Investment Column: Stakis benefits from US bookings

Hotel shares have had a pretty rough time of late. Hit by concerns over the impact of the strong pound on the level of overseas visitors, the sector has fallen sharply and last year's euphoria which spawned a long list of new issues, has evaporated.

Some of the new crop, including Jarvis Hotels and Thistle Hotels, are languishing below their issue price, while others, such as Millennium & Copthorne and Macdonald, have also been badly affected.

Given all this turbulence, Stakis, the Scottish hotels and casinos group, has held up quite well. Its third-quarter figures announced yesterday showed that, while occupancy rates fell slightly from 78.6 per cent to 77.3 per cent in the 13 weeks to 29 June, the average room rate jumped to pounds 53.21 from pounds 46.85. This boosted the net yield per room by almost 12 per cent to pounds 41.16.

The Metropole Hotels, which were bought from Lonrho last year for pounds 327m, continue to improve, with both occupancy and room rates showing healthy increases of 8.5 per cent and 12.2 per cent respectively. The figures have been boosted by the introduction of special corporate rates and weekend break programmes.

The only slight disappointment was in Stakis's casinos division, where the average spend per head fell, hit in part by an increase in lower spending customers.

Stakis shareholders who have stuck by the company since the dark days of the 1990s have been rewarded by a five-fold increase in the share price over the last five years.

Given these robust third-quarter figures, there seems no reason to sell out now. While the sector will remain troubled by currency concerns, the strength of the dollar should limit the damage.

Stakis says it is the American visitors that stay the longest and so spend the largest sums. European visitors are more of a worry, given the current weakness of continental currencies, though Stakis says it has noticed no downturn yet.

NatWest Securities is forecasting full-year profits of pounds 58.5m, putting the shares, up 3p at 107p, on a forward rating of 15, falling to 14. That suggests they are still worth holding.