bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

helpersCheckIsPostiesArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

moreOnThisArticles

urlAlias

commentCount

authorLocations

authors

paywallTypes

corrections

sponsorType

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

socialHeadline

headline

flag

firstTopic

glossary

flattenTypeIds

publishedDate

additionalInfoBoxes

images

image

relatedLinks

relatedNewsletters

__typename

createdDate

sponsor

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

SCMP Reporter

STRONG rental income from properties is expected to spearhead the earnings growth of luxury hotel group Shangri-La Asia.

The group's Hong Kong operations remained a main provider of profit but to a lesser extent than previously as the growth in foreign visitors slowed in the first half.

Analysts forecast that the group's first half result would be in the region of $331 million to $384 million, representing a growth of 14 to 32 per cent.

Earnings per share were predicted to be flat at 29 cents or increasing by up to 16 per cent, or 33.6 cents.

The earnings are to be announced on Friday.

'I think the result will not be an encouraging one,' said an analyst, pointing to flat margins for hotels in Hong Kong and China.

'During the past six months, the average room rate increase in China hotels was in the low teens and occupancy was quite flat,' he said.

'Basically over the past few years, room rate increases in China were more than 50 per cent and there is limited room for a similar rise again.' Other analysts expected earnings growth to pick up in the second half.

They expected an improved performance from the Hong Kong operations and a greater contribution from hotels in the Philippines and Fiji that have been acquired recently.

  The consensus forecast for the full year is a 41 per cent rise in profit to $892.1 million, according to The Estimate Directory.

   Earnings per share would increase by only five per cent to 64 cents as a result of the placement of 415 million shares for the purchase of hotels in the Asia-Pacific region.

  Dividend per share would climb seven per cent to 32 cents.

  For the first half, the achieved rental rate per square metre at the group's properties in China rose 50 to 55 per cent.

 The performance of the hotels in China was mixed.

 The best performing hotel in China was the one in Shenzhen where the occupancy leaped to 78 per cent from 53 per cent, although room rate was flat at $615.

 Unfavourable market conditions saw Shangri-La Golden Flower Hotel in Xian continue to report a poor occupancy level at 35 per cent, down from 37 per cent.

 The room rate was lifted by 28 per cent to $327.

 The two hotels in Hong Kong registered a lower than expected performance by the territory's standard.

 The occupancy rate at the Kowloon Shangri-La was almost flat in the first half of this year, edging up only 0.3 per cent to 77 per cent.

 Hong Kong Shangri-La saw a fall of four per cent to 72 per cent compared with 77 per cent for all high tariff A hotels in the same period.

 The tariff room rates at the two hotels were not raised this year and room rates improved only because of an increase in rates last year.

 There is no plan to increase the tariff room rates next month.

 Kowloon Shangri-La posted an eight per cent rise in room rate to $1,628 and Hong Kong Shangri-La climbed 11 per cent to $1,924.

 Profit margin was not significantly affected because inflation and cost was kept in check.



Property income to lift Shangri-La earnings growth