Shangri-La Asia Ltd, Starwood Hotels & Resorts Worldwide Inc and other Asian hotel operators, already bracing for a slowdown from the Iraq war, face a new worry -- a respiratory disease that killed at least 18 people.
Hotel bookings have fallen by a fifth in Hong Kong, where more than half the victims have been diagnosed, and by the same level in Singapore, where the government quarantined as many as 740 people in their homes, Asiatravel.com Holdings Ltd said.
"After the airlines, the industry that is going to be hardest hit is us," said Tony Virili, group general manager for Japan at Accor SA, the world's fourth-largest hotelier. Accor said two weeks ago it may scale back expenditure on new hotels and rooms by two-fifths as markets decline.
At stake is an industry still reeling from the impact of a terrorist attack in Bali and a string of recessions. In Singapore, where tourism makes up a 10th of economic output, hotel occupancy had already fallen to 74.1 percent at the end of last year, down 14.3 percentage points from a November 2000 peak. Shangri-La said 1,400 rooms were canceled at its two Hong Kong hotels.
The respiratory disease has infected at least 487 people, including 39 in the US, after being carried by airline passengers to 15 countries in Asia, North America and Europe, according to the World Health Organization. Among those who may be infected is William Ho, the head of Hong Kong's Hospital Authority, Hong Kong health officials have said.
As governments warn against travel to more Asian destinations, hotel shares worldwide will keep falling, some analysts said. A Morgan Stanley International index that tracks hotels, restaurants and leisure stocks worldwide fell by a quarter in the past year.
Starwood, the world's biggest hotelier, lost a third of its value in the past year. Shangri-La fell about 6 percent while Raffles Holdings Ltd, which owns the 116-year-old Raffles Hotel in Singapore, fell by a fifth.
"What we have is more bad news," for the industry, said Cher Hung Jin, who manages about US$200 million at Daiwa SB Investments in Singapore. "It's never been a well-liked sector and all this news just means it's not about to change."
Both Singapore and Hong Kong are struggling to pick up from the twin recessions they each had in the past five years. Other Asian markets such as Indonesia are still trying to get foreign investors back following the regional financial crisis in 1997.
This week, White Plains, New York-based Starwood, which owns the Sheraton and Westin chains, withdrew its earnings forecasts after the war in Iraq sparked a decline in shares of travel-related companies. Analysts said a surge in last-minute cancellations makes it harder to forecast profit.
Asian hotel operators such as Hongkong and Shanghai Hotels Ltd, which owns the Peninsula in Hong Kong, said they have had some cancellations amid the spread of the disease, known as Severe Acute Respiratory Syndrome.
Symptoms include a fever of more than 37.8?C and coughing, difficulty breathing and pneumonia. Singapore reported its first death from the illness with 10 others in "serious condition."
"People are assessing whether they should travel on a day-to-day basis," said Scott Hetherington, Asia executive vice president at Jones Lang LaSalle Hotels in Singapore, a hotel brokerage and research firm.
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