug 21, 2014
  • Updated: 1:34am

Shangri-La lifts first-half earnings 33pc to US$160m

PUBLISHED : Wednesday, 05 September, 2007, 12:00am
UPDATED : Wednesday, 05 September, 2007, 12:00am

Rising room rates for chain counter drop-off in occupancy


Shangri-La Asia, the largest luxury hotel chain in the region, reported a 33 per cent surge in first-half operating profit to US$160.17 million from US$120.45 million a year earlier as room-rate increases outpaced a slight decline in occupancy rates.


Net profit soared 95 per cent to US$159.7 million from US$82 million a year earlier, on one-off accounting measures related to Shangri-La's mainland associate companies.


'We have seen positive growth [on room rates] through the first eight months and we expect that trend to continue' chief operating officer Symon Bridle said yesterday.


'The second half of the year is traditionally stronger ... our revpar growth is now about 9 per cent and we hope to develop that further.'


Revpar, revenue per available room at the company's 41 self-owned hotels, increased 9 per cent to an average US$102 per night even as the average occupancy rate dipped 2 percentage points to 70 per cent. Average room rates rose 13 per cent to US$147 per night.


Earnings before interest, tax, depreciation and amortisation rose 21.5 per cent to US$204.1 million from US$167.9 million a year earlier, after turnover rose 19 per cent to US$557.73 million.


Shangri-La has 54 hotels in operation, representing 26,451 rooms. It has 42 new properties set to open between now and 2011, representing 15,288 new rooms.


Twenty-four, with 8,095 rooms, will be self-owned, with 14 of these properties, or 6,221 rooms, on the mainland.


Room rates probably would rise, despite a rapid supply increase, on strengthening demand in mainland cities, management said yesterday.


'While we cannot continue to increase room rates ad infinitum ... these [mainland] cities are growing exponentially and creating satellite centres,' chief financial officer Madhu Rao said.


'We may see some shifts in demand but not enough to destabilise our strategy,' he said.


The mainland accounts for 44.7 per cent of Shangri-La's room inventory, 35.4 per cent of revenue and 33.2 per cent of results. Hong Kong, which includes two Shangri-La branded hotels and the newly acquired interest in the Novotel in Sheung Wan, accounts for 5.8 per cent of room inventory, 20.1 per cent of company revenue and 9 per cent of results.


Shangri-La's net profit was lifted by a 351 per cent rise in share of profit from associate firms to US$51.4 million from US$11.4 million a year ago.


The company booked a one-off gain of US$27.9 million on reduced provisions for income tax as the mainland's national tax rate is set to drop from 33 per cent to 25 per cent as of January 1.


That compared with a one-time loss of US$14.7 million incurred a year ago after the company's Shanghai-listed associate underwent reform of its non-tradable shares.


Operating profit before exceptional gains or losses among mainland associate firms fell 10 per cent during the period to US$22 million.


Shares in Shangri-La rose 4.27 per cent before yesterday's results announcement to close at HK$20.25. Shangri-La is a sister company of the SCMP Group and is controlled by the Kerry Group.


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