Shangri-La's paradise soured by Sars

THESE are grim times for the hospitality industry in Asia as, for many weeks, there have been few guests to be hospitable to. The deadly Sars virus has slashed the number of business and leisure travellers, driving hotel occupancy rates in some extreme cases into single digits.

Today, it was the turn of Hong Kong-based Shangri-La Asia to document its problems with a nasty - if not entirely unexpected - profits warning. The region's largest luxury hotels operator, which has more than 20,000 rooms across 39 sites, said the health crisis would 'adversely affect' its earnings over the first half of the year.

With the sombre situation largely priced in, the shares held their ground at HK$4.80, but missed out on a rising wider market and remain well off their high this year of HK$6.10. The company, controlled by Malaysian-born tycoon Robert Kuok, said it remained unclear just how badly its earnings would be mauled.

The board will meet later this month to reconsider its recommended final dividend of five cents a share to conserve cash, echoing a recent step by Cathay Pacific Airways. To reassure investors, however, Shangri-La said it still had a healthy balance sheet and decent credit lines.

Analysts now reckon that, even though there are signs that the fight against Sars is being won, especially in Hong Kong and Singapore, a full recovery remains a distant prospect. 'We estimate it should take at least three to six months before long-haul travel to Asia rebounds fully,' said UBS Warburg analysts Eric Wong and Franklin Lim. 'This is likely to delay full recovery in Asia hotels until October.'

The territory's Hang Seng index added 71.4 points at 9155.6, buttressed by a run-up in banking giant HSBC. The lender firmed 25 cents, or 0.3%, to HK$89.50.

Shoemaker Yue Yuen Industrial won promotion to blue-chip status and rose 45 cents, to HK$16.35, a 2.8% gain. Shipping group Cosco Pacific gained 40 cents, or 5.7%, to HK$7.35.

In Japan, the market continued to focus on the government's possible stock-boosting measures. Cabinet Secretary Yasuo Fukuda said prompt action was likely - but would not say what. The Nikkei 225 rose 68.96 points, or 0.85%, to 8221.12.

Shares in Softbank, the internet business investor, sank 151 yen, or 9.3%, to 1480 yen after it posted worse-than-expected losses for the last financial year. Camera maker Nikon also eased on lousy earnings, falling 50 yen to 805 yen, a slide of 5.8%.

Singapore trade was lit by a dramatic run-up in BIL International, the investment group that recently took over Britain's Thistle Hotels. It gained 12.5 cents, or 18%, to 82 cents as talk swirled of a takeover bid. Asset trader Oei Hong Leong has been building a position in BIL in recent days, prompting rival tycoon Quek Leng Chan to raise his controlling stake to 26% from 24%. The Straits Times index closed unchanged at 1309.6.

Australia's News Corp advanced 19 cents, or 1.7%, to A$11.39 ahead of third-quarter figures on Tuesday. The All Ordinaries index put on 17.3 points to 2945.5.

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