The property group is blaming reduced tourist numbers after the Sars outbreak Great Eagle Holdings has given out a profit warning, saying it has been hit hard by reduced hotel occupancy from tourists staying away in the wake of the Sars outbreak. Deputy chairman and managing director Lo Ka-shui yesterday said occupancy in its Great Eagle Hotel in Tsim Sha Tsui and Eaton Hotel in Jordan had slumped to about 7 per cent or 8 per cent as a result of the crisis. Mr Lo said this compared with an average occupancy of about 90 per cent for April and May in previous years. The group's Delta Chelsea Hotel in Toronto had also suffered, but to a lesser degree as the city's Sars outbreak was contained in a shorter period of time. The Toronto hotel's occupancy had fallen to 40 per cent following the Sars spread but had recovered to more than 50 per cent, he said. 'Hong Kong hotels have been badly hit by Sars. This will certainly affect our earnings but it is not possible to gauge the extent of effect at this stage,' he said. As a costing-saving measure, the group has asked its 800 employees at its hotel division to take unpaid leave of four to five days a month. Mr Lo said the move would save 15 per cent to 20 per cent in hotel staff salary costs, or several million dollars a month. The measure was initially for two months, subject to review. Great Eagle is planning to open a five-star hotel with 719 rooms at its Langham Place development in Mongkok in the third quarter of next year. It is projecting a need to hire 600 people. But Mr Lo said the office leasing market was facing continued pressure as company expansion was frozen. Rental figures at Great Eagle's office properties this year were at least 20 per cent lower than a year ago, he said. Its main properties are Citibank Plaza in Central and Great Eagle Centre in Wan Chai, which have a vacancy rate of about 15 per cent and 7 per cent respectively. Mr Lo also said the group would consider selling certain properties in about three years to reduce its debt level, adding that now was not a good time for disposal. He would not disclose which properties were likely to be sold. Great Eagle has a debt of about HK$12 billion, of which about HK$8 billion is attributable to Hong Kong operation and HK$4 billion to overseas operation. This puts its debt-to-equity ratio at about 70 per cent. Mr Lo said the high gearing ratio was because the debt-to-equity ratio for its overseas operation stood at more than 200 per cent. The ratio for its Hong Kong business was between 30 to 40 per cent. But he said the overseas operation had strong cash flows, with interest cover at 2.1 times, an improvement from last year's 1.7 times. Mr Lo said his family, the major shareholder of Great Eagle, had no plans to privatise the company in the short term, but he added that privatisation was an option for all property companies.