Global Hospitality News: eHotelier Newsletter

(Reuters) - The closely held Hyatt hotel companies plan to consolidate their hospitality businesses as a step toward raising capital and expanding their mini-empire, the new president of the hotel businesses said Tuesday.

Doug Geoga, a longtime company insider, was named president of Hyatt Corp. and AIC Holding Co., which together operate Hyatt's 207 domestic and international hotels. The appointment was part of a management shuffle that saw several executives moved into new positions.

A primary goal of the reorganization is to create a "pure-play hospitality company," Geoga said in an interview, "to make sure we have access to a full range of financing techniques."

The expansion plan may seem counterintuitive, given the depressed state of the lodging industry. The weak economy has meant fewer business travelers, who drive prices for the entire hotel sector. At the same time, anxieties about war are making business as well as leisure travelers reluctant to venture far from home.

A number of hotel companies are selling assets in the downturn, which some analysts say provides opportunities for rivals with more financial flexibility.

Hyatt, which is owned by Chicago's Pritzker family, has suffered along with the rest of the industry, but Geoga said growth makes sense.

"The Pritzkers in general and Hyatt in particular (are) countercyclical investors," Geoga said.

Hyatt took advantage of the last industry recession, in the late 1980s and early '90s, when hotel companies were sagging under heavy debt. Those conditions allowed Hyatt to swoop in and purchase properties to complement its upscale portfolio, or to negotiate lucrative new management contracts.

In this downturn, Geoga said, hotel companies have better balance sheets but their valuations have fallen, making for some attractive acquisition opportunities.

But Geoga declined to specify on which properties, or where, Hyatt is setting its sights. Speculation has focused attention on Britain's Six Continents SXC.L , the No. 1 global hotelier. That company is currently fending off a takeover bid from entrepreneur Hugh Osmond, who has vowed to disassemble Six Continents and sell off the pieces, which include Inter-Continental and Crowne Plaza.

"We'll stick with our policy of not commenting on deals that we might or might not be working on," Geoga said.

Hyatt named Steven Goldman as executive vice president for development and acquisitions, to oversee the hotelier's expansion plans. Edward Rabin was named president of Hyatt Hotels Corp., replacing Scott Miller, who will become an adviser to the new initiative.

The shuffle comes as the billionaire Pritzker family battles over the fortune created through its network of over 200 privately held companies. Last year, the generation that runs the family's business and charities decided to divvy up the wealth after the death of deal-maker Jay Pritzker, triggering speculation that Hyatt and other family-owned companies would be taken public.

Hyatt has traditionally bought single properties, rather than full portfolios, but Geoga said all possibilities are on the table, including development, management, and venture deals as well as company acquisitions.

Hyatt's expansion raises the tantalizing possibility of an initial public offering in order to raise capital, though the company has said it has no immediate plans to go public.

The new structure "will help us be a better borrower. The platform could conceivably create both private and public equity opportunities down the road," Geoga said.

"The way that equity markets are valuing publicly traded hotel stocks today, they're better off waiting for what would be a much better overall valuation when trends start to improve in the market," said Marc Falcone, an analyst with Deutsche Bank North America.

Instead, financing may come from private sources and from the company's own cash stash. Geoga said he is comfortable with Hyatt's cash position.

"That is one of the luxuries of being in the hospitality business within the context of Hyatt and the Pritzker family businesses. We do have the resources to take advantage of opportunities as they develop," he said.

Falcone said the lodging industry looks like ripe fruit to private investors right now.

The Blackstone Group and Kohlberg Kravis Roberts & Co. are reportedly interested in Six Continents, he said.

"There's a lot of private capital that's closely following the activity in the lodging sector today," Falcone said.

He expects to see merger and acquisition activity pick up in the near future. Many expected to see a major sell-off after the Sept 11, 2001, attacks in the United States, but it never materialized.

At that time, "bid-ask spreads on transactions were far apart," he said. But "we've seen that spread narrow considerably, and that alone will lead to assets trading hands later this year," he said.

The reorganization was spurred, in large part, by an agreement finalised last year among 11 Pritzker cousins to divide their empire among them, the newspaper said.

Hyatt Hotels Corp. and Hyatt International Corp. could have a value of at least several billion dollars. The Pritzkers plan to build up the chain in an effort to increase its value and they have no current plans for an initial public offering, according to the report.

Hyatt plans to announce a new management structure that brings together its domestic and international operations. Douglas Geoga, who recently has been running a related Pritzker operation, will be president of both arms, the Journal said. Thomas Pritzker remains chairman and chief executive and Nicholas Pritzker will be vice chairman of both entities.

Geoga told the Journal that Hyatt's low debt gives it room to raise money for deals and said the chain could double in size in the next few years. He did not say what properties he might pursue, the article said. While the company has begun scouting, he said in the report, it could take as long as a year before it is ready to cement any deals.

Hyatt is keeping an eye on Britain's Six Continents Plc SXC.L , which is trying to fend off a hostile takeover battle from Hugh Osmond, the article said.

The plan for Hyatt, Geoga told the newspaper, is to create a larger, "pure play" lodging company that outside investors could understand, giving it the ability to raise debt or equity in either the public or private markets.

e-Tid.com - BIL, formerly Brierley Investments, has made a cash offer of 115p a share, worth around £300m, to take full control of Thistle Hotels.
It already owns around 45.8% of the chain.

Thistle has rejected the offer, saying the offer ‘is opportunistic and fails to deliver value for all shareholders’

BIL said that it would carry out a ‘strategic, operational and financial review’ of Thistle. Last summer it was reported that BIL was looking to dispose of its stake in the hotel chain

A helicopter has crashed into the swimming pool of a five-star hotel in the Indonesian capital, Jakarta, killing three people on board.

The helicopter clipped the roof of the Hotel Sahid Jaya before crashing at around midday (0500 GMT) Tuesday.

The helicopter was attempting to land on the hotel's helipad, situated atop the 20-floor building, when it clipped a part of the building, Reuters reported.

The weather was clear at the time of the crash and witnesses did not report seeing any signs that the helicopter was in difficulty before the crash.

The Hotel Sahid Jaya is located in the heart of Jakarta's business district close to the city's stock exchange.

This is the second in a series of articles where we are addressing the problems which some borrowers (and obviously their lenders) are having currently with hotel mortgage loans, along with some ideas as to strategies for possible resolution.

For most hotels in most markets, 2001 was simply a bad year, capped off by the terrorist attacks of 9/11. However, other than the attacks, the downturn in the hotel industry was not totally unexpected. As has been chronicled by HVS literature in the past, the hotel industry, especially in the U.S., has tended to follow a 10-year boom/bust cycle, and has done so with some regularity since the end of WWII. Because of the previous downturn occurring in 1991/1992, a downturn in 2001 was due.

This downturn was accompanied by both supply-side problems (too many new hotels opening) and demand (for hotel rooms) downturn. On a positive note, thanks to the comparative industry-wide restraint of hotel construction lenders during much of the latter half of the 1990s, the recent 2001/2002 downturn (expressed as a decrease in RevPAR) can be fairly equally attributed to both supply-side and demand-side problems. Such a downturn mix tends to resolve itself faster than a more heavily weighted supply-side downturn, as was evidenced in the 1991/1992 era. Therefore, it is generally expected that the return to positive RevPAR growth could occur over a shorter period of time.

Currently, the highest level of default rates continues to be found in loans secured by hotel properties. Hotel default rates have climbed, due to 9/11 coupled with a less robust economy, raising the number of defaulted hotel loans (conduit, fusion, and large loans) from 12 in 1999 to 70 in 2001. Below is a chart that depicts average annual loan defaults for the multi-family, retail, healthcare, and hotel sectors from 1999 to 2001.

Even though the recent level of defaults in hotel mortgage loans was not as severe as may have been expected or was experienced in 1991/1992, we can see that there certainly have been some. So, the question becomes: what do you do if you find yourself in the unfortunate situation of owning a hotel that is currently in default on its debt? In our last article, we mentioned that the root cause of a hotel mortgage default was essentially a lack of liquidity; the hotel is often in a downward spiral and the various parties associated with the hotel (and/or its mortgage debt) cannot or will not resolve the problem with cash.

Obviously, the first thing most borrowers will do is contact their lender (or the mortgage loan servicer) and request some level of temporary forbearance or other concessions. We further mentioned that hotels, as a real estate asset class, have recently generally underperformed, as compared to the remainder of a diversified real estate lender’s portfolio. Therefore, in most cases, lenders have been willing to agree to some temporary accommodations. The focus of this article is to analyze what happens when the temporary good graces from the lender and the earnings from the hotel have not improved. Such a discussion typically centers on two topics: is the loan a non-recourse mortgage, and what is the current value of the hotel?

Recourse vs. non-recourse provisions in a mortgage obviously can have a bearing on the tenor of discussions between a lender and defaulted borrower. However, typically the presence of recourse in a mortgage is often not as dire as most borrowers think, nor does it represent the panacea that most lenders would like to have. The issue obviously revolves around the borrower’s liquidity and the lender’s realistic likelihood of collecting on a personal guarantee. It is often the case that if a borrower is defaulting on a mortgage, the borrower’s general financial conditions may be poor, thus the time and expense for a lender to collect on a judgment against a borrower may not be encouraging. Still, the presence of recourse in a mortgage is an issue with which to be dealt.

Most commonly, to the extent that the borrower maintains other assets, the resolution of the recourse issue often involves the borrower “buying out” its guarantee - in other words, paying an agreed upon sum of money to the lender in satisfaction of the mortgage guarantee. Usually, this is occurs either with the borrower threatening bankruptcy or under the control of the bankruptcy courts, after the borrowing entity has declared bankruptcy.

The second major issue is the current value of the hotel, or more precisely, the current value of the hotel in comparison to the present principal balance on the mortgage. It is critical to identify whether or not the borrower has any real equity left in the property. The answer to this gives rise to a series of decisions that both the borrower and the lender need to make in the matter. If the borrower indeed does have equity in the property, this obviously gives the borrower a reason to stay in the deal, and also could give it better hopes in bankruptcy court, especially in its ability to get a reasonable plan confirmed.

Conversely, if the mortgage balance is substantially higher than the current property value (and the borrower has no equity), then the lender is faced with some hard choices. These include “marking the loan to market,” which often could be best done by simply selling the mortgage, probably at a loss. This is not as black and white during instances in which an appraisal shows that the margin between current value and the mortgage amount is narrow. Such situations become especially unclear if it is probable that the value of the hotel might substantially rise in the future. Sometimes this issue is resolved through the introduction of a “white knight” - a new third-party investor that enters the transaction. The white knight may bring cash to cure the existing default, perhaps pay down the mortgage slightly, and/or provide funds for renovation/repositioning of the property, in addition to working capital.

From the existing lender’s perspective, this is often a good solution because it could give the lender the ability to restore the loan to a productive, “non-scheduled item” status. From the existing borrower’s perspective, the introduction of a white knight could assist in avoiding a bankruptcy and income tax recapture (which can often happen in a foreclosure), in addition to affording the borrower an opportunity to enjoy the rise in value from the asset (this is usually true if the existing borrower is willing to invest in this new recapitalization of the asset). Lastly, from the white knight’s perspective, by investing in this manner, it can hold a stake in attractive assets that may not be technically “on the market.” Further, depending on the level of the white knight’s investment vs. any new investment by the existing borrower, the white knight is able to strip out most of the economic upside (appreciation, management, control, cash flow, etc.). Therefore, it is often the case that this type of arrangement, if properly structured, presents a win-win-win situation for all parties involved.

Michael T. Sullivan
Marshall A. Bendelac
HVS Capital Corp.
1777 South Harrison St.
Denver, CO 80210
303-758-3100

News@PATA

March 15 is the deadline to apply for one of four PATA scholarships to the 25th Executive Development Institute for Tourism (EDIT) programme in Honolulu, June 9-27, 2003. The three-week programme features lectures, class discussions, case studies, group presentations and field visits conducted by experts, professionals and academics. It is designed for travel industry professionals with managerial responsibilities. If your organisation is a PATA member you are encouraged to apply. You may also apply on behalf of your employees. For programme and application details visit www.tim.hawaii.edu/edit/. E-mail: aye@pata.th.com.

PATA will soon launch a special deals section on www.pata.org where PATA members extend exclusive deals on products and services to other PATA members. The list of specially-priced products and services will be hosted in the members-only area of www.pata.org. PATA members should send information on their special-price offers to communications@pata.th.com.

PATA Members attending ITB Berlin are invited to the annual PATA Germany chapter luncheon. The lunch will start at 1230 Monday, March 10 on the first floor of Grosser Stern restaurant at ITB. The three awards to be presented include the Vasco da Gama awards presented by PATA and Business Traveller Germany and the Sri Budoyo award presented by PATA. PATA President and CEO, Mr. Peter de Jong, will attend. If you wish to join in, please visit the PATA booth (#115, Hall 26) at ITB and request an invitation from PATA Managing Director-Europe, Ms. Marion Buttler. E-mail: marion@pata.th.com.

Malaysia Airlines is offering identical reduced fares to Denpasar (Bali) from Los Angeles and Newark. The return fares, US$350+ (economy) and US$1,099+ (business), are open to all registered delegates of the 52nd PATA Annual Conference and the Bali Discovery Tour. Only Malaysia Airlines ticketing offices can issue tickets. Official PATA registration approval must be presented when booking. Stopovers in Dubai, Kuala Lumpur, Singapore, Penang, Kuching or Kuantan may be arranged. For booking information e-mail: SimonePATA@aol.com. For Conference and pre- post-tour information visit: www.pata.org. To find a Malaysia Airlines office in North America, visit www.malaysiaairlines.com/frame11.html.

To put Kathmandu on the international Jazz circuit and to enhance the image of Nepal as a safe and fun destination, “Jazzmandu” is playing from February 28 to March 15 in venues around the Nepalese capital. Featuring international and local jazz musicians, “Jazzmandu” is recommended by the PATA Nepal Chapter as a quality festival. Packages for accommodation, tickets, tours and treks are available at www.kathmandujazzfestival.com/package/pack.html. E-mail: patanep@mos.com.np.

PATA members are eligible for a 10 percent discount for CruiseTour World 2003 in Fort Lauderdale, Florida, April 24 - 27, 2003. The show is endorsed by PATA and many PATA members are participating. For general information visit www.CruiseTourWorld.com. To book space and enjoy the PATA discount, contact Show Manager, Ms. Jennifer Fernandez. E-mail: jennifer@travelindustryshows.com. Tel: (1-718) 621-7499.

** Sixty percent of travellers believe they are not safe on flights outside Europe and the United States according to a Daily Telegraph newspaper survey in the U.K. However, the poll shows that 70 percent are happy with security measures in the U.K. and 60 percent are happy with arrangements in the U.S.

** Malaysia’s no-frills AirAsia will start flying regionally by January 2004. The airline has broadened its network through joint ventures with airlines in Indonesia and Thailand.

** Boeing's new 777-300 ER (extended range) aircraft is undergoing test flights. The new aircraft can carry 365 passengers, cruise at a speed of 0.84 Mach and has a range of 11,800 kilometres.

** The U.K. government plans to combat the environmental impact of air travel through doubling air passenger duty, the ticket tax paid on all flights out of Britain.

Michael Issenberg has just had his territory and portfolio expanded by a quantum leap. Previously managing director of Australia, New Zealand, South Pacific and Japan for Accor Hotels & Resorts, he has now been put in charge for the full Asia/Pacific region. The move is part of Accor’s move to synergise its Asia/Pacific operations. Financial controller Kim Mooney has also seen his job enlarged as a result of the move.

The integration of the two regions follows Asia/Pacific deputy chairman Jochen Dobel’s move to Germany to run Dorint Hotels, in which Accor has a 30 percent stake. Yeoh Siew Hoon asks Issenberg some key questions on the day his promotion was announced to the media.

Q: So how are you going to do it, manage such a big region?
Issenberg: That’s what I am trying to figure out but with good people, it should not be an issue.

Q: You’ve gone from looking after 110 hotels to 190 hotels, that’s almost doubling your portfolio. It is a big task.
Issenberg: Yes, but we have a good team in place. I will be doubling the number of people in my team. I will restructure the team in Australia to spend more time in Asia. I will spend time between Bangkok and Sydney.

Q: What happens to Brian Deeson’s position? (Deeson, who was chief executive officer of Century International Hotels and sold the company to Accor, was put in charge of sales and marketing for Accor Asia)
Issenberg: We haven’t made any changes yet. Brian is a valuable member of the team, and will remain so.

Q: Will you be integrating the marketing for the two regions as well so that Ray Stone (now general manager-sales and marketing for Australia and South Pacific) will also take over Asia?
Issenberg: Possibly, but there will continue to be executives based in Asia. We have to make sure we get the best synergies so that business within Australia, 70 percent of which is domestic, and business within Asia, 70 percent of which is intra-Asian, is reinforced.

Q: What was the primary motivation behind the integration?
Issenberg: There was already some degree of integration with David Baffsky, our chairman, looking after the two regions. We want to make sure that at every level, we get efficiencies in technology, procurement, sales and marketing.

Q: Your two priorities are China as well as Japan, which you looked after? How is Accor going to make a difference in the competitive China market?
Issenberg: We are going to be launching our Ibis product in China, which is a different tack from the international competition. I believe that as you understand the domestic market better, you can then capture a bigger share of the upscale market.

Japan is a little different – we will focus on the middle market down. We have launched two Formula Ones and will launch our Mercure brand in June.

There are real opportunities in Japan where, despite it being the second biggest economy in the region, there is no company with more than 50 hotels in Japan or any international hotel company with a significant presence.

Q: So two different strategies for Japan and China?
Issenberg: Yes, in China, we will go for the whole range from three star upscale. We will not launch Formula One in China.

Q: Would it be fair to say that one reason for the integration too is that Australia and New Zealand are fairly matured markets for Accor and there is not much more room for growth?
Issenberg: It would be correct to say that – it would be difficult to sustain the same level of growth that we have seen in past years. We grew from one hotel to 110 in just over 10 years.

Q: Is Accor driven by size?
Issenberg: It is not about size. It is more important that we have successful hotels which then attract additional hotels to the network. It is about operating well that enables us to have successful hotels.

Q: Define successful hotels.
Issenberg: Leading in market share, profitable and happy employees.

Q: Of the new area that you will be taking over, which do you think will be the more challenging markets?
Issenberg: Ask me in two months.

Caterer.com - Irish hoteliers are being urged to focus on survival and growth this year as the level of hotel bookings plummets.

Jim Murphy, president of the Irish Hotels Federation (IHF), speaking at its 65th annual conference in Galway today, said: “As the world holds its breath in anticipation of the developments in Iraq, the Irish tourist industry is facing one of its most difficult periods ever.

“With the fear of travelling firmly rooted in the minds of many foreign tourists, particularly amongst Americans, the level of bookings for the forthcoming season has reduced to a trickle.”

Figures from the IHF’s 2002 annual report reveal that the number of tourists visiting Ireland from North America fell by 10% in 2002 to 815,000.

Total overseas visitor figures increased by 2%, boosted by a 9% increase in tourists from Britain, who took advantage of good low-fare air and sea access to Ireland.

But John Power, chief executive of the IHF, said early indications for 2003 were worrying, particularly because of a recent slowdown in bookings from the USA because of the threat of war.

As a result the IHF is calling on the Irish Government to implement short-term initiatives to give the hospitality industry the strength to survive the downturn and position it to reap the benefits when business returns.

Murphy said: “The federation is appealing to the government to introduce a number of measures that will shoulder the blow the sector will experience in the coming season. This is the third successive year of difficulties for Irish tourism, all due to occurrences outside our control.

“We continue to be a major contributor to the Irish economy and all we seek is some relief from the crippling cost increases over which either central or local government have direct control.”

Murphy admitted that there was no quick-fix solution to the problems faced by the industry but called for a deferral of a recent 1% increase in the rate of VAT for hotels and restaurants until 2004, a freeze on local authority rate for hotels at 2002 levels and the removal of a 2% government levy on insurance premiums to help alleviate the pressure.

He added: “While the hotel industry will do its best to target new and repeat business for the coming season, the government will have to step up its efforts with regard to keeping costs down and ensuring that Ireland’s competitiveness is maintained, not only for the hotel sector but for private enterprise as a whole.”

TTG Asia - The tallest building in the Philippines is under construction. This will be the Eaton of Makati, which will rise on Makati Avenue, a 64-storey property consisting of both a five-star hotel and full-serviced residences.

When completed, The Eaton Makati will house 28 floors of the Holiday Inn Hotel, 20 floors of full serviced apartments, four floors of amenities, seven floors of residential suites and four floors of office spaces. For occupancy, the Eaton of Makati will initially depend on Holiday Inn’s international hotel booking system, Holidex, which centralises foreign guests’ bookings automatically to the Holiday Inn network and FITs, the biggest segment of Holiday Inn’s clientele.

Some units of the 20 floors earmarked as residential (full service apartment) units will be used to accommodate long-term guests. The Eaton of Makati will have separate grand lobbies for the hotel and for the residential suites with 15 high-speed elevators.

Sharjah in negotiations for three new hotels

Gulf News - Negotiations on three new hotels in Sharjah are underway, with two in the private sector and one to be jointly owned with a government stake, Sheikh Tariq bin Faisal Al Qasimi, chairman, Sharjah Economic Development Department, stated yesterday.

"The new projects form part of our tourism initiative, with the other two core areas being industry and the retail sector, where we see the highest future growth potential," he told delegates invited to MashreqForums.

The event formed the latest in the invitational business series being hosted by Mashreqbank since last March to enhance communications within the business community and economic development in the UAE.

Sheikh Tariq added two new shopping complexes - the Downtown and Ansar malls - are also set to augment the fast-growing retail sector, which has witnessed investment of Dh2 billion over the last three years in the emirate.

"We have also refurbished the Central Market for Dh35 million," he pointed out.

On the drive towards industrial expansion, he said the authorities are in the process of developing three new industrial areas in Sajaa, Hamriya and Al Nouf, to complement the 17 industrial areas already set up.

"The focus will continue to be on the SME (small and medium enterprise) sector, as in our free zones." He attributed the meteoric 30 per cent year on year average growth at Saif Zone to the emirate's policy of treating investors as its strategic partners, while having instituted simplified investment requirements and offering personalised service.

"It is perhaps due to these reasons that Saif Zone today has 950 investors, and Hamriyah Free Zone 350, with the quality of investment being relatively high."

Meanwhile, Abdul Aziz Al Ghurair, bank CEO, noted Sharjah has been charting strong growth and represents a sizeable market. "Our own business has grown over 50 per cent last year," he said.

Speaking about the MashreqForums series, he stressed the importance of building and maintaining close business relationships across different sectors that might not otherwise meet on a regular basis.

"The response to the forum from our corporate clients and invited speakers has been overwhelmingly positive," he added.

Each forum is addressed by a high profile industry speaker to a gathering of the business elite. Former speakers have included Sultan bin Sulayem, chairman of Dubai Ports and Jebel Ali Free Zone Authorities, and Mohammed Alabbar, director general of the Dubai Department of Economic Development.

AsiaTravelTips.com - Business Travel Expo Hong Kong 2003, Asia’s first business to-business travel show, is on target for record-breaking attendance and its biggest-ever turnout of exhibitors at the Hong Kong Convention & Exhibition Centre on March 25-26.

Following the tremendous success of last year’s inaugural two-day event, which attracted more than 1,200 buyers, managers and arrangers of corporate travel, most main exhibitors are returning – and many new exhibitors have booked stands.

A conference and seminar programme titled ‘Make Your Travel Budget Go Further’ focusing on how to cut corporate travel costs in today’s challenging global economy is proving especially appealing to travel professionals, says Event Director Paul Robin.

“There’s never been a more appropriate time to learn how to efficiently manage corporate travel budgets,” he notes. “Even small companies can save a lot by managing their travel more efficiently.”

Keynote speaker is Tony Hughes, President and CEO of the global travel agency consortium, Radius Travel Group who will fly in from New York to deliver global perspectives on best practice in international travel management.

Other expert speakers will explain such issues as utilising low-cost carriers, finding the best accommodation for your money, getting better value from small budgets, online booking, cutting overall travel costs and saving benefits of corporate credit cards.

Returning exhibitors this year include American Express, Cathay Pacific, P&O Travel, Singapore Airlines, Galileo, KCRC, Marriott, Shangri-la, BTI Westminster, Swire Travel, TQ3, Regal Hotels, Abacus and Swiss International Airlines.

Additional exhibitors making their debut at the expo include Dragonair, Hyatt Hotels & Resorts, Raffles Hotels, US Airways, Continental Airlines, Mastercard, Carlson Hotels and Deerjet (Air Charter), to name just a few.

New travel products being launched include the ABACUS ‘GetThere’ direct-user booking engine that streamlines the travel management process, the newest hotel from newly named Hong Kong-based hotel group, Langham Hotels International, Cathay Pacific’s new ‘same day’ flights to London, five new Accor Hotels & Resorts in the Asia Pacific region, a ‘new world of comfort’ aboard Dragonair, and a new online booking system being introduced by Raffles International Hotels & Resorts.

The Expo is once again supported by HATA (Hong Kong Association of Travel Agents) and ACTE (Association of Corporate Travel Executives).

“This year’s 2003 event is on target to be even bigger and better than our first expo last year,” notes Mr Robin.

“We’ve secured greater participation by exhibitors and expect an even larger attendance by travel professionals looking for new and more cost-effective products.”

Among other top travel suppliers exhibiting in 2003 are: Accor Asia, American International Travel, BTI, Carison Wagonlit Travel, Eaton Hotel Hong Kong, Farrington American Express, OAG, Pan Pacific Hotels & Resorts, Raffles Hotels, Six Continents Hotels, SRS-WORLDHOTELS, Star Alliance c/o Austrian Airlines, Manchester Swire Travel c/o Rosenbluth, The Leading Hotels of the World and Travel Plus Magazine.

The show is organised by UK-based Centaur Exhibitions which stages the highly successful Business Travel Show London and other leading corporate travel events in Europe.

Dominion Post - The threat of war in Iraq, weak global growth and a rising New Zealand dollar are starting to affect the number of tourists visiting New Zealand, according to economists.Deutsche Bank said tourism had grown about 6 per cent in the past seven months -- down from the 7.5 per cent annual growth rate revealed by Statistics NZ yesterday and "significantly below" double-digit rates in 2000-2001.

Senior economist Darren Gibbs forecast the "subdued" visitor growth to continue till year's end. "At the margin, the loss of the America's Cup is a negative for New Zealand's international profile and therefore for its tourist industry." Shotover Jet managing director Peter Jackson said the company's turnover was up on last year but tensions in the Middle East could affect trading conditions, particularly if the outcome was war. Though Shotover had not been adversely affected by September 11, "this war might have more of an effect".

The rising New Zealand dollar might have affected business but the British pound was still almost three times stronger than New Zealand's dollar, Mr Jackson said. Despite the negative outlook by economists, visitor arrivals are still growing steadily. During January visitor numbers rose 8 per cent compared with January 2002. More visitors arrived from Korea, Britain, Japan, Hong Kong, China and Australia than last year. Visitors arriving for educational or medical reasons rose 23 per cent. Those arriving for business purposes rose 3 per cent.

But if the rising New Zealand dollar keeps visitors away, it will also contribute to the increasing number of Kiwis holidaying overseas. Overseas trips by New Zealand residents were up 3 per cent on January 2002. Deutsche Bank expects outbound tourism to at least keep pace with arrivals growth. A net inflow of 3790 permanent and long-term migrants was recorded in January -- a record high. In the January year 39,000 more people settled in New Zealand than left -- doubling the previous year's figures. The total number of permanent and long-term arrivals rebounded to its highest level since last August, while gross outflows slumped to the lowest since October 1996. "Security concerns and weak global labour markets likely explain the low level of departures," Mr Gibbs said. BNZ chief economist Tony Alexander said there had been a steady decline in the pace of population growth from migrant flows in the past few months.

He was picking a fall in net inflows in 2003. Only 1954 Kiwis went to live overseas in January -- 43 per cent fewer than January last year and the fewest January departures since 1998. In the year to January there was a 45 per cent drop in Kiwis going overseas. The 15,843 loss was the smallest since May 1996. Mr Alexander tipped net migrant flows to peak soon. "This will underpin housing activity and economic growth overall," he said.

Stephen Burt, managing director, of Hotel Capital Partners a joint venture between Greg Paramor and Richard Colless has made good on his promise to return the former Peppers Hotel Trust to profit. The trust, renamed Australian Hotel Fund in November, showed a profit of $2.02million including asset sales for the six months to December 31, and posted a 1.6cents interim distribution. Proceeds from the sale of assets were $1.45million, or about $1.25million after selling expenses, translating into a profit from the ordinary operation of about $768,000.

In the same period last year, the fund made a loss of $6.46million, which included $7.36million in property valuation write-downs. This equated to a profit from ordinary operations of about $900,000. Mr Burt acknowledged that the underlying performance of the hotels had deteriorated, saying initiatives were being put in place to address this. Net tangible assets improved 3.5per cent to 74.3cents per unit. Mr Burt said the result had been achieved through implementing HCP's strategy since it took over management of the trust last June.

This included the sale of three non-performing hotels in the Peppers chain for $15.95million, which was $1.45million above book value, and the reduction of debt from $41.7million to $29million. The sale of the hotels also provided $3million for the refurbishment of the remaining three hotels, paving the way for further growth. Mr Burt said he expected trading performance for the next six months to be slightly lower that the first half. He said the first property to be refurbished under the upgrade plan would be Fairmont, at Leura in the Blue Mountains west of Sydney. The project would enhance the conference facilities, which have the capacity to host 800 people, to "make it the premier conference destination within two hours of Sydney", Mr Burt said.

The fund had also obtained development approval for an additional 80 units at Fairmont; 16 villa units at Manor House in NSW's Southern Highlands, and 12 new rooms at the Anchorage at Port Stephens on the NSW central coast. Mr Burt said the fund was identifying partners to carry out any potential development work. Hotel Capital Partners is presently embroiled in a courtroom battle with the founder of the Peppers chain, Michael O'Connor's Peppers Hotel Management. Peppers has gone to court over the interpretation of an agreement struck early in the life of the trust, which may affect HCP's plans to bring in partners to help fulfil the development potential of the trust's three hotels.

Newsletter - March 5, 2003

News@PATA