As the tourism industry made a steady recovery from the aftermath of the December 2004 tsunami, hotels last year performed well. However, the sector's total shareholder return (TSR) was comparatively low at 15.1%, below the 20.2% average for all the listed companies on the Stock Exchange of Thailand.

Shareholders' returns on hotel operating firms over a five-year period were also not as exciting as for stocks of listed companies in other industries.

The sector's average TSR over the past five years was 22.8%, ranked 19th of all 27 sectors in the SET, while the five-year TSR of the market-leading health-care services sector was 75%.

In terms of three-year TSR, the hotel sector's average was 12.6%, and for a 10-year period it was 10.9%.

In a relatively small sector, with total market capitalisation of 33.24 billion baht, the company offering the highest TSR last year, at 66.4%, was Central Plaza (Centel). The second-best performer was Royal Orchid (ROH) at 21.8%, replacing Dusit Thani (DTC), which last year yielded 8.6% TSR.

Centel also commands the largest market capitalisation in the sector at 5.31 billion baht, after another leading player in the hotel industry, Minor International Plc (MINT), with capitalisation of 17.22 billion baht, moved to the food and beverage sector last year.

The lowest TSR last year, at -13.8%, came from Grande Asset Development Steeb: Dividends (GRAND). With a good at Centel policy to pay a dividend of at least 50% of net profit after tax, it was listed in early 2004.

For Centel, the company offered threeyear TSR at 42.5% and five-year TSR at 54.5%, the highest among all companies in the hotel sector in both TSR categories,with the dividend payment policy of at least 60% of net profit after tax.

Gerd Steeb, president of Central Hotels & Resorts, which is part of Centel, said significant factors behind his company's high TSR might be high dividend payments, coupled with the fact that the price of Centel shares had risen significantly over the past few years, from 10 baht to more than 30 baht lately.

Nevertheless, the company's revenue rise was also driven significantly by its food businesses, which contributed 60% of the company's total revenue, he said. For three-year TSR, the second-best performer was Rajdamri Hotel with 15.7%, while the poorest performer was Pacific Asset with 0.4%.

As for five-year TSR, the second-best performer was Mandarin Hotel at 44.7%, and the poorest performer remained Pacific Assets at -3.6%.

According to an analyst at Kim Eng Securities, the average TSR of listed hotel companies was comparatively lower than for other sectors because share prices did not fluctuate too much. Short-term investors are not interested in hotel stocks, and most shareholders in the industry are long-term investors.

Amid rising fuel prices, most investors thought stocks in the energy sector would yield higher gains and dividends. At the same time, they viewed hotel stocks as being too sensitive to fuel-price rise. As a result, most investors chased after energy stocks while trying to avoid investing in the sectors that could bear the negative effect of fuel-price increases.

Chanin Donavanik, a director of Dusit Thani Plc, said hotel stocks were now mostly in the hands of families that run the hotel operating companies themselves. Since hotel businesses were doing well and yielding acceptably high dividends, most shareholders did not want to sell their stocks. If any of the hotel stocks were offered for sale in the SET, they would be quickly scooped up by industry insiders, he said.

Mr Chanin, also chairman of the Thai Hotels Association (THA), said Thai tourism had gone through rough times over the past four years, following the outbreak of Sars and avian flu, the Bali bombing and the tsunami.

But the industry bounced back extremely quickly, which showed it was more resilient to negative factors, he added.

With lingering political uncertainty, Mr Chanin said, he still believed Thai hotels and travel services would enjoy a bright prospect due to the expansion of low-cost airline services, convention and trade exhibition facilities, and the opening of the new Suvarnabhumi Airport that would bring many more travellers into Thailand.