Hong Kong, August 3, 2000 � Following sustained improvement in the economic environment, The Hongkong and Shanghai Hotels, Limited (HSH) today announced a 43% increase in unaudited group operating profit of HK$369 million for the six months to June 30, 2000, compared to HK$258 million for the same period in 1999. Profit attributable to shareholders increased to HK$126 million compared to HK$33 million in 1999. 

Earnings per share increased to 11 cents. Despite a more positive outlook, the directors have elected to defer judgement on the payment of a dividend until they have reviewed the full year�s results. Consequently, they have resolved not to declare an interim dividend. 

Shareholders� funds at June 30, 2000 stood at HK$11.9 billion or HK$10.17 per share and net borrowings decreased to HK$6.0 billion. 

Commenting on the results for the half year, William Mocatta, deputy chairman, said, �The first six months of this year have tested our mettle as we implemented our announced strategy. Momentum has been building in our business, underscored by better market sentiment. As well as improved operations results � in marked contrast to those of last year � we have made steady progress on a number of fronts. 

�A rejuvenated company has attracted support from the financial markets, as witness the recent loan facility of HK$2.5 billion raised by HSH at favourable interest rates. In terms of expansion, we have topped out The Peninsula Chicago which is on a fast-track programme aimed at a mid 2001 opening. Our disposal of The Sutton in New York is in line with our objective of shedding non-core assets and focussing on our primary business.� 

Reviewing the group�s operations, Pierre Boppe, chief executive officer, said, �In March this year, we forecast that better times were in prospect, and we have not been disappointed. The group�s hotels in general have performed well, indeed have exceeded expectations. 

�The fortunes of the industry in Hong Kong have lifted with target visitor figures for the year likely to be met. That improvement is reflected in the performance of both The Peninsula and The Kowloon Hotel. For the six months ended June 30, 2000, The Peninsula�s average occupancy was 53% (46% in 1999) and average room rate was HK$2,885 (HK$2,790). The Kowloon Hotel recorded occupancy of 89% (82% in 1999) and a room rate of HK$499 (HK$464).� 

Of the group�s other hotels in Asia, The Peninsula Bangkok has turned in dramatically different occupancy figures, shooting to 80% for the first six months of 2000 compared to 20% in 1999. Yield per room peaked to US$63 in 2000, a substantial increase over the 1999 figure of US$26. A specific marketing strategy successfully employed to gain wide exposure of the hotel has propelled the property to positive operating cash flow; the strategy will remain in place throughout 2000. 

The Palace Hotel Beijing has held its own in a fiercely competitive market with improved occupancy and room rate levels, whilst those of The Peninsula Manila were slightly depressed. 

In the United States, The Peninsula New York is now making a material contribution to the company�s results with impressively better figures. The hotel�s occupancy and room rates for the six month period are 76% and US$499 respectively, compared to 52% and US$458 for 1999. The Peninsula Beverly Hills maintains a sterling performance with 87% occupancy (83%) and an average room rate of US$395 (US$391). Quail Lodge Resort, which began a phased renovation programme in May, saw occupancy increase to 61% (58%) and average room rate substantially improve to US$261 (US$219). 
 

�We have met the challenges of economic turmoil with solid strategies and are beginning to yield the results in our performance,� said Pierre Boppe. �Our intention is to continue on this path, focussing on core business in the deluxe hotel sector, leveraging brand equity, and pursuing a healthy fiscal policy.� 

Incorporated in 1866, The Hongkong and Shanghai Hotels, Limited, formerly The Hongkong Hotel Company, Limited, was one of the first stocks to be listed on the Hong Kong stock exchange. Its principal business comprises the ownership and management of prestigious hotel, commercial and residential properties in key destinations in Asia, Australia and the USA; the hotel management arm is The Peninsula Group.