Strong sales of the group's property portfolio are also expected to boost its coffers Regal Hotels International Holdings says it will reduce its debt by more than 50 per cent this year to $2 billion, in anticipation of brisk business at its hotels and stronger sales from its property portfolio. Speaking after the group's annual general meeting yesterday, chairman Lo Yuk-sui said he expected $3 billion in revenue to be generated from the sale of the remaining 50 luxury houses at Regalia Bay in Stanley. He also expressed optimism over the hotel division, saying average occupancy rates at Regal's five Hong Kong hotels reached 80 per cent in the first quarter, with some reporting double-digit growth in room rates. Regal, which focuses on residential property development and hotels, found itself heavily geared after the 1998 property market crash. Analysts have said the $4 billion in red ink could have drowned the company had it not been for record-low interest rates in recent years. The reviving economy, particularly the rebound in luxury property prices, should enable the group to write back provisions it made last year to reflect the rise in the value of its assets. Mr Lo said a looming interest-rate rise would prove manageable and the firm could keep interest expenses below $100 million a year. Regal was actively seeking hotel expansion opportunities in Hong Kong and the mainland in view of the strong demand, he said. 'We are very optimistic on the hotel sector.' The company would spend 'tens of millions of dollars' renovating the Regal Oriental Hotel - formerly the Regal Kai Tak Hotel - in Kowloon City, now that it had withdrawn the property from sale, he said. Another property arm in Mr Lo's complex web of companies, Paliburg Holdings, intends to spend $1 billion developing Sharp Island in Sai Kung into a 'Fantasy Island' resort, in line with the government's plan to turn the area into a large-scale water sports centre. Paliburg owned a 200,000-square-foot undeveloped property on Sharp Island, Mr Lo said, adding discussions with the government were still at an early stage and foreign investors had expressed interest in the project. He noted that Paliburg had appointed a financial adviser to formulate plans for amalgamating and spinning off its construction businesses on the main board. Mr Lo said the $1 billion debt restructuring of Century City International Holdings, parent of Paliburg, was scheduled to be completed by the end of this month. So far, most creditors have agreed with the terms in principle but some banks still need more time to consider the plan.