HONG KONG (Bloomberg) ? Mandarin Oriental International Ltd., which manages luxury hotels in Asia, Europe and the Americas, said first-half profit fell 12 percent on lost revenue from its Hong Kong flagship, which was closed for renovations.

Net income for the six months ended June 30 fell to $48.7 million, or 5 cents a share, from $55.3 million, or 6 cents, a year earlier, the Hong Kong-based company said in an e-mailed statement today.

Sales rose two percent to $398.4 million. Without one-time gains, profit fell 29 percent to $13.7 million.

Mandarin, a unit of Bermuda-registered Jardine Matheson Holdings Ltd., which also holds the management contract for Bermudas Elbow Beach Hotel, closed its flagship Hong Kong hotel in December for a $140 million renovation.

Mandarin, which drew almost half its profit from Hong Kong and Macau in 2005, announced management contracts in Barcelona, Dallas and China?s southern province of Hainan during the half as part of efforts to reduce that dependence.

?The decline is entirely attributable to the renovation,? finance director John Witt said in a phone interview. ?Rates in most markets have strengthened and there is more occupancy in London and Singapore.?

The flagship Mandarin Oriental Hotel in Hong Kong will reopen in late September rather than late August as previously scheduled because of an expanded renovation, Witt said. The cost remains unchanged, he said.

The hotel will reopen with 200 rooms, gradually building up the full 503 by year?s end, Witt said. Occupancy levels and rates at the chain?s two other Hong Kong hotels and its property in Macau have increased, he said.

?While revenues in the second half will continue to be affected by the Hong Kong renovation, market conditions in key locations are expected to remain strong for the remainder of the year,? company chairman Simon Keswick said in the statement.

Mandarin Oriental expects to manage 7,800 rooms in 25 hotels by the end of 2006 and 10,000 rooms in two to three years? time. It will open the 99-room Barcelona hotel in September and has more new hotels planned, Witt said.