Aug. 20, 2003 - Contrary to what sceptics believed, The Peninsula Bangkok, the five-star hotel on the west bank of the Chao Phraya river that opened as the Thai economy was in the grips of an economic crisis in November 1998, has been running relatively profitably ever since its second year of operations.

Except for the first nine months of service when the 1997 Asian financial turmoil was reaching its peak, the 370-room hotel has fared quite well on the balance sheet, with undisclosed operating profits in the past four years.

That came despite a series of negative impacts that hit the hospitality industry as a whole, including the war in Iraq and more recently the Sars outbreak that had devastated travel-related businesses in the region.

General manager Ian Coughlan, who has managed the W-shaped riverside property since 1999, told the Bangkok Post that during 2001 and 2002, the hotel was able to achieve an occupancy rate of 73 percent, relatively high by industry standards in the Thai capital.

That occupancy rate is lower than its first year, when 82 percent was achieved as it offered a heavily discounted room rate of 3,000 baht a night.

The discount approach, enabling the hotel to fill many empty rooms but with poor margins, was dropped in 2000, as The Peninsula Bangkok opted for doubling room rates to 6,400 baht.

With less volume, the company was able to double operating profit, said the Irish executive.

During the first 10weeks of this year, the hotel did well.

Then came the Iraq war and the outbreak of Severe Acute Respiratory Syndrome (Sars), which "kicked us by the stomach and destroyed the resilience of travellers", he said.

Mr Coughlan conceded that The Peninsula Bangkok was able to manage occupancy of only 30 percent from April to May, the height of the Sars period -- a figure not far different from those of other five-star hotels in Bangkok.

The room take-up rate began to bounce back in June when the deadly virus was put under full control and the associated travel restrictions were lifted. In June, The Peninsula Bangkok booked an occupancy rate of 62 percent.

The hotel, which was recently voted the World's Best Hotel 2003 by readers of Travel + Leisure magazine, expects a gradual recovery, anticipating 73 percent occupancy this month and a slight rise to 75 percent in September.

Guests, mostly leisure travellers, are returning to The Peninsula Bangkok, though the earlier slump will leave a red scar on its full-year balance sheet.

Mr Coughlan said the hotel, owned by Siam Chaophraya Holdings, expected its revenue this year to be 50 percent behind projection, with profit projected at 11 percent less than last year's level.

"We would have a respectable profit for this year," he insisted.

For the first seven months of this year, the hotel recorded an average 59 percent occupancy rate and expects to finish the year with an annual average of 66 percent which is "very good", he said.

Seventy-five percent owned by The Hongkong and Shanghai Hotels, (the parent of The Peninsula) and 25 percent by Phatara Euromill Group (owned by the Phataraprasit family), Siam Chaophraya Holding is investing 62 million baht to add a dedicated Thai restaurant on its site, as well as renovating its terrace eatery.

If the right opportunity presents itself, the company will look at creating a sister resort hotel, though smaller, in Thailand in locations such as Phuket and Chiang Mai, he said.

The Peninsula Group is here to stay and will not expand globally like major hotel-management chains, which normally do not have stakes in the properties they manage.

During the next seven to 10 years, the group is expected to expand from nine hotels to 15, Mr Coughlan said.

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(c) 2003, Bangkok Post, Thailand. Distributed by Knight Ridder/Tribune Business News.