Who says Regent is history?  

By Steve Shellum, Publisher/Editor,  HOTEL Asia Pacific   

The Asian-born chain suffered a big blow when it lost its world-famous Hong Kong flagship. But the brand’s new Asia Pacific boss, Paul Kirwin, has already scored a major coup in the region – and promises many more ahead

Just when you think Regent is a spent force in the luxury-hotel sector, it comes up fighting with a coup that signals to the industry: “We’re very much alive and kicking!”

Many in the industry believed the writing was on the wall when the Asian-born brand lost the world-renowned Regent Hong Kong to global giant Six Continents.

Overnight, the Regent flag was lowered from the magnificent property that had given birth to the brand in the late ‘70s and upon which it had built its reputation as one of the world’s most admired hotel companies.

US-based, privately-owned Carlson Hotels Worldwide – which also owns the Radisson and Country Inns & Suites brands – acquired the rights to the Regent name in 1997 from Canada’s Four Seasons, and quickly unveiled a strategy to embark on a “selective global growth programme”.

Its plan was to “enter new markets and offer expanded, worldwide presence in the luxury- hotel category”.

But growth has been slow, with most of the properties in its portfolio having been developed in the pre-Carlson days. 

At present, Regent hotels and resorts are located in Bangkok, Chiang Mai, Jakarta, Kuala Lumpur, Singapore, Taipei, Almaty (Kazak­h­stan), Beverly Hills and New York.

It debuted in Europe earlier this year with the Regent Schlosshotel, Berlin, and has a property on France’s Cote D’Azur under development, as well as two more in the US (Boston and Orlando).

But, with its swift exit from the crucial Hong Kong market where it was born, and the likely rebranding of its Chiang Mai property as a Four Seasons, you could be excused for thinking that the once-mighty Regent brand has lost its way a little in Asia Pacific.

Indeed, when a group of industry leaders at the recent Hotel Investment Conference Asia Pacific (HICAP) in Hong Kong were asked: “Which brand to you believe will have disappeared over the next five years?”, one hotel CEO answered, without hesitation: “Regent”.

Ouch!

But sitting in the audience and smiling to himself was Paul Kirwin, MD of the newly created Carlson Hotels Asia Pacific.

During a press conference a couple of hours later, he and his boss, Carlson Hotels Worldwide president Jay Witzel, announced an impressive new property that had many at the conference eating their words – the Regent Beijing at Junefield Plaza, near Tiananmen Square.

The 377-room property, scheduled to open in 2004, is the first major development to be announced by Carlson Hotels Asia Pacific, which has been set up as part of the company’s restructuring into three distinct geographical regions: the Americas, Asia Pacific and Europe.

The announcement of the Beijing property sent a clear message to the industry that the Regent brand is not only alive in Asia Pacific – but kicking.

With a whole roster of other brands to choose from, why did the owners, the Hong Kong-based Junefield group, go with Regent at a time when it appeared to many to be undergoing something of an identity crisis?

“Regent International Hotels is the perfect luxury brand to bring to this most prominent area of central Beijing,” says chairman Zhou Jian He.

“Choosing the right hotel company for this project was critical, and Regent brings the right level of prestige, personalised service and uncompromising commitment to quality.”  

So there you have it – as far as this particular owner is concerned, the 30-year-old brand can still deliver the goods in the luxury-hotel market.

The reorganisation of Carlson Hotels puts Asia Pacific, for the first time, on a par with the Americas and Europe in terms of importance and future development.

When asked what percentage of future growth will come from the region, Witzel answers: “If North America accounts for 33%, and Europe 33%, then Asia Pacific will also account for 33%.”

He pauses for a second, then corrects himself: “No, Asia Pacific will account for more than that, perhaps up to 35%.

New vision

“Although several of our brands have had operations in Asia Pacific for many years, we recognise the potential that can be achieved by developing a new structure and vision for the region.”

Expanding Regent and the company’s other brands in the region is now a key priority for the company.

“The restructure moves the organisation to operate as one company with complementary and well-defined brands,” says Kirwin.

“It represents an  evolution from the past structure where we operated many areas of our business independently within each brand.

“It will allow us to provide the most effective and efficient levels of support for our brands so we can focus on delivering world-class customer service.

“We will build upon our existing infrastructure of support systems to provide powerful resources to our hotels in the areas of business delivery, reservations, marketing, sales and operational support.”

An important element of the restructuring is to maintain a major regional-office presence in Sydney, Hong Kong and Tokyo.

Carlson plans to “aggressively pursue” developments across all its brands in North Asia, particularly in China, through strategic partnerships, and to increase the number of properties from the current 37 locations to 100 over the next five years.

Specific development plans for the region include adding Regent hotels in major gateways where it is absent, particularly Tokyo, Seoul, Shanghai, Sydney, Melbourne and Auckland.

And, of course, Hong Kong.

Returning to the city of its birth remains a top priority for the Regent brand, and Kirwin is in negotiations with a number of owners to re-establish the Regent brand there.

“There is huge brand equity in the Regent name in Hong Kong, and several developers have expressed an interest in being a part of its return to the city,” says Kirwin.

Kirwin also has his sights set on leisure destinations for Regent (and Radisson), including: Indonesia (Bali, Bintan Island and Lombok); Thailand (Chiang Mai and Phuket); Malaysia (Langkawi); and Vietnam (Ho Chi Minh City, Dalat, Ha Long Bay and Hoi An).

‘Asian-ness’

Although Regent was born in Asia and emphasises its “Asian-ness” as an integral aspect of its character and values, it is now very much a US company – the last of its head-office functions, including global marketing and PR, were moved from Hong Kong to Minneapolis two years ago.

Has it lost the edge compared with other Asian-based brands, including Shangri-La, Mandarin Oriental, Raffles International and the Peninsula Group, which remain truly Asian brands with global aspirations, rather than one of the multitude of US and Europe homogenised chains?

In short, can a brand that is based in mid-America, that is owned by a company that has only just decided to open up a regional HQ in Asia and is managed by American hoteliers, really justify clinging to its Asian heritage as a marketing advantage? Some cynics might argue that Regent has lost touch with its Asian roots and is now, in fact, just another US-based hotel company with ambitious aspirations in Asia.  

The Regent history is one still in the making. It’s kind of like an “Amer-Asian” returning from the US to rediscover her roots.

But, as many a returnee has found, things are never quite the same when they return.

Brierley group considers offer for Thistle Hotels

Thistle hotels yesterday joined the list of British hoteliers being stalked by would-be predators after BIL International, its majority shareholder, admitted it was considering making an offer.

BIL, a Singapore-based investment group, said its board was considering launching a bid "at a modest premium" to Thistle's share price as of Thursday's close of 100p. It is thought that BIL, whose president is the New Zealand entrepreneur Sir Ron Brierley, was forced by the Takeover Panel to issue a statement in response to a sharp rise in Thistle's share price. Thistle's stock climbed 7.5 per cent to 107.5p, valuing the group at just under £520m.

In response, Thistle said it had "not received any formal approach from BIL regarding a possible offer". Ian Burke, its chief executive, has come under fire for dithering about what to do with £600m he raised in April by selling 37 of its hotels but while retaining the management rights.

BIL, which floated Thistle in 1996 at 170p a share, said there could be "no assurance that any offer will be forthcoming". It has a 46 per cent stake in Thistle.

This is the second time in four months that Thistle has been the subject of takeover speculation. Last month, Orb Estates, a Jersey-based investment group that bought the 37 Thistle sites in March, decided against a bid for the London hotelier.

Peter Joseph, an analyst at KBC Peel Hunt, said: "The group has got itself in a pickle over its balance sheet but I can't understand why it's worth less than 150p to 175p per share."

US groups seen interested in Six Continent Hotels

(Reuters) - Two major U.S. lodging companies, Sheraton owner Starwood Hotels & Resorts Worldwide Inc. (nyse: HOT - news - people) and Strategic Hotel Capital, the largest private U.S. hotel owner, are interested in buying some or all of the lodging business of Britain's Six Continents Plc , industry sources said on Thursday.

Six Continents is planning to break itself up into a hotel business and a restaurant and pubs business, but British entrepreneur Hugh Osmond has said he may make a bid for the entire group.

Six Continents, the world's largest international hotel group, owns well-known lodging brands such as franchiser Holiday Inn and upscale groups InterContinental and Crowne Plaza, and the fate of the lodging group after a demerger has been a fertile source of speculation for the industry.

"If the company goes into play, we are naturally very sophisticated and obviously very interested," Laurence Geller, chief executive of Strategic, said in a telephone interview. His company has just closed $1.17 billion in new debt financing, he said.

"Our prime focus would be the real estate -- all of it," he said.

A source familiar with the situation also said that Starwood had opened preliminary talks on acquiring one or more of the hotel assets. A Starwood spokesman said the company does not comment on such issues as a matter of policy.

It was not clear if Starwood had spoken with Osmond or directly with Six Continents, which was formed after Britain's Bass group sold off its brewing operations.

Analysts believe that other major hotel companies might also show interest in the assets, if they become available. One analyst named Marriott International (nyse: MAR - news - people) and Hilton Group Plc as potential bidders. Hilton has dismissed the possibility, while Marriott was not immediately available for comment. (Additional reporting by Peter Henderson)

Reuters News Service

Franchisees of Six Continents Hotels Extremely Concerned About Rumored Hostile Takeover

/Business Wire/ - The IAHI, The Owners' Association of Six Continents Hotels, announces today their extreme concern regarding rumored hostile takeover bids for Six Continents, PLC.

According to Jay Fishman, Chairman, IAHI Board of Directors, "We believe this would be the absolute worst time for change of control with the company.

We are in the weakest business environment in the history of the modern hotel industry." He adds, "Franchisees have spent quality time with Richard North, Steve Porter and the leadership team at Six Continents Hotels and believe they have a strong vision for where they want to take the hotel group."

Another member of the IAHI Executive Committee, Roy Adilman, said "We've been down this road before. In 1987 when Donald Trump tried to take over the company it led to a massive restructuring of the company and lots of upheaval, which had a negative impact on franchise service levels. I believe that is when we started to have some of the system quality problems that we are just now, 15 years later, beginning to overcome."

Fishman further points out that owners' operations would be jeopardized by a break-up of the hotel group which would destroy the synergies of the Priority Club Rewards program, a common reservation system, the equity of the internet sites, preferred vendor relationships, strategic alliances and more.

Fishman further states that there was strong sentiment amongst the association's executive committee that many franchisees would seriously consider terminating their license agreements and leave the system in the event of a takeover and/or breakup of the company.

Fishman also says, "The IAHI supports Richard North and the proposed demerger of the hotels and restaurant groups."

War of words over Six Continents

Punch founder slates record of pubs to hotels group and threatens to launch hostile bid

Hugh Osmond, the leisure entrepreneur stalking Six Continents, yesterday revealed he would consider making a hostile takeover bid for the hotel and pub operator as he launched an outspoken attack on the group's management team.

Mr Osmond, who would use his AIM-listed cash shell Capital Management & Investment as a bid vehicle, said he would appeal direct to Six Continents' shareholders "if necessary".

In a statement that fleshed out Mr Osmond's rationale for tabling a possible bid for Six Continents, the former head of Punch Taverns criticised the leisure group's plans to press ahead with a scheme to spin off its pubs arm as not being in shareholders' best interests. A demerger would achieve "absolutely nothing", he said, adding: "If we make this bid, believe me, we will fundamentally improve this business."

CMI, who has hired Credit Suisse First Boston and Lehman Brothers as its financial advisers, said if successful it would break up the hotels division, which spans brands such as InterContinental and Holiday Inn. It plans to pursue a number of financial transactions to unlock cash from the group's fixed asset base worth some £7.6bn such as asset sales, sale-and-leasebacks and securitising the cash flow.

Mr Osmond said he had "substantive discussions" with a number of possible partners although he declined to give names. "There are operators who can run this business substantially better by breaking it into separate parts. Whether we deal with them as buyers, partners or managers we will see."

He attacked the Six Continents board, headed by Sir Ian Prosser, for delivering "unacceptably low returns". He criticised it for selling businesses such as Gala, the gaming group, too cheaply, for destroying shareholder value through its £1.8bn acquisition of InterContinental, and for investing a net £2.8bn in its business since 1998 only to see operating profits fall. "Since 1989, not to have achieved any growth in the share price is quite an achievement," he added.

Responding to CMI's accusations, Six Continents said the shell company had "chosen to ignore the fact that in terms of total shareholder return [we have] outperformed the FTSE 100 over the last one, two, three, five and 10 years". In a statement, Six Continents attacked CMI's approach as "fundamentally flawed", highlighting its lack of experience in the hotels sector.

Richard North, Six Continents' finance director who will step up to become chief executive of the hotels arm, said: "The key thing is at the end of the day shareholders have seen value through the performance of the share price and the dividend." He added: "We have absolutely thrashed [the US hotel companies] in terms of total shareholder return over the same period."

Shares in Six Continents soared 25.5p to 615.5p on hopes that CMI's interest could spark a bidding frenzy akin to that under way for Safeway, the supermarket chain. Analysts have been split about possible valuations for the leisure group, with some suggesting Mr Osmond could bid 650p a share and others arguing that the group is worth nearer 850p a share. At the higher end, the group's equity would be worth £7.4bn. It also has £2.5bn of debt.

Mr Osmond, who first approached Six Continents in October about a possible deal involving its retail estate, remained tight-lipped about how he intended to structure a deal. However, he admitted: "We are using CMI not least because of its ability to issue stock." He added: "It is very much our intention that shareholders participate fully in the upside of this business."

Despite the lack of detail about an offer, several large shareholders have signalled their inclination to back Mr Osmond. "We would be very interested in listening to Mr Osmond. There is clearly a feeling among shareholders that something needs to happen with this business; this has acted as the catalyst," Helen Driver, at Standard Life Investments, one of Six Continents' largest 10 investors, said.

Defending his decision not to outline his funding plans, Mr Osmond referred to the £2.75bn battle he fought against Whitbread to gain control of the former Allied Domecq pub estate. "I don't want that track record to be blemished by a frivolous bid," he said, adding: "I'm not big on making promises and not delivering on them."

In an attempt to shoot down Mr Osmond's tentative plans, Six Continents revealed it had rejected an approach from the entrepreneur's private equity group, Sun Capital Partners, last year. The proposal, which involved a sale-and-leaseback deal for the group's 2,200 pubs, was rejected after Six Continents' advisers concluded "material value would have been transferred from [our] shareholders to Sun Capital". One element of that proposal would have seen Mr Osmond reverse Spirit, the managed pubs company spun out of Punch Taverns, into the Six Continents retail estate. Mr Osmond is a shareholder in both Punch and Spirit, and sits on Spirit's board.

Rebutting suggestions from Mr Osmond that Six Continents had been "extremely resistant to approaches", Mr North said he would talk to "anybody who comes to us with a proposal that properly reflects value and looks deliverable".

Commenting on his plans, Mr Osmond said: "There will be a hell of a lot more value than this management has generated over the last 10 years, or is likely to generate over the next 10 years, or ever." He added: "I don't recall Mr North having a lot of experience in hotels."

Any takeover offer from CMI would be conditional on shareholders rejecting the proposed demerger, it said. CMI is under pressure to table a bid quickly, ahead of the Six Continents' shareholder meeting scheduled for 12 March to approve the separation.

To get around the fact that most institutional investors are unable to hold AIM-listed paper, CMI said it intended to seek a full stock market listing after the completion of any offer.

Mr Osmond denied that he was seeking to flush out possible partners by issuing statements about his intention to launch a bid before revealing whether he could get financial backing for an offer.

Charge sheet against Sir Ian Prosser, according to Hugh Osmond

* Attacked board for delivering "unacceptably low returns over recent years";

* Blamed board for selling assets, such as its Gala gaming business, too cheaply. Gala, which originally fetched £236m, was recently sold on for £1.24bn;

* Claimed board had invested a net £2.8bn in Six Continents since 1998 to see operating profits fall by £217m;

* Accused board of shelling out £1.8bn on InterContinental, yet letting the upmarket hotels group destroy shareholder value in every year since its acquisition;

* Blamed board's decision to hike net debt and use disposal proceeds to maintain dividends ­ only to slash payout by 38 per cent post-demerger;

* Attacked fall in share price that has seen stock slide to the level of mid  

Arabian Travel Market (ATM) on course for yet another record breaking year

Reed Travel Exhibitions (RTE), which organises Arabian Travel Market, the Middle East's premier travel and tourism show, says this year's event is "well on track to be the biggest show to date."

"It is safe to say that, to date, the uncertainty in the region has not affected Arabian Travel Market," said Matt Thompson, Group Exhibition Director, Overseas Events, RTE.

RTE says that with three months to go before the 2003 Arabian Travel Market, which will be held at the Airport Expo, Dubai, United Arab Emirates from May 6-9, the show is already already 5% square metres larger than last year's record-breaking event.

"Much of this space growth is taken by tourism boards which are increasing the size of their stands to meet demand from the private sector," explained Thompson. "Moreover, we are welcoming a number of fresh exhibitors to  the show with new national pavilions from Saudi Arabia and Canada and the return of a Ugandan national pavilion after a break of seven years."

Visitor expectations also remain unhindered by regional uncertainties, according to Thompson.

"We recently started our visitor promotional campaign and the early indication is that our pre-registration figures are on track to match those of last year," he said.

Thompson stressed that Arabian Travel Market, now in its 10th year, was proceeding very much as "business as usual.

"Everything is going to plan," he said. "Of course, we are monitoring events in the region very closely, and, like everyone, we sincerely hope that tensions do not escalate. However, if they do, I believe that we will have some fallout from the show, which is understandable. But I do not believe that it will have a truly detrimental effect on the event.

"At the moment Arabian Travel Market is in a very healthy position and booking trends over the last few weeks have been very positive."

To date, exhibitors from 47 countries have registered for Arabian Travel Market 2003, including destinations, tour operators, hotel groups, national tourist boards, travel technology providers, airlines, industry associations, yachting and cruise operators and tourism consultants.  

Best Western to Add 400 New Hotels in 2003

/PRNewswire/ -- Best Western expects to hold its position as THE WORLD'S LARGEST HOTEL CHAIN(R) with a robust global expansion plan in 2003. Over the past few years, Best Western's development team will continue its growth strategy by targeting key international and domestic gateways as well as geographic locations where the brand is under represented. The addition of a new development focused website will also aid efforts.

Coming off of a successful year despite difficult economic conditions, the brand added 282 hotels to its global portfolio in 2002. In 2003, the company plans to add 400 new hotels worldwide.

In North America, Best Western anticipates adding another 155 properties. That number breaks down to approximately 35 percent new construction and the remaining 65 percent focusing on conversions.

Hotels expected to become active Best Western properties in 2003 include: Phoenix West Inn in Phoenix, Ariz., 126 rooms; Marina Inn in Dana Point, Calif., 137 rooms; Oakland Park Inn in Ft. Lauderdale, Fla., 106 rooms; Robert Treat Hotel, Newark, NJ, 169 rooms; the Albany hotel in Albany, NY, 132 rooms; Country Squire Resort in Gananoque, Ontario, Canada, 68 rooms and the Clermont hotel in Cincinnati, Ohio with 128 rooms.

"Best Western's goal is not to over saturate crowded markets with excessive new build projects," said Mark Williams, Best Western's vice president of North American Development. "Instead, we will develop new hotels where it is economically sound to do so."

"Our growth strategy has been converting independent hotels and regional chains that desire a national brand affiliation," he added. "Best Western offers tremendous value in terms of services versus costs which has made those efforts that much easier."

Internationally, the brand just welcomed its first hotel in Bulgaria in January. The Best Western City Hotel is located in the country's capital city Sofia, in the heart of the business district. The brand new, four-star property features 36 guest rooms, onsite restaurant and meeting facilities.

Additions such as these will be targeted in 2003 for a planned total of 245 new hotels. Heavy emphasis will once again be placed on Asia and South America according to Suzi MacDonald Yoder, Best Western's vice president of International Operations.

"We will continue our aggressive plans for development in China and hope to add at least eight new properties there this year," said Yoder. "Specifically, we're targeting cities such as Harbin, Guangzhou, Shenyang, Beijing and Shenzhen."

A total of 20 new hotels are slated for Asia. In addition to Asia, Best Western is committing significant resources in South America. Uncertain political and economic conditions in the region forced a more conservative approach for the area in 2002. However, company officials feel confident they can add at least 24 branded properties on the continent this year with a heavy focus on Brazil.

In other regions, Best Western expects to add 25 hotels in Australia bolstered by recent personnel additions to the country's business development team. Other significant expansion is expected in Great Britain with the addition of 18 hotels in 2003.

Development efforts go online

To augment development efforts, Best Western's team added a new section to the global website at www.bestwestern.com/memdev . The site highlights advantages to becoming a Best Western, benefits of membership, associated fees, hotel design prototypes for potential developers, target market breakdowns and regional contact information.

Best Western International is THE WORLD'S LARGEST HOTEL CHAIN(R) with more than 4,000 hotels in 80 countries and territories. It is a membership association of independently owned and operated hotels that provides marketing, reservations and operational support to its member hotels.

For more information about Best Western, visit the Best Western Newsroom at www.bestwestern.com/newsroom  .

Source: Best Western

Half of UK cities saw January revPAR fall

e-Tid.com  -  Preliminary January data from Deloitte & Touche’s HotelBenchmark report show average revenue per available room (revPAR) declined at just under 50% of 19 UK cities surveyed.

Brighton and Aberdeen were the worst affected during the month. Brighton recorded revPAR of £32, down 26% from the same month of 2002, which had been boosted by two major pharmaceutical conferences in the city.

Aberdeen hotels, meanwhile, saw occupancy slump 14.9% year-on-year to 51.8%, while average room rates remained static at £50, which resulted in revPAR down £4 from January 2002. Deloitte said uncertainty surrounding the situation in Middle East was impacting hotel demand from the oil and gas sector in Aberdeen.

Overall revPAR at regional hotels fell 2.5% to £33. While England (excluding London) and Scotland saw performance worsen, Wales reported growth.

Wales continued to be bolstered by Cardiff, which has benefited from increased leisure traffic driven by events at the Millennium Stadium and corporate demand from the Cardiff International Arena. Of the 19 cities surveyed, Cardiff reported the strongest January revPAR growth of 11.4% to £29.

Hotel Expense Creep

The current recession is affecting hotels in several ways that differ from how hotels were affected by recessions in the past. While much has been written about the terrible pain and suffering that has occurred in the hotel industry from the ‘one-two punch’ of an economic downturn and unprecedented catastrophic events in 2001, truthfully, hotels have barely a scratch on them as we near the tenth round of 2002. By contrast, the hotel industry was down for a ‘nine count’ from billions of dollars of losses during the 1990-1991 recession. 

Sure, some hotel employees lost their jobs, a couple of small hotel companies needed Chapter 11 protection, and revenues declined sharply in most gateway hotel markets, but hotel profit margins felt only glancing blows. The Business 101 explanation – hotel expenses also declined, which moderated the effects on net income and cash flow of revenue losses. 

In response to recent analyst inquiries, hotel industry executives claim that between 33 to 75 percent of the expense reductions achieved during the past twelve months can be maintained as the industry recovers. Is it possible to control expense creep as the hotel markets recover? If so, the climate for hotel investing will be quite pleasant during the next few years if occupancy and average daily rate move steadily upward, as expected. 

What Happened During 2001?

Each year, the Hospitality Research Group (HRG) of PKF Consulting processes financial statements for approximately 4,000 hotels for its Trends database. The top-line and bottom-line results for 2001 appear disastrous when taken at face value.

• Hotel revenues down 9.9 percent
• Profits down 19.4 percent
• Profit margins down 10.5 percent

As Yogi Berra once proclaimed about baseball “ Ninety percent of the game is half mental.” Hence, another look at these data may provide a different perspective. On the brighter side of the 2001 hotel financial performance report card.

• Hotel operating expenses down 5.2 percent
• Labor costs, the largest expense for hotels, down 6.6 percent
• Interest expenses down 9.0 percent

Although hotel profits declined by nearly 20 percent, profits and profit margins were at historic industry highs going into 2001. Profit margins fell from 32.8 percent to 29.4 percent. The decline in interest expense because of refinancing at lower rates helped cushion the blow of revenue declines on hotel before-tax cash flow. 

As a frame of reference, the historical average profit margin during the 40-year period 1960 through 2000 equals 25.3 percent. As another frame of reference, Smith Travel Research estimates that industry profits reached $16.7 billion in 2001. During 1986, 1987, 1988, 1989, 1990, and 1991 the hotel industry lost money.

What is the History of Expense Creep Following Recession?

One way to examine the question of whether or not expense creep will occur along with a revenue recovery is to look at what happened after previous recessions. The exhibit accompanying this article shows how revenues, expenses, and operating profits changed during the three years following the last five recessions. The data indicate that expense growth exceeded revenue growth during some recoveries, and after others almost kept pace. If history is any indicator of the future, hotel management will begin spending coincidently with increasing revenue flows. 

Expense Creep Makes Sense on a Conceptual Level

Hotels, the operating businesses, derive their revenue from an asset base that consists of physical assets, financial capital, human capital, and intangible assets. These assets need servicing to be productive, hence operating expenses are always incurred as revenues grow. Management will have some limited ability to hold the line on expenses, but similar to a tired football team defense in the fourth quarter, management will have no choice but cave under the pressure of competitive forces. The correlation between the same-year revenue growth rate and labor expense growth rate during the past 20 years, for example, equals an astounding 75 percent.

• As defined by the National Bureau of Economic Research
  Source: Hospitality Research Group of PKF Consulting

The best hope management has to maintain expenses at any where near 2002 levels is to institute measures that improve the productivity of labor. Ultimately, lowering expenses in some meaningful way involves substituting cheap capital (i.e., technology) for more expensive labor. Unless you have been with Tom Hanks on a deserted island for the past half-dozen years, you know that this process has been occurring since the mid-1990s. With over 40 percent of hotel expenses devoted to labor, management has the incentive and now the opportunity to seriously evaluate technological solutions to service needs before hiring more people.

John B. (Jack) Corgel, Ph.D. is the Managing Director of Applied Research for the Hospitality Research Group of PKF Consulting.  He works in the firm’s Atlanta office.  This article was originally written for Real Estate Forum magazine.  

Bring Back the Newsletter!!!  We always need to share information.

Written By:  Leora Halpern Lanz & Barbara Wiener  HVS International

Sometimes, old habits shouldn’t die.  Nor should they fade away.  However, over the last few years, print communications has naturally evolved into HTML.  Unfortunately, in many cases due to declining revenues, marketing budgets have been slashed or even evaporated.  This has resulted in the disappearance of a critically important though underestimated public relations tool — the newsletter.

When crafted properly, newsletters are a cost-effective way to deliver the right messages to the right audiences.  Newsletters can help a firm establish both credibility and authority.  They can enhance an organization’s image.  They can build customer, employee and team loyalty, simply by keeping audiences better informed about an establishment.  A key sales and marketing tool, newsletters can help introduce or sell a product or service.  And, by creating good will and keeping one’s name out in front of customers, they can also potentially increase business.

Newsletters can work wonders

Smart hotels and their parent companies recognize the value of internal communications and the necessity of networking with their various publics.  Consider these points and decide if now is the time for your organization to benefit from producing a newsletter.

·     Do you share all the necessary information with your various publics?

·     Do you regularly communicate with management and owners in a tangible format?  

·     Do you regularly communicate with a vehicle that can maintain some shelf life so that everyone can refer to it when necessary?

·     Despite what we might assume, not everyone has access to a computer.  For example, on property, do all line and management staff have personal e-mail addresses and access to memos on the computer?  (Probably not.)

·     Are all staff English speakers?  (Probably not.)

Creating more attention

Newsletters allow us to translate important messages so that we can clearly talk to our employees, owners, and guests.  In addition, newsletter articles can frequently be transformed into media releases and thus earn more publicity and attention for items of human interest

Whether electronic or print, newsletters can encourage readership participation. For example, they can provide the opportunity to recommend useful Internet sites or books and articles of interest.

Tricks of the trade

Newsletters can be very simple and brief — but they must be carefully and methodically assembled.  They, in a word, have to be “good” in order to be effective.  One cannot just place words on a sheet of paper.  The contents must be focused, powerful, intriguing and informative, and the layout needs to be clean and easy to navigate.  Remember, the contents must be useful, readable, user friendly, and—to maintain readership interest —interactive. 

One of the key things to remember when drafting your newsletter is to strive for tight copy. People often claim that they have no time to read lengthy articles, and so they tend only to peruse the piece rather than read it in its entirety. Therefore, by using effective headlines, photo captions and blurbs, your message can come through quickly and clearly. 

A regular newsletter not only helps a company to continually refine its marketing objectives and messages; it can actually help encourage the team to feel connected by “pulling” a company together and bringing employees that much closer to the firm’s decision makers.

If you wish to revive your public relations efforts through the use of newsletters, or for us to review and enhance your existing internal communications pieces, do let us know.

Leora Halpern Lanz
HVS International
372 Willis Avenue 
Mineola, NY 11501
516-248-8828, ext. 278
516-742-3059 Fax  

ICCA congress to feature Asian experts

TTG Asia  -  Delegates at the ICCA (International Congress and Convention Association) annual congress in Busan, Korea  later this year can expect a lineup of seminars and speakers with a distinctly Asian touch.

Held from October 26-29, the congress will incorporate two major themes.

ICCA CEO, Mr Martin Sirk, said: “One of the focuses will be on attracting high-level Asian experts to be speakers. This region tends to focus on getting people from Europe, but there is a lot of untapped expertise in Asia, which are never considered. I would like to invite them to come and share their experience.

“Secondly, we will have a series tentatively called Critical Skills which will be at the ‘how-to’ level. The idea is to provide something for our members at CEO level and those who are just starting out.”

Mr Sirk said it was also a chance to focus on the Asian membership.

He said: “This region has had the fastest growth for the past few years but it has a mixture of maturity in the cities. We have Hong Kong, Singapore and Bangkok which are very strong in MICE (meetings, incentives, conventions and exhibitions) and secondary cities, such as Malacca, which are building a convention centre but does not really have the business to justify it.

“They have to hope that there is equal growth in demand which will depend greatly on the regional markets. But I think once Asia gets past this economic downturn it will be poised for growth. The main advantage is, unlike many cities in Europe, what is here is state of the art.”  

Australians holidaying at home in uncertain times

Growth figures released today by Australia’s leading online accommodation company, Wotif.com, suggest independent Australian travellers are looking to holiday at home as the likelihood of conflict looms in the Middle East.

Wotif.com, a website offering Australians last-minute accommodation services throughout 20 countries worldwide, suggests it is witnessing the greatest swing towards domestic holiday bookings in its three year history.

While sales to overseas destinations including New Zealand and Singapore have posted sustained growth, it is Australia’s major tourism regions that have benefited from the trend towards Australian travellers holidaying at home. Sales in Wotif.com’s top five leisure destinations - Hunter Valley, Sunshine Coast, Gold Coast, Yarra Valley, and South Coast NSW – reported a minimum 40 per cent increase in the past month, a period when local leisure bookings traditionally slow down and international bookings pick up.

According to Wotif.com CEO, Graeme Wood, although customers are not openly fearful of overseas travel, they are increasingly opting for the security of holidaying on home soil.

“Renewed Australian interest in Bali attests to the fact that Australian travellers are increasingly resilient in the face of turmoil, but at the same time they aren’t willing to take chances for chances’ sake.”

“We have seen much of our outbound business redirected into Australia. Aussies are rediscovering Australia as a secure and convenient alternative to overseas travel, and providing the industry with a much-needed boost.”

Although the duration of the average holiday has decreased over the last six months, Wood points out an increase in the frequency of domestic travel.

“More people are holidaying locally more often, with customers replacing long-haul trips with two and three day getaways locally and interstate,” says Wood.

“Travel plans that were once made months ahead are being made a matter of weeks or even days from departure, a trend that lends itself to the short-term booking service Wotif.com provides.”

Wood believes Australian suppliers’ ability to withstand this period of unease is testament to the strength of Australian product on offer.

“Our hotels and resorts have responded to the challenge, providing travellers with a wide-range of affordable rates and attractive holiday options on our own shores.”

Wotif.com sales in top five leisure regions (Dec 2002 – Jan 2003):

Hunter Valley up 45%

Gold Coast up 47%

Sunshine Coast up 67%

NSW South Coast up 32%

Yarra Valley up 44%

Wotif.com sales in top five leisure regions (Jan 2002 – Jan 2003):

Hunter Valley up 69%

Gold Coast up 57%

Sunshine Coast up 77%

NSW South Coast up 86%

Yarra Valley up 91%

Visit the Website:   Wotif.com :  http://www.wotif.com