Mandarin Oriental International Ltd, Shangri-La Asia Ltd and rival Hong Kong hotels, struggling to fill rooms as the city battles SARS, probably won't see a recovery this year.
Tourists won't return soon even if the World Health Organization lifts a travel warning on the city this week, analysts said. Hotels -- losing as much as US$13,000 a day each as they fill a fifth of the rooms they need to break even -- have seen share prices plummet. Shangri-La, the largest luxury hotel operator in Asia, yesterday scrapped its proposed final dividend.
"As long as one country in Asia still has a big problem, it's seen as a whole -- the traveler will just decide to give Asia a miss," the company's Malaysia Managing Director, Kay Kuok Oon Kwong, said after a shareholders' meeting in Kuala Lumpur.
Occupancy at the Hong Kong's 77 top hotels has fallen to about 10 percent, costing them an average HK$100,000 (US$12,800) a day, according to hotel consultant Horwath Asia Pacific. They need to fill at least 45 percent of their rooms to cover operating costs, according to Eric Wong, an analyst at UBS Warburg.
Many hotels have already warned the outbreak of severe acute respiratory syndrome will erode earnings. Sino Hotels Holdings Ltd, controlled by the family of Singapore billionaire Ng Teng Fong, and Hongkong & Shanghai Hotels Ltd, owner of the luxury Peninsula chain, both said profit will decline.
Shangri-La, with 18 of its 40 hotels in Hong Kong and China, said it will scrap its proposed final dividend of HK$0.05 to save cash. That makes the full-year payout the smallest since the company listed in 1993. Its Shangri-La Hotels (Malaysia) Bhd unit said occupancy, which fell as low as 40 percent last month, may not rebound until October.
Shangri-La's earnings may plunge 64 percent this year if its occupancy remains below 20 percent for three months, UBS Warburg said in a report. Shangri-La shares, which have declined 6.4 percent this year.
At Mandarin Oriental, profit may fall 99 percent, the report said, while earnings at Hongkong & Shanghai Hotels may drop 19 percent.
Shares of Hongkong & Shanghai, which is bolstered by rental income from residential and commercial properties, have risen 7.6 percent this year.
To be sure, the number of new SARS cases in Hong Kong has fallen and hotels have begun checking in more guests.
Hongkong & Shanghai said occupancy at its landmark Peninsula recovered to 25 percent from less than 10 percent a month ago, though it doesn't expect bookings to rise quickly.
"Full recovery will take some time," chief executive officer Clement Kwok said in an interview. "Some of the summer business we might have got may have changed plans. The strongest season for travel is from September to the end of the year, so we are hoping for an autumn peak season."
About four-fifths of travelers to Hong Kong arrive from elsewhere in Asia and 65 percent visit as part of extended trips in the region, UBS Warburg's Wong said.
"If you are planning for your Christmas holiday now, probably Hong Kong and other parts of Asia will not be your destination of choice," said Martin Lau, who helps manage US$1.8 billion at First State Investments HK Ltd. "We may see full recovery sometime next year."
Intelligence agents have recorded 510,000 instances of “controversial information” being spread online by the Chinese Communist Party (CCP) so far this year, the National Security Bureau (NSB) said in a report yesterday, as it warned of artificial intelligence (AI) being employed to generate destabilizing misinformation. The bureau submitted a written report to the Legislative Yuan in preparation for National Security Bureau Director-General Tsai Ming-yen’s (蔡明彥) appearance before the Foreign Affairs and National Defense Committee today. The CCP has been using cognitive warfare to divide Taiwanese society by commenting on controversial issues such as Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) investments in the
INVESTIGATION: The case is the latest instance of a DPP figure being implicated in an espionage network accused of allegedly leaking information to Chinese intelligence Democratic Progressive Party (DPP) member Ho Jen-chieh (何仁傑) was detained and held incommunicado yesterday on suspicion of spying for China during his tenure as assistant to then-minister of foreign affairs Joseph Wu (吳釗燮). The Taipei District Prosecutors’ Office said Ho was implicated during its investigation into alleged spying activities by former Presidential Office consultant Wu Shang-yu (吳尚雨). Prosecutors said there is reason to believe Ho breached the National Security Act (國家安全法) by leaking classified Ministry of Foreign Affairs information to Chinese intelligence. Following interrogation, prosecutors petitioned the Taipei District Court to detain Ho, citing concerns over potential collusion or tampering of evidence. The
‘COMPREHENSIVE PLAN’: Lin Chia-lung said that the government was ready to talk about a variety of issues, including investment in and purchases from the US The National Stabilization Fund (NSF) yesterday announced that it would step in to staunch stock market losses for the ninth time in the nation’s history. An NSF board meeting, originally scheduled for Monday next week, was moved to yesterday after stocks plummeted in the wake of US President Donald Trump’s announcement of 32 percent tariffs on Taiwan on Wednesday last week. Board members voted to support the stock market with the NT$500 billion (US$15.15 billion) fund, with injections of funds to begin as soon as today. The NSF in 2000 injected NT$120 billion to stabilize stocks, the most ever. The lowest amount it
NEGOTIATIONS: Taiwan has good relations with Washington and the outlook for the negotiations looks promising, Minister of Economic Affairs J.W. Kuo said Taiwan’s GDP growth this year is expected to decrease by 0.43 to 1.61 percentage points due to the effects of US tariffs, National Development Council (NDC) Minister Paul Liu (劉鏡清) said at a meeting of the legislature’s Economics Committee in Taipei yesterday, citing a preliminary estimate by a private research institution. Taiwan’s economy would be significantly affected by the 32 percent “reciprocal” tariffs slapped by the US, which took effect yesterday, Liu said, adding that GDP growth could fall below 3 percent and potentially even dip below 2 percent to 1.53 percent this year. The council has commissioned another institution
RSS