HOTEL stocks performed generally poorly in the past week, with most counters taking a tumble following Governor Chris Patten's tabling of the first part of his political reforms in Legco. With the exception of Associated International Hotels, Harbour Centre, Mandarin Oriental and Regal Hotels, hotel stocks were not spared the massive fall in the Hang Seng index. The market was expected to be volatile in the near-term, and its direction would be significantly dictated to by political events. Shangri-La Asia fell to an all-year low of $9.75. The company, however, is poised to enjoy better earnings this year from both its China and Hong Kong properties as demand should pick up. In addition, room rates are expected to strengthen further in China and Hong Kong. But, in the short-term, a combination of saturation at Kai Tak airport and the shortage of hotel rooms is expected to constrain tourism growth in Hong Kong. However, existing hotels are forecast to reap the benefits of a shrinking room inventory, and room rates are expected to go up. Hong Kong and Shanghai Hotels, which will be opening the extended wing in the Peninsula this spring, remained inert at $12.40.