Sector defies Hang Seng slide
HOTEL stocks continued to do well over the past week, with many withstanding the 3.7 per cent fall in the Hang Seng Index.
Investors appeared keen to hold on to hotel shares despite the broad-based fall caused by further attacks by Chinese authorities concerned about Governor Chris Patten's electoral package.
Many brokerages still rate Mandarin Oriental as a strong buy, despite the good run its shares are having. The Hongkong flagship of the group is benefiting from good tourist data and projections that few rooms will be coming on stream while visitor numbers rise, allowing it to raise room rates to cover increases in salaries and other costs.
These factors also have been boosting the locally based hotel stocks.
But Mandarin Oriental is also winning praise for its strong management and enthusiasm for the other hotels it operates in Asia, which are expected to benefit from increased inter-regional travel.
CDL Hotels received an extra boost from its purchase for $690 million plus 3.8 million shares of the Regent Hotel in Kuala Lumpur.
- apparently a good price.
Investors have been betting that the Kwok family's 70 per cent stake in the Holiday Inn Crown Plaza in Xiamen will be injected into the company.
This has caused an abrupt switch in its investor image, previously tarnished by its involvement in the sluggish British market.
The company still has about $240 million remaining from the $686 million rights issue to invest.