Hotel operator Shangri-La reports deeper first-half loss in China from a year earlier

Shangri-La Asia, the luxury hotel chain owned by the Kerry Group, on Wednesday said a weak global economic outlook and depreciation of the yuan currency would drive its core hotel ownership segment deeper into the red in the second half.

The operator of the Shangri-La, Kerry and Traders chain of hotels reported a net loss of US$900,000 in its hotel ownership business in the first half, compared with a net profit of US$37.8 million a year earlier. Net losses in China deepened to US$34.3 million from US$15.5 million.

Improvement in its property rentals arm and hotel management services contributed to an overall 5 per cent gain in consolidated profit in the first six months from a year earlier, excluding fair value gains of investment properties and impairment losses, to US$41.1 million.

"The group's hotels in general continue to face a challenging business environment characterised by weakening local currencies which have reduced the affordability of overseas travel for many; lower profits in US dollar terms; weak demand from key markets, especially for some of the luxury hotels in the portfolio; and oversupply of hotel rooms in certain cities in mainland China," it said in a stock exchange statement.

"Given the significant impact of the hotel portfolio on the overall operating results of the group and the recent depreciation of the renminbi, the group's operating profits are expected to be materially lower than those of the previous year."

Shangri-La Asia also reported hotel ownership business losses in Britain, France, Australia and Japan.