Shangri-La Asia chief executive Giovanni Angelini said the discussions involve a 5-star hotel and a 4-star business hotel operating under the group's Traders brand. ``We are only talking about the hotel part of the development, and we won't be managing the casinos,'' he said, adding ``we are not discussing any investments by Shangri-La, only management contracts.''

Angelini said the discussions with Las Vegas Sands are on an ``all or nothing'' basis, meaning it will either manage two hotels or none at all. The group also confirmed plans to open 33 more hotels in the region by 2008 on top of the 45 it now owns or operates.

The company's first-half net profits climbed 25 percent from last year's level to US$60.6 million (HK$472.68 million), helped by a rise in revenue per available room, or room yield, of 16 percent to US$80. Both room rates and occupancy levels rose across the region, led by Hong Kong, where average room rates surged 20 percent to US$241, with average occupancy increasing to 74 percent from 66 percent a year ago. The group reported a 14 percent rise in half year turnover to US$388.7 million.

Angelini said he expects room yields will rise 18 percent for the year as a whole, with the two Hong Kong properties accounting for much of the gain. Average room rates at the Island Shangri-La hotel stand at US$295, close to 1997's high of US$300.

Shangri-La's prospective partner, Las Vegas Sands, has said it will invest US$2 billion to build a 3,000-room hotel-casino, the Venetian Macau, to open around June 2007. Las Vegas Sands said it hopes to bring in other investors to open six more hotel complexes in its area. The Shangri-La talks are on one of those projects.

Las Vegas Sands said it is also talking with the Four Seasons hotel chain about managing a 400-room hotel that will also feature serviced apartments. And it is talking with Starwood Hotels and Resorts about managing another complex. mark.lee@singtaonewscorp.com

zach.coleman@singtaonewscorp.com