Around Asia's markets: Avian flu casts pall over H.K. hoteliers
By Hanny Wan
Bloomberg News
MONDAY, DECEMBER 12, 2005
Shares of Hong Kong's hotel owners are slumping amid concern that bird flu will drive away business, just as severe acute respiratory syndrome did two years ago.
The stock price of Regal Hotels International, which operates five hotels in Hong Kong and two in Shanghai, has fallen 23 percent since two United Nations teams said in late June that an outbreak of bird flu in the western Chinese province of Qinghai might spread. Shares of Shangri-La Asia, the region's largest luxury-hotel operator, are down about 10 percent.
"Investors are trying to stay away from hotel stocks because of emerging bird-flu cases," said Kenny Tang, head of research at Tung Tai Securities in Hong Kong. "People will still try to avoid hotel stocks unless it is confirmed there won't be any more bird-flu outbreaks."
Hotel chains said they have seen little effect on their bookings. Business hotels run by companies including Regal and Global Hyatt reserved 10,000 rooms for attendees at the World Trade Organization meeting that runs this week, said James Lu, executive director of the Hong Kong Hotels Association.
Health officials are concerned that the bird-flu virus could mutate and cause a pandemic among humans. Two years ago, Hong Kong's hotel occupancy rates slumped when the SARS outbreak killed 299 people in the city.
China has reported 31 outbreaks of avian influenza in poultry this year. In the past two years, avian flu has infected at least 133 people in Vietnam, Thailand, Indonesia, Cambodia and China and killed 68, the World Health Organization said Nov. 29. China has reported at least five cases of human infection as of Thursday.
The prospect that the disease may spread to Hong Kong poses a threat to the increase in occupancy rates since the end of the SARS outbreak. Hotels benefited from a surge in tourist arrivals after China's government made it easier for mainland residents to visit Hong Kong.
Regal is the third-worst performer in the 201-member Hang Seng Composite index since the beginning of September. Only HKR International, a property developer, and IDT International, a consumer-electronics company, have fallen more.
During the 12 months through July, shares of Regal almost tripled and shares of Shangri-La Asia jumped 86 percent. Shares of Hongkong & Shanghai Hotels, the Hong Kong-based company that owns the Peninsula chain of luxury hotels, gained 82 percent. Since then, Regal has fallen 32 percent, Shangri-La lost 16 percent, while Hongkong & Shanghai Hotels dropped nearly 11 percent.
The decline in Regal was exacerbated by a failure to reach agreement with Las Vegas Sands to build a hotel in Macao, said Andes Cheng, an analyst at South China Finance & Management in Hong Kong.
About 3.4 million business travelers visit Hong Kong annually, according to the Hong Kong Tourism Board. The meetings, incentives, conventions and exhibitions area "is the fastest growing segment and the biggest spender as far as hotel spending is concerned," CitisecOnline.com said in a July report.
The trade organization meeting will be the first gathering of trade ministers from all WTO member countries since the 2003 meeting in Cancun, Mexico. Hong Kong expects 11,000 delegates and journalists to the city. The meeting may also draw another 10,000 protesters.
Hotels may also benefit from the Dec. 21 opening of AsiaWorld-Expo, an exhibition and event venue integrated with the international airport. The exhibition center has teamed up with 12 hotels that can offer up to 1,600 rooms at any time, and has more than 30 events confirmed for next year.
Shares of Hong Kong's hotel owners are slumping amid concern that bird flu will drive away business, just as severe acute respiratory syndrome did two years ago.
The stock price of Regal Hotels International, which operates five hotels in Hong Kong and two in Shanghai, has fallen 23 percent since two United Nations teams said in late June that an outbreak of bird flu in the western Chinese province of Qinghai might spread. Shares of Shangri-La Asia, the region's largest luxury-hotel operator, are down about 10 percent.
"Investors are trying to stay away from hotel stocks because of emerging bird-flu cases," said Kenny Tang, head of research at Tung Tai Securities in Hong Kong. "People will still try to avoid hotel stocks unless it is confirmed there won't be any more bird-flu outbreaks."
Hotel chains said they have seen little effect on their bookings. Business hotels run by companies including Regal and Global Hyatt reserved 10,000 rooms for attendees at the World Trade Organization meeting that runs this week, said James Lu, executive director of the Hong Kong Hotels Association.
Health officials are concerned that the bird-flu virus could mutate and cause a pandemic among humans. Two years ago, Hong Kong's hotel occupancy rates slumped when the SARS outbreak killed 299 people in the city.
China has reported 31 outbreaks of avian influenza in poultry this year. In the past two years, avian flu has infected at least 133 people in Vietnam, Thailand, Indonesia, Cambodia and China and killed 68, the World Health Organization said Nov. 29. China has reported at least five cases of human infection as of Thursday.
The prospect that the disease may spread to Hong Kong poses a threat to the increase in occupancy rates since the end of the SARS outbreak. Hotels benefited from a surge in tourist arrivals after China's government made it easier for mainland residents to visit Hong Kong.
Regal is the third-worst performer in the 201-member Hang Seng Composite index since the beginning of September. Only HKR International, a property developer, and IDT International, a consumer-electronics company, have fallen more.
During the 12 months through July, shares of Regal almost tripled and shares of Shangri-La Asia jumped 86 percent. Shares of Hongkong & Shanghai Hotels, the Hong Kong-based company that owns the Peninsula chain of luxury hotels, gained 82 percent. Since then, Regal has fallen 32 percent, Shangri-La lost 16 percent, while Hongkong & Shanghai Hotels dropped nearly 11 percent.
The decline in Regal was exacerbated by a failure to reach agreement with Las Vegas Sands to build a hotel in Macao, said Andes Cheng, an analyst at South China Finance & Management in Hong Kong.
About 3.4 million business travelers visit Hong Kong annually, according to the Hong Kong Tourism Board. The meetings, incentives, conventions and exhibitions area "is the fastest growing segment and the biggest spender as far as hotel spending is concerned," CitisecOnline.com said in a July report.
The trade organization meeting will be the first gathering of trade ministers from all WTO member countries since the 2003 meeting in Cancun, Mexico. Hong Kong expects 11,000 delegates and journalists to the city. The meeting may also draw another 10,000 protesters.
Hotels may also benefit from the Dec. 21 opening of AsiaWorld-Expo, an exhibition and event venue integrated with the international airport. The exhibition center has teamed up with 12 hotels that can offer up to 1,600 rooms at any time, and has more than 30 events confirmed for next year.