Hotel group is the latest to expect a steep decline in first-half results on the dramatic tumble in traveller numbers Hongkong and Shanghai Hotels (HSH) has become the latest local company to issue a Sars-related profit warning, saying it expects its first-half results to be significantly affected by the sharp fall in the number of travellers stemming from disease fears. The warning came a day after Mandarin Oriental International said it had seen an unprecedented low level of occupancy in its Hong Kong hotel as a result of the Sars outbreak. Analysts covering the hard-hit hotel industry have cut earnings forecast for HSH, Mandarin Oriental and Shangri-La Asia and advised shareholders to avoid the sector. HSH, the operator of Peninsula Hong Kong, said its hotels in Asia, particularly those in Hong Kong and Beijing, had been adversely affected by the health crisis. Analysts said occupancy rates at luxury hotels in Hong Kong and Beijing had dropped to single digits since the World Health Organisation issued a travel advisory warning against visits to Hong Kong and the nation's capital. Despite the fact that its interim results would be hit by the Sars outbreak, HSH said it did not intend to revise or amend its proposed final dividend of 8 HK cents. Meanwhile, a spokeswoman for Shangri-La Asia said its hotels in Hong Kong, Beijing, Shenzhen, Taipei and Singapore had also been suffering from the outbreak of atypical pneumonia. 'Our occupancy rate is in line with the industry in Hong Kong,' she said. Asked if Shangri-La Asia would issue a profit warning, the spokeswoman said that this decision was a matter for the company's board. The spokeswoman said the group had no cash problems at the moment. Yesterday, shares of HSH fell 0.72 per cent to HK$3.45, and those of Shangri-La Asia dropped 0.52 per cent to HK$4.80. UBS Warburg analyst Eric Wong said he had revised downward his full-year profit projection for HSH by 19 per cent to HK$270 million. The downward forecast is based on HSH's occupancy rate falling to 20 per cent and a 25 per cent decline in room rates for three months from the beginning of the Sars outbreak. His original forecast was HK$335 million. In February, HSH announced that net profit leapt 833 per cent to HK$308 million for the year to December largely due to the absence of provisions. Mr Wong said he believed the Mandarin Oriental International would also be badly hit by the Sars outbreak and he anticipated the group's net profit this year could fall to as little at US$100,000, compared with his earlier forecast of US$14 million. He expected a 65 per cent decline in profit for Shangri-La Asia to US$46 million this year, compared with an earlier forecast of US$129 million.