Hotel stocks would not seem like the ideal investment when the bullets start flying.
However, if the experience of the last Gulf War is any indication, the present Iraqi jitters may present a buying opportunity.
The headlines from early 1991 certainly do not tell that story.
Tourist arrivals into Hong Kong fell between 15 and 20 per cent during the last Gulf War while the Bangkok Shangri-La closed 10 of its 25 floors due to the sudden fall-off in demand.
In the week that the Allied air campaign began, Tokyo's Okura Hotel saw 1,300 reservations cancelled in two days.
But the stock performance of hotel operators tells a different tale. Hongkong and Shanghai Hotels (HSH) shares, which ended down 0.67 per cent at HK$3.70 yesterday, lost a quarter of their value in the days immediately following Saddam Hussein's surprise invasion of Kuwait at the beginning of August 1990.
The diplomatic frenzy which followed saw HSH shares tumble further, bottoming out at $3.67 - 3.5 months before the Allied offensive began.
Although remaining depressed over the weeks that followed, the stock suddenly sprang to life at the end of January 1991, when the Allies declared air supremacy over Iraq; the Soviet Union and the United States jointly offered Iraq a ceasefire if it withdrew; and the tide of war turned from bad to worse for Mr Hussein's forces.
Within six months, HSH shares had gained more than 25 per cent, and by March 1992, had gained 33 per cent from their low of September 1990.
On that basis, should investors be piling into shares such as HSH and Shangri-La Asia now that they languish in historic doldrums? Analysts are cautious.
Morgan Stanley analyst Rob Hart argued that the reason for the turnaround in share-price performance in 1991 was because of signs of recovery as the global economy emerged from the recession of the previous year.
'The reason they went off to the races at the time was because the global economy started to recover from then and they were coming off a low base and low valuations,' he said.
'Will it happen again after this potential war? Perhaps, but there's no certainty.'
South China Securities analyst Jeff Yau said the success of any military campaign would be crucial, and agreed that the health of the global economy would decide the immediate fate of these stocks.
'It depends on how long the war lasts for. If it's just a few days or weeks, then the impact on the global economy will be very small,' said Mr Yau. 'But if it lasts for a long time then there will be uncertainty over the economy and that will have an impact on the hotel industry.'
And any turnaround in the global economy will take time to feed through to the hoteliers' bottom lines.
Michael Sagild, Asia-Pacific managing director of unlisted luxury group Le Meridien Hotels & Resorts, said that it would take 18 months for the industry to recover should the United States launch a war against Iraq.
'Luxury hotels very much rely on the performance of the global economy,' he said.
ABN Amro analyst Nicole Wong downgraded her recommendation for Shangri-La to an 'add' from a 'buy' last week, in part because of a recent rally in the share price. The stock climbed 0.96 per cent yesterday to $5.25.
Ms Wong said the rally was based on premature hopes that the removal of the Iraqi overhang would clear the way for the company, and that events such as the Gulf War were not necessarily followed by immediate improvements in the operating environment.
'A quick turnaround seems unlikely as past events . . . show that declines in tourist arrivals in the first three months after a conflict ranged from 5 to 10 per cent for the more steady markets like Hong Kong, to 17 to 34 per cent in other parts of the region, which was then followed by six to nine months of sluggish arrivals growth as confidence returned,' she said.
UBS Warburg hotel analyst Eric Wong said a military campaign would hit HSH earnings but said it was difficult to say by how much.
He said Shangri-La would be relatively insulated by comparison because its hotel portfolio was largely limited to Asia.
But Mr Hart said the benefits of a speedy resolution to the Iraqi situation would be felt more by those hotel operators exposed to countries at the heart of any conflict, such as the US and Britain, rather than those with an Asian focus.
'After it is resolved, travel will improve and it'll be good for hotel companies. But most other hotel companies have more to gain as Shangri-La is centred around China,' he said.
On that basis, groups such as Canada's Four Seasons, HSH and Singapore-listed Mandarin Oriental International are likely to gain most when the dust begins to settle and the markets snap back.