The poor figures prompted analysts to predict that the strong growth the London hotel market has enjoyed over the past few years was beginning to slow.
One of Thistle's institutional shareholders said: "We are very disappointed with Thistle. It has been a lousy investment since it floated and we are not happy."
Industry sources suggest Thistle may now be a bid target or that rivals could look to buy a large stake in the group. Brierley Investments, the New Zealand-based investment group, and the Singapore government own about two-thirds of the company and are allowed to sell their shares any time from next month.
One leading analyst said yesterday: "Thistle was overhyped at flotation. The share price fall makes it more likely that rivals will look at Thistle and there will be some corporate activity."
Bruce Jones, analyst at the group's house broker, Merrill Lynch, said: "There is no doubt that the London hotel market will slow down by 1998 due to the cyclical economy and the strength of the pound. Occupancy rates are already showing signs of peaking."
He has downgraded Thistle's profit forecasts by pounds 10m to pounds 80m for the current year.
Thistle announced a 9 per cent rise in operating profits to pounds 55m for the six months to July but warned that operating profits for the financial year would only be "slightly above that achieved in the first half''.
Robert Peel, Thistle's chief executive, said: "I am obviously disappointed for our shareholders. We did not do as well as hoped. However our strategy has not changed."
Mr Peel denied that administration costs were getting out of control after they jumped 18 per cent to pounds 7.9m in the first half. He said most of the increase was due to one-off costs associated with the group's flotation last year and a pounds 300,000 increase in directors' pay. Thistle also launched a pounds 450,000 marketing campaign to attract customers from America after fears that the rising pound would hit custom.
However its initiatives were not enough to stop revenue from Japanese and European customers falling sharply due to sterling's strength.