Raffles President &  CEO Dick Helfer quits - Jennie Chua to head group

TravelWeeklyEast.com  -  After 17 years with the Raffles group, president and CEO of Raffles Holdings will leave the Singapore-based hotel company on April 10.

Chua, who is attending ITB Berlin, declined comment on her new role for now. The only comment she was heard to make, when someone congratulated her at a Raffles cocktail party at Swissotel Berlin Saturday night, was, “It is only a change in title.”

Six Continents awaits crucial demerger vote

The Scotsman  -  DIRECTORS of hotels and pubs giant Six Continents are expected to wait until a final count of postal votes from major shareholders later today before deciding whether to press on with Wednesday’s crucial meeting on demerger proposals.

Their decision will be taken in the light of increasing speculation that the private equity firm CVC Capital is preparing to mount a £6 billion "friendly" bid for the company - but only if directors hold back on plans to split the business into separate hotel and pub companies.

Already, entrepreneur Hugh Osmond has said that he will withdraw his £5.7 billion offer if the demerger goes ahead.

A spokesman for Six Continents insisted yesterday that the group is receiving overwhelming backing for its proposals and that the meeting in London will go ahead as planned.

But the directors need the support of 75 per cent of voting shareholders and are aware that the Osmond team is said to speak for 15 to 20 per cent.

Advisers are concerned others may be tempted to vote for a postponement in the light of the interest from the CVC Capital consortium, advised by JP Morgan, and is expected to include heavyweight international hotel groups Marriott and Starwood as well the Texas Pacific Group.

"If they feel that Osmond stands a chance of carrying the day with his own vote for a postponement, they could well announce on Tuesday that the meeting is being adjourned," a close observer said yesterday.

"By then, they will have a better feel for the way things are going after checking the results of the postal vote, which must be in the night before."

A poll of leading institutions last week suggested that three out of the group’s top ten shareholders were in favour of postponing the demerger meeting for up to 60 days, although it is questionable whether they would publicly vote against the board.

Six Continents finance director Richard North, who is due to take control of the hotels division, conceded at the weekend that the vote could be "finely balanced", but maintained that shareholders could do better from separate disposals of its two operating divisions rather than accepting a takeover of the whole business.

His view is echoed by fellow director Tim Clarke, who is due to take over the running of the managed pubs operation and has plans for large scale refinancing to return cash to shareholders.

Osmond, bidding through his AIM quoted Capital Management & Investment company, has his own plans to return cash to Six Continents shareholders by auctioning the group’s InterContinental hotels and securitising its Holiday Inn estate.

But some institutional shareholders have raised complaints about the relatively low level of cash - £1.4 billion through the actual bid terms - and the level of personal financial incentives on offer to the directors.

It is understood that Osmond could counter both criticisms through a new, improved offer - but only if Wednesday’s meeting is postponed.

CVC prepares £6bn bid for Six Continents

The Telegraph  -  CVC Capital Partners, the leading private equity firm, is close to putting together a consortium to make a £6bn friendly cash bid for Six Continents, the hotels and pubs group.

It is on the verge of signing a deal that would create a bidding consortium with Texas Pacific Group (TPG), one of the biggest private equity groups in the world, and two international hotel groups, Marriott and Starwood. The group is being advised by JP Morgan, the investment bank.

However, a businessman linked to one of the groups said the consortium agreement had not yet been signed. He wants 6C to delay its shareholder vote, due on Wednesday, on the break-up of 6C, for fear that this would stymie the consortium offer.

"It must be in shareholders' interest to allow us time to put together this proposal," he said.

6C's directors were adamant yesterday that they would not delay the vote. They insist they will realise far more for their shareholders if they auction the separate pubs and hotels businesses when they are demerged.

The chief executive designate of 6C's hotels business, Richard North, said that the group would not rebuff any credible bidders. "We will give serious consideration to any proposal that might be attractive to shareholders and has a reasonable chance of success," he said.

Over the past fortnight, 6C has met with David Bonderman of TPG and with Arne Sorenson, Marriott's chief financial officer. These discussions focused on their interest in buying 6C's hotel interests, but not the whole company.

The vote on the demerger plans is expected to be extremely close. A minority of shareholders want it delayed to give them more time to consider the existing hostile bid from Hugh Osmond's Capital Management and Investment. Osmond has threatened to withdraw his offer if the demerger gets the go-ahead.

He has made stinging attacks on Six Continents management, led by Sir Ian Prosser, the chairman, whom he accuses of destroying shareholder value.

A number of 6C's leading shareholders are also critical of the company's performance. "I have rarely encountered such deep shareholder mistrust of a board," one of its advisers admitted.

A majority of shareholders appear to want the demerger to go through. "We think it will create value for us," said one. "We originally pushed for it, so we think it would be wrong to call it off."

Osmond wants to sell off Six Continents' extensive property portfolio to real estate investors to raise cash to hand back to shareholders. These include trophy assets such as the Inter-Continental in Park Lane in London.

Osmond also intends to borrow money secured against the cash flows from the Holiday Inn franchise in North America. This would also be handed back to Six Continents' shareholders.

Osmond plans to sub-contract the running of the hotels to a number of international hotel operators depending on their areas of expertise. Osmond would securitise the cash flows from Six Continents' pubs division which includes the All Bar One and O'Neills chains

Making room for a Hyatt IPO

But hotelier first must reorganize real estate, see tourism rebound

Chicago Business  -  Global Hyatt — the holding company Hyatt Corp. will create to combine aspects of its domestic and international hotel operations — has some housecleaning to do before it can host public investors.

An initial public offering of the hotel company owned by Chicago's Pritzker clan is viewed as a likely component of the family's plan to divvy up its empire. But the privately held hotel company isn't quite ready for the public markets.

Before it can compete on Wall Street with rivals such as New York-based Starwood Hotels & Resorts Worldwide Inc., Marriott International Inc. in Washington, D.C., and California's Hilton Hotels Corp., Hyatt must address several issues.

An initial public offering (IPO) probably would require Hyatt to separate the hotels it actually owns from its business of operating hotels owned by investor groups that contract for the use of the Hyatt name and its management services. Other hotel companies have segregated their hotel management businesses from real estate holdings before taking the separate businesses public.

If Hyatt decides to go public, it also will have to clarify whether it faces liability to hotel owners. Like Marriott, Hilton and other major hotel operators that have faced legal action by owners for allegedly overcharging on operating contracts, Hyatt has settled similar claims. The extent of Hyatt's potential liability to the hotel owners, if any, is the kind of uncertainty Wall Street abhors.

"There are no pending lawsuits or arbitrations at the moment," a Hyatt spokeswoman says.

Perhaps hardest of all, Hyatt will have to wait for a rebound in the tourism market — the prospect of which has been dimmed by mounting tensions in Iraq.

Douglas G. Geoga, the Hyatt veteran who will head up Global Hyatt, says the restructuring announced last week that consolidates the domestic and international operations of finance, accounting and business systems and technology is not a pr elude to an IPO.

"If you ask, 'Are you dressing yourselves up to borrow more money on attractive terms?' the answer would be, 'Maybe,' " Mr. Geoga says. But whether that involves adding or restructuring debt, raising private equity or going to the public markets, or nothing at all, has not been decided, he says. "We are building this financial platform . . . so that we can make additional investments."

Toward that end, the company has hired Steven R. Goldman, the former executive vice-president in charge of acquisitions and development at Starwood — which grew at a meteoric pace, in part by snatching ITT Corp.'s Sheraton hotels chain out of the hands of Hilton in 1997.

Telling a growth story

Experts say Hyatt needs a plan to increase revenues if it plans to go public.

"They would have to come up with a growth story," says M. Chase Burritt, national partner in charge of Ernst & Young LLP's hospitality services group in Miami. "Hyatt has traditionally been a very modest growth company."

Says John B. Corgel, managing director of applied research for hotel consultancy Atlanta-based Hospitality Research Group, "If you are a privately held company, you don't have this growth story in your hip pocket to drag out every time an analyst calls."

Buying up properties — whether overseas or in the U.S. — will not be easy, however, even in a down market. "There are not a lot of desperate sellers," says William Marks, an analyst at JMP Securities in San Francisco.

Says Mr. Corgel, "There's a lot of capital waiting for assets to drop out. When good properties do appear on the market, there are a lot of birds flying around."

Restructuring its real estate

Experts predict that Hyatt will rearrange its real estate holdings.

"They may look at selling some of the assets or put them in a (real estate investment trust) or some other structure," says Theodore R. Mandigo, president of Elmhurst-based hotel consultancy T. R. Mandigo & Co.

Investors will want to know whether Hyatt — like Marriott and other major hotel operators — faces legal action by hotel owners claiming that Hyatt breached its duty to them by taking rebates and kickbacks and competing with owners.

"It is an issue for all hotel operators," says James R. Butler, a hotel lawyer at Jeffer Mangels Butler & Marmaro LLP in Los Angeles.

Still, analysts say there would be no shortage of takers if Hyatt goes public.

"The Hyatt brand is very, very strong," Mr. Marks says.

Cornell Hotel Society Panel Discusses 2002 Performance  and Perspective for the New Year

The New York Chapter of the Cornell Hotel Society organized its kick-off event for the year with “2003: What Now?”, a panel discussion featuring six key members of the lodging industry at the Westin New York at Times Square on Monday evening, February 24, 2003. The panel, moderated by Sean Hennessey of PricewaterhouseCoopers, featured Stephen Brandman of the Pomeranc Group, Marc Falcone of Deutsche Bank, Sean Hehir of Trinity Hotel Investors, Karen Rubin of Starwood Hotels and Resorts, and Brett Traussi of The Dinex Group.

2002 Performance and Perspective for the New Year

Sean Hennessey, who is the Practice Leader and Director of PricewaterhouseCooper’s Hospitality Division, started the panel discussion inquiring about everyone’s performance in 2002 and their perspective for the new year. 

Sean Hehir, who works for an opportunistic hotel investment vehicle, jumped in to explain his view on both domestic and international hotel markets. “We started out acquiring hotels from 1995 through 2000 and finished disposing of those assets from 2000 through the end of last year so we’re in a great position,” explained Sean, whose two new platforms, one consisting of domestic three- to three-and-a-half-star properties and the other an international joint venture with Leading Hotels of the World, are currently in acquisition mode. “The only challenge we’ve seen so far,” adds Sean “is finding the right product. But we have found that to be more of an issue in the U.S. market, where bid/ask spreads are higher than in Europe.” 

On the local front, Karen Rubin, with the Development, Feasibility and Investment Analysis division at Starwood Hotels and Resorts, shared her views on Starwood properties in New York City. With approximately 5,000 hotel rooms in the City and all brands represented, with the exception of the Four Points Sheraton, Karen said decreases were seen at Starwood’s hotels since September 11 th (as was true of the market as a whole), but the picture is looking brighter now. Having recently added two hotels to the New York City market, the W Times Square and Westin New York Times Square, Starwood sees hotel demand continuing to hold from 2002, with the biggest challenge being rate retention. She disagreed with the views of the Wall Street Journal’s Christina Binkley, whose article that morning suggested that hotel demand had fallen permanently from September 11 th . “Smith Travel Research numbers for the country show that demand activity was up in 2002,” Karen said. “That doesn’t mean rate, occupancy, or revenues were up but our industry clearly sold more rooms than 2001.” Karen concluded, “Demand for travel exists. We have the flu but we aren’t amputated.”

Stephen Brandman of the Pomeranc Group, owners of 60 Thompson, Hilton at Newark International Airport and the Ramada Plaza Hotel at LaGuardia, was next. “Airport hotels are most challenged after September 11 th ,” he said. On the boutique hotel side, however, Stephen added, “60 Thompson has done well in the two years it’s been open”, citing a year-end occupancy rate over 90% with average rates in the $300 range. The positive trend seems to be continuing in 2003 with an expected 95% occupancy at a $305 average
rate for 60 Thompson this February. The Pomeranc Group hopes to see the same success in their to-be-developed boutique hotel in Columbus Circle, across from the AOL-Time Warner development, as well as its newly acquired Sagamore Hotel in South Beach, Miami.

Brett Traussi, who heads the operation of the restaurants Daniel, Café Boulud, and DB Bistro Moderne, stated that they were fortunate to have a strong brand from Chef and Owner Daniel Boulud’s reputation for good food and excellent service. “2002 wasn’t the best, but we were happy to have it,” noted Brett, who added, “The top end of the market and hotel restaurants saw the biggest weakness”. Despite lower check averages and a 5% negative impact on covers from a harsher winter this year, Brett stressed, “When you call around for restaurants in New York City, it’s still hard to get in,” summing up that generally, the restaurant industry was still strong.

Deutsche Bank’s Gaming, Lodging and Leisure Equity Research Analyst, Marc Falcone, shed some light on Wall Street’s view of the industry. On the gaming side, Marc noted investor sentiment being the “worst it has been since 1998”, when Las Vegas experienced oversupply and not enough air service to the destination, yet in hindsight, 1998 “turned out okay” for the gaming sector. On the lodging front, Deutsche Bank’s initial coverage on the main owner and operating public companies in August 2000 projected a 5% year-over-year growth in RevPAR in 2003 compared with today’s forecasts for public, upscale companies of “-1% growth in 2003.” However, interest level for the industry is better than before. An evidence of the gaming and lodging industry’s strength is the recent raising of $2.6 billion in Stephen Wynn’s IPO for the development of his new Las Vegas Hotel, Le Reve, in 2005 without any revenue or earnings projections, casting a positive light on investor confidence. A recent development in the industry, Marc noted, was the increasing interest of hotels from the private companies. “Many public companies have balance sheet issues due to poor decisions made in the past,” Marc explained “That is why we’re seeing more bids for assets coming from the private side.” All eyes in the industry are also focused on the outcome of Six Continents’ de-merger in the next few months.

Impact of an Impending War 

Upon Sean Hennessey’s question to the panel on the impact of an impending war on the industry, Steve Brandman reinforced his view on the vulnerability of airport hotels, stating, “Everything follows the news.” Marc Falcone added, “People stayed close to home after September 11 th ,” so gaming markets like Illinois and Indiana will not be as affected as Las Vegas if war were to occur. Additionally, a short war would be beneficial to the industry, since corporate spending would increase shortly after, contributing to a trickle-down effect on hotels, he explained. 

Karen Rubin’s advice to hotel managers during this time was to manage expenses more effectively, adding, “With technology, more expenses today can be made variable.” Her main concern beyond the war, however, was the airline industry and what key leaders were doing to salvage that problem.

Both Brett Traussi and Sean Hehir, who were adding new restaurants and hotels respectively to their portfolios, mentioned taking advantage of the lower costs for capital improvements. “We’ll be coming out with new product in the 4 th quarter next year,” said Sean, “We feel this is good timing.” 

The Internet

The panel also addressed the Internet, a heavily discussed topic at the recent American Lodging Investment Summit in Los Angeles among hotel owners. Sean Hennessey asked if it was a net plus for the industry. Marc jumped in to say that engines such as Hotels.com, Expedia, and Priceline were detrimental to rate at times like this, when occupancy levels are down and rate deterioration is rampant. He added, however, “When we are back in recovery mode, such engines may push occupancy north of 70-80%”, which helps to maximize hotel occupancy levels. Karen agreed and also mentioned the huge impact in changing the relationship hotels had with their clients.

Proxy Statements – How to read them and what to look for Part 2 of 2

Written By:  David Mansbach   HVS International

If you are a company employee, shareholder, or potential investor, it is important to understand several parts of the proxy statement.  Part 1 discussed the Summary Compensation Table and how it should be read to effectively track executive pay versus performance.  Two other areas of the proxy worth discussing are the Stock Option Grants Table and the Aggregate Option/SAR Table. 

The Stock Option Grants Table

Often the real eye opener lies in the Stock Options Grants Table (see sample).  This table details the exercise price, the expiration date, vesting period, and the potential value of stock options granted to executives based on 5% and 10% annual appreciation rates.  We recommend using the Black-Scholes valuation model for calculating potential value, rather than using the SEC required 5% and 10% estimates.  Black-Scholes is the most common valuation model used by Wall Street brokers and analysts.  Exercise prices should not be below market value; in fact, we prefer to see premium-priced and index-priced options on the table.  These are options that must see meaningful appreciation in stock price to be worth anything.  Another red flag with regard to options is re-pricing, which is a no-no on Wall Street.  Analysts frown on this because it may be a sign that management is moving the performance bar lower because business has hit a downswing. 

The Aggregate Option/SAR Table

The Aggregate Option/SAR Exercise Table notes how many options each executive officer exercised during the fiscal year and the value realized in the transaction (see sample).  It also shows the yet-to-be-realized value of stock options that the executive is sitting on.  If the company offers Stock Appreciation Rights in tandem with stock options, it will be noted in this section.

The Executive Compensation section summarizes the company’s pay philosophy.  The report is written by the Compensation Committee and submitted to the board.  Make sure that no company insiders are on this committee; it’s a clear conflict of interest.  Study whether the company really embraces a pay-for-performance methodology.  Compensation Committee Interlocks is where the company must disclose whether directors on the committee have ties to outside entities that do business with the firm, such as banks, law, or accounting firms.  Furthermore, look to verify whether the committee uses competitive data to set compensation levels. 

You now have the knowledge to understand key parts of the proxy statement such as The Summary Compensation Table, Stock Options Grant Table, Aggregate Option/SAR Table, and the company’s pay philosophy.  As an employee, shareholder, or potential investor, you can determine if executive pay and company performance are in line.

David Mansbach
Vice President
HVS Executive Search

Online travel still charting growth, says Travelocity's founder

TravelWeeklyEast.com  -  Even though the travel market in general is on a decline due to unsettled economic and political conditions, the online travel market is on the rise, said Terrell Jones, former chief executive and founder of Travelocity.com.

Now a consultant to many of the big names in online travel retail, Jones was addressing the group at the EyeforTravel USA West conference in Las Vegas.

"The sun is shining brightly for online travel even though the travel market in general is decreasing," said Jones.

He observed that there is now more e-commerce done over the Net than there has ever been.

But Jones cautioned that online players have still a lot to do to grow the market further.

"Everyone thought that with commission cuts, agents will increase service fees, and customers will buy travel online to avoid paying those fees and online travel will boom. But it did not happen," said Jones.

Travellers still believe the best customer service is still offered offline. The well-staffed call centres of online players like Expedia and Travelocity remain "a best kept secret".

"Customers still don't trust the online channel - they are afraid transactions are not secure, that information collected through websites they visit will be sold," said Jones.

Thus, issues of privacy and customer service must be addressed by online players, he urged.

But the next generation of buyers will likely not grapple with these fears and online players should be ready for them.

"Today's college kids, 43 percent of whom use the Internet for every assignment, are next year's new customers," said Jones.

Thailand: Hotels, services a solid bet in short, medium terms

Tourism rebound lifts most hotel stocks though some three- and four-stars struggle amid intensifying competition

Bangkok Post  -  A rebound in the domestic tourism industry and terrorist threats and unrest in some neighbouring countries have helped boost the local hospitality business. Leading listed hotels showed strong performances, providing investors with an attractive punt.

During the past year, tourism showed a strong rebound, with 7% growth in arrivals over 2001.

Sporadic bombings and unrest in Indonesia and the Philippines meant a windfall for the Land of Smiles, as most travellers to this part of the world adjusted their holiday plans and chose Thailand as one of their top destinations instead.

With consolidated market capitalisation of 25.07 billion baht as of the end of last year, the hotel and travel services sector yielded a total shareholder return (TSR) of 32.24% for one-year investments last year, which slid to 15.49% for holdings during the three-year period. During the past five years, the sector realised TSR of 19.98% but for those who invested for 10 years, their gains came in at a mere 0.04%.

Among the listed hotel companies, Royal Garden Resort Plc (RGR) is the best performer, with total shareholder return of 85.27% on a one-year basis. With a market capitalisation of 1.51 billion baht, RGR stock gave a TSR which more than doubled the hotel sector's one-year average of 32.24%.

RGR's yields, however, dropped sharply to 16.71% for an investment of during the three-year period but regained 20.67% in five-year returns. Its 10-year TSR declined even further to 7.04%.

Kavee Chukitkasem, assistant manager of Capital Nomura Securities, said RGR posted robust performance both in its financial statement and in the stock market because its properties spanned the country, covering many strategic tourist hot spots.

RGR chairman Bill Heinecke said the group was trying to offer services at all top tourist destinations and was now building a hotel in Ko Samui, further broadening its portfolio.

The second-best performer last year went to The Oriental Hotel (Thailand) Plc (OHTL). Capitalised at 4.64 billion baht, OHTL provided 83.33% on one-year TSR. OHTL's shareholder returns for investments of three and five years were also a healthy 26.48% and 21.33% respectively. For a period of 10 years, the stock yielded 11.55%.

Mr Kavee said the five-star riverside hotel provided high returns thanks to its world-class reputation and unique services. OHTL had built up its reputation for decades, as reflected by several awards worldwide and the number of its loyal customers.

Although the stock had low liquidity, its high profit margin helped lift its price, Mr Kavee said.

``The hotel industry is very competitive. If a property does not carry a worldwide brand name, it had better get one, like the Central group did when it brought in the Sofitel brand or build a reputation the way The Oriental did,'' he said.

Other stocks that also provided positive returns last year were Laguna Resorts & Hotels Plc (59.63%), Dusit Thani Plc (54.74%), Central Plaza Hotel Plc (46.62%), Royal Orchid Hotel (Thailand) Plc (25.32%) and The Mandarin Hotel Plc (22.04%).

Mr Kavee said that local brand hotels like the Dusit Group were now struggling, as many new five-star international hotels were springing up in Bangkok.

For three-year investments, Mandarin Hotel achieved the best performance, with 60.52% TSR, followed by LRH, at 48.20%.

Notably, OHTL, Royal Orchid Hotel and RGR are the only three players whose TSRs have never been negative for investments over one-, three-, five- and 10-year periods.

Last year's worst performer in terms of shareholder return was Rajadamri Hotel Plc (RHC), operator of the Regent Bangkok.

Capitalised at 1.34 billion baht, RHC provided one-year yields of -22.57%. For three-year TSR, the loss fell to -12.42%. But five-year returns fared much better, giving investors 21.34% yields. For a longer holding of 10 years, returns came in at a poor -0.35%.

Phornphan Padmasankha, RHC's corporate secretary, said the stock performance did not reflect the company's actual performance, which included a 209 million baht in net profit last year.

``Our shares touched a peak for a very brief period when we announced [a] dividend payment last year. It then declined when investors started to take profits. But this doesn't mean our company isn't doing well,'' said Ms Phornphan.

She added that hotel stocks generally did not show capital gains over a short period but benefitted investors in the long run.

This year, RHC will embark on a substantial investment that is expected to further lift its performance.

Other players in the sector that produced negative returns during the past year were Shangri-La Hotel (SHANG), at -6.34%, and Phuket Yacht Club operator Pacific Assets Plc (PA), at -1.2%.

SHANG, however, gave positive TSRs of 8.06% and 13.58% for investments of three and five years. But the stock's TSR slipped back to the negative territory, at -1.12% on a 10-year basis.

While PA's three-year TSR stood at -14.12%, for investments of five years, the stock gave the highest return of 43.92%, outpacing the sector's average of 19.98%. Its gains during the 10-year period, however, slipped into the red at -9.87%.

Mr Kavee acknowledged that this year the hotel industry was unlikely to grow as strongly as it did last year since the market had swung back after plunging to a low following the terrorist attacks on Sept 11, 2001.

But the sector should still have potential, particularly those five-star hotels with international brand names. Three-star and four-star hotels might have to struggle to survive, as a glut was now seen in the segment, he said.

Golden Tulip's impact on hotel room business measures Euro 67.5 million in 2002

AME Info  - In its first annual report, Golden Tulip announces the impact on the gross room revenue into its 264-strong hotel portfolio to be Euro 67.5 million in 2002, accounting for 15 per cent of the portfolio's overall room revenue

In the Middle East & Africa, comprising 15 hotels in 2002, Golden Tulip contributed 9% of the region's room business. This percentage comprises the business that is measurable, whilst the full impact of the brand remains intangible. The overall room revenue of the Middle East & African hotel portfolio reached Euro 23.5 million in 2002, of which Euro 2.1 million were impacted by Golden Tulip's six measurable value drivers. The annual report further outlines the company's present, past and future.

Hans Kennedie, Managing Director of Golden Tulip Hotels, Inns & Resorts comments: ”2002 was a year of change and rebirth for Golden Tulip. Following the independence of the company from its previous owner at the beginning of 2002, our main focus was to strengthen our position within the industry, whilst at the same time to give our brands a fresh new look. I am very happy to announce, that the year ended in positively compared to 2001.”

The annual report will be officially launched at the ITB in Berlin on 11th March 2003.

Global Tourism Destinations Promoting in China

People’s Daily  -   As spring nears, some of the world's popular tourism destinations have been promoting themselves in China, in the hope of attracting more Chinese tourists and setting up closer ties with China's tourism circle

As spring nears, some of the world's popular tourism destinations have been promoting themselves in China, in the hope of attracting more Chinese tourists and setting up closer ties with China's tourism circle.

Nearly 20 tourism companies from northern Europe were in Beijing as the 2003 tourism season nears. Denmark, Norway and Sweden promoted their beautiful scenery and way of living.

"Chinese people are familiar with Andersen's fairy tales, the Nobel prize, Ericsson and Nokia mobiles," said Ole Lonsmann Poulsen, the Danish ambassador to China. "I hope one day they can visit the Danish seaside, Norwegian mountains and Swedish forest."

The north European countries have not yet gained the authorized destination status (ADS) to make it easier for Chinese tourists tovisit, but this did not stop their promotions in China.

Almost at the same time as these European promotions, a man named Amran took office as a tourism official for Malaysia, a country also wanting to attract more tourists.

Malaysia will offer Chinese tourists tropical scenery, tasty fruit and a thriving rain forest with a long history, said Majid Bin Khan, Malaysian ambassador to China.

Since Malaysia gained ADS status, millions of Chinese tourists have visited the country, including tourists and business people. Over 550,000 Chinese people visited last year alone, up 23 percentcompared with the previous year, making China the southeast Asian nation's fourth largest tourism source for Malaysia.

Swiss tourism operators came on their six trip to China. Composed of 21 institutions from Switzerland, they planned to launch workshops in six cities within one week.

In 2002, Chinese people spent nearly 120,000 overnight stays inSwitzerland, up 25 percent over the previous year, said Federico Sommaruga, director of southeast Asia and Australia for Switzerland Tourism.

Sommaruga said Switzerland was the first European nation to apply for ADS and the first European nation to open an office in China.

He said he believed that as China quickened its pace of openingup, Chinese tourists can conveniently visit the beautiful and richEuropean nation soon.

This was an especially busy spring season with various nations promoting among Chinese cities to get a piece of China's prosperous outbound tourism.

Online Travel Companies in Europe Get the Last Laugh

BusinessWeek  -  After the Internet bubble burst, pundits hurled plenty of dot-bomb epithets at Brent Hoberman. None of it fazed the energetic, 34-year-old chief executive and co-founder of London online travel service Lastminute.com PLC Sure, the stock cratered, plunging 97% from its $8.77 peak on Mar. 14, 2000, the date of its initial public offering, to a nadir of 25 cents on Sept. 19, 2001. But Hoberman never gave up his dream of building Europe's largest e-travel business -- and never dropped the dot-com suffix. "The best motivation for our staff was to see new sales records every day," he says. "Any pessimism was wiped out by that."

Hoberman might be forgiven for gloating these days. In 2002, Lastminute.com sold $462 million worth of flights, hotel rooms, vacation packages, and even concert tickets over the Internet and pocketed a tidy $65 million in revenues from commissions and other fees, a 107% increase from the previous year. The five-year-old company is now on the brink of breakeven, and analysts expect it to turn a modest profit for the year as a whole. The reaction among investors? Lastminute.com shares have tripled since the start of 2002, to $1.50, making it one of the best performers on the London Stock Exchange. "Travel and the Internet turn out to be a perfect match," says analyst Robin Chhabra of London brokerage Evolution Beeson Gregory Ltd.

No kidding. Online leisure travel sales advanced 70% in Europe last year, to $7.3 billion, out of a total travel market topping $180 billion, and should grow 50% in 2003, says research director Jaap Favier of Forrester Research Inc. in Amsterdam. That makes it the fastest-growing segment in e-commerce -- and a beacon of hope for the troubled travel industry, which saw overall European revenues fall 6% last year.

Lastminute.com's closest rivals are faring just as well. Expedia Inc. (EXPE ), based in Bellevue, Wash., sold $440 million worth of products outside the U.S. in 2002 -- much of that in Europe -- up a sizzling 146% from the year before. It's the most profitable among its peers. London-based eBookers PLC (EBKR ) should post 2002 sales of $468 million, up 79%, when it announces results on Mar. 24, predicts Chhabra. And newcomer Opodo.com, a collaboration between nine European airlines aimed at grabbing back business from the independents, is gaining ground, though it still lags well behind the others.

Why such a surge now, especially amid weak economies and geopolitical anxiety? It's largely a reflection of Europe's fast-growing Net penetration and the ensuing rush to online shopping. Also, e-travel has strong appeal in uncertain times, as penny-pinching consumers comparison shop for the best prices. "We work bloody hard to make sure our deals are the best," says Simon Breakwell, senior vice-president for international at Expedia Europe, who also claims his service has the widest selection and is the easiest to use. Indeed, the shift to online sales -- now just 4% of travel spending in Europe -- will likely increase no matter what happens to overall travel bookings.

That's not to say online travel is crisis-proof. "If the travel industry fell 40%, everybody would be hit hard," Hoberman says. "But if it fell 20%, we'd see that as an opportunity." To guard against a downturn, online bookers are broadening their horizons. Lastminute now serves eight European countries and has affiliates in four others. Some are snapping up smaller rivals to stoke revenue growth and gain greater leverage over suppliers. Meanwhile, eBookers, which started out as a bricks-and-mortar travel agency, is hedging its bets by buying tour operators. It also runs a low-cost call center in India that allows customers to plan more complex trips with the aid of a flesh-and-blood agent. "It adds another dimension to our product," says CEO Dinesh Dhamija.

This being the Internet, of course, companies also continue investing in new technology. The latest capability, pioneered by Expedia, is a "dynamic packaging engine" that lets customers design their own tours by picking and choosing among airlines, hotels, cars, restaurants, and activities -- with package prices better than the sum of its parts. For conventional travel agents, already reeling as financially strapped airlines pare back commissions, such innovations promise to make life even more miserable. But for online brokers -- and the hardy few investors who own their stocks -- the flight is looking mighty smooth.

India:  Poor IT services hit hotel business: study

MSN.com.in  -  Low levels of communication services, such as Internet, telephone, fax and television, have impacted occupancies at three- and four-star hotels, a study conducted by the Federation of Hotels and Restaurant Association of India said today.

“In three- and four-star hotels, while the level of information technology (IT) services being offered is better, it has become imperative for individual properties to upgrade IT services in order to lure customers,” the study said.

The association added that lack of these services was likely to have a major impact on the occupancy levels of these hotels.

According to the study, while practically all the five-star and five-star deluxe hotels have 24-hour access to the Internet through a dial-up service, 75 per cent hotels plan to install plug-n-play services or broadband Internet within the next one year.

Only 48 per cent hotels in the three- and four-star categories are providing dial-up Internet, while 26 per cent are offering broadband services.

Also, the percentage of hotels providing voice mail in three- and four-star categories is only 7.5 compared with 75 per cent in case of five-star and five-star deluxe hotels.

A large number of the lower category hotels are offering Internet, fax, photocopy, and secretarial services in their business centres.

Almost all hotels in the five-star and deluxe category offer these services including colour printers, computer.

About 55.56 per cent of five-star and 40 per cent of the three- and four-star category hotels admitted that financial return from investment in these services and especially from the Internet usage was high.

Almost all hotels in both the categories agreed that investment in these services had given them the marketing advantage.

Some three- and four-star hotels pointed out that though the cost incurred by them in installing services are the same as in the case of five-star hotels, they can charge much lower rates and thus get lower returns on their investments.

The association suggested that the hotels should prepare a short- and long-term plans regarding communication services.

“While a short-term plan should deal with areas which need immediate attention and should be implemented within the next one year, the medium-term plan should be for new desirable activities and certain upgradations over the next 2-3 years.”

“Hotels should find funds for short-term plans or could even consider buying equipment on lease rentals or on installment basis,” the association said in the study.

Over 80 per cent of the hotels in the sample of the survey were hotels, while the remaining were resorts.

On top of the list of customer demand were 24 hours business centre facility, access to Internet from business centre, Internet service through the guest room, laptop on demand.

The service which drew maximum number of complaints included low Internet speed, followed by a distant margin by high charges for the business centre services and for Internet usage and problems in connecting to the web