Shangri La Hotel

Only available on StudyMode
  • Download(s): 228
  • Published: December 13, 2011
Read full document
Text Preview
Shangri-La's Net Profit Rises 54%
Kate O'Keeffe. Wall Street Journal (Online). New York, N.Y.: Mar 17, 2010. Abstract (Summary)
HONG KONG--Luxury hotel operator Shangri-La Asia Ltd. said Wednesday its 2009 net profit rose 54%, lifted by higher property prices, though its core hotels business suffered from a sharp drop in demand due to the global financial crisis.  »  Jump to indexing (document details)

Full Text (515  words)|
(c) 2010 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission. HONG KONG--Luxury hotel operator Shangri-La Asia Ltd. said Wednesday its 2009 net profit rose 54%, lifted by higher property prices, though its core hotels business suffered from a sharp drop in demand due to the global financial crisis. The economic crisis hit the hospitality sector as businesses restricted employee travel and tourist numbers declined. The industry has lagged other sectors in its recovery outlook, even as demand has been making a comeback since the end of 2008. The Hong Kong-listed company, which is controlled by Malaysian businessman Robert Kuok Hock-nien, said though it expects improvements in its business this year and next, it doesn't expect to return to pre-crisis levels until 2012. "We've been fairly encouraged by the last 10 to 12 weeks," said Shangri-La Chief Financial Officer Madhu Rao at a news conference, adding there has been a return in business travellers. He also said he expects the second half of this year to be better than the first. Shangri-La, which owned stakes in 49 hotels at the end of last year, said its net profit for 2009 totaled US$255.5 million, up from US$165.9 million a year earlier. Revenue fell 9% to US$1.23 billion from US$1.35 billion. The strength in Shangri-La's earnings was mainly due to a US$327.1 million non-cash property revaluation gain, up from US$13 million in 2008, reflecting higher property rates. The company has stakes in a number of investment properties such as shopping malls and offices, mainly in the Asia-Pacific region. Stripping out the accounting gain, Shangri-La's operating profit for the year fell 69% to US$51.3 million from US$163.2 million, dragged by the poor performance of its core hotel operations. Total revenue for room rentals fell 15% for the year to US$570.2 million from US$674.2 million, with average revenue per available room--a key metric of the hotelier's performance--falling 24% for the year. RevPAR for its hotels in mainland China, Shangri-La's biggest single market, fell 27% to US$66 from US$91, while RevPAR for its hotels in Hong Kong fell 24% to US$157 from US$206. Shangri-La said it saw more opportunities in China as the nation's economy continues to expand and that outside of projects it has already committed to do in Beijing and Shanghai, most of the company's development focus will be in provincial cities. Credit Suisse said last week Shangri-La Asia's well-established footprint in tier-two and tier-three cities in China should help it generate superior returns over the next three to five years, noting hotel room oversupply concerns persist in tier-one cities such as Beijing and Shanghai. The brokerage firm said Shangri-La Asia would likely have stronger earnings growth momentum compared with regional peers Hong Kong & Shanghai Hotels Ltd. and Mandarin Oriental International Ltd. due to expectations its hotel portfolio will increase 26% over the next three years in terms of rooms. Shangri-La's disappointing core earnings performance comes after rival Hong Kong & Shanghai Hotels last week reported a 61% drop in underlying profit to HK$315 million from HK$807 million in 2008 as hotel revenue was hit hard by the financial crisis from January to August. Credit: By Kate O'Keeffe

| Translate document from:  |
Other available formats:
Abstract
Find more documents like this:
Subjects:
Hotels & motels
Bond issues
Stock...
tracking img