Hongkong and Shanghai Hotels, which owns the Peninsula hotels, will meet stronger headwinds this year after a recovery in the hospitality business stalled, according to the company's chief executive. Clement Kwok King-man said yesterday that business was complicated by the economic uncertainty in the United States and European markets and inflation. The group reported a 3 per cent rise in underlying profit to HK$152 million, or 10 cents per share, in the first six months of this year. Taking into consideration a HK$1.78 billion revaluation surplus on investment properties - largely the flagship Peninsula Hong Kong and the Repulse Bay residential and commercial complex - the group's net profit surged 174 per cent year-on-year to HK$1.9 billion, or HK$1.29 per share. 'The outlook for the second-half is somewhat mixed, somewhat uncertain,' Kwok said. The Peninsula Hong Kong in Tsim Sha Tsui saw its yield, or revenue per available room, rise 14 per cent in the first half on the back of a 7.8 per cent rise in average room rates to HK$4,074. The occupancy rate was up 3 percentage points to 70 per cent. Early next year, the hotel will have 300 rooms upgraded at a cost of HK$450 million over 18 months, hitting earnings. Mainlanders formed a significant segment of the Peninsula Hong Kong's patrons, accounting for about 20 per cent of the total, a spokeswoman said. The Peninsula Shanghai saw a 23 per cent jump in revenue per available room, The average room charge rose 26.64 per cent to HK$3,294 even though occupancy was down 2 percentage points to 56 per cent in the first half. Kwok said the Peninsula hotel in Tokyo suffered an undisclosed loss in the first half as the March 11 disaster dealt a blow to tourism and the hospitality business. The hotel's revenue per available room fell 18 per cent in the first-half. Bricks & Mortar analyst Eric Wong said mainland tourists and the Peninsula Shanghai would be growth drivers in future. 'The US and Europe are already in stagflation and it's hard to see growth in the tourism and hospitality sectors,' he said.