Deutsche Bank downgraded Shangri-La's (0069.HK) rating from buy to sell, lowering the target price from HK$20.00 to HK$13.00.

Earlier, Deutsche Bank lowered the company's profit forecast for the 12-13 fiscal year by 31%-45%, reflecting a reduction in the revenue forecast for each rentable room because it is expected that the company will cut its travel budget next year.

Deutsche Bank said that although it is still optimistic about Shangri-La's long-term prospects, it is worried about the advent of a cycle of decline. The bank lowered the forecast value of Shangri-La's revenue per rentable room for fiscal year 12 from a 10% year-on-year increase to a 10% year-on-year decline.

Shangri-La dropped 4.8% yesterday to close at HK$14.74.