Sars snaffles Raffles' profits

Raffles is a Singapore landmark

The owners of Raffles, Singapore's iconic luxury hotel, have blamed the Sars virus and the war in Iraq for a 95% collapse in profits.

Raffles Holdings made just 250,000 Singapore dollars (£89,000; $141,000) in the first three months of this year, down from 4.3m a year earlier.

The group's focus on Asian markets has left it vulnerable to the effects of Sars, which has infected about 3,500 people so far, and which is having a catastrophic effect on tourism.

The Singapore Government says Sars reduced tourist arrivals by 15% in March, and 61% in the first half of April, causing average hotel occupancy rates to fall to 20-30%.

Worse to come

Despite the overwhelming fame of the landmark Raffles Hotel, Raffles Holdings is not entirely reliant on Singapore.

Two years ago, the group bought a medium-sized international hotel chain from failed Swiss carrier Swissair.

This gives it 10 hotels in Asia, 14 in Europe and seven in the Americas.

But it nonetheless warned that worse results could be still to come this year.

Singapore has been one of the territories worst affected by the Sars outbreak: it has so far suffered 13 deaths as a result of the disease, behind only China and Hong Kong.

The government has taken aggressive steps to contain the virus, quarantining hundreds of residents, temporarily closing all schools and screening travellers at air and sea ports.

On Thursday, the territory cut its economic growth forecast for 2003 to between 0.5% and 2.5%.

It also announced a 230 million Singapore dollar (US$130 million) relief package to help the economy weather the outbreak of the Sars.

"Sars will significantly impact our economy," said a joint statement from the ministries of finance, and trade and industry.