Newsletter -August 13, 2002

Winston Hotels Reports Second Quarter 2002 Results; FFO Per Share Exceeds Analysts' Consensus Estimate by $0.02

Winston Hotels, Inc. a real estate investment trust (REIT) and owner of premium limited-service, upscale extended-stay and full-service hotels, today announced results for the second quarter and six months ended June 30, 2002.

Funds from operations (FFO) declined 12.0 percent to $8.0 million for the second quarter of 2002, compared to $9.1 million for the second quarter of 2001. On a per share basis, FFO for the second quarter of 2002 fell 26 percent to $0.37 on 21.4 million weighted average shares outstanding, compared to $0.50 on 18.2 million weighted average shares outstanding for the same quarter a year ago. FFO per share was two cents higher than consensus analysts' estimates. Lease revenue totaled $10.1 million for the 2002 second quarter, down 3.1 percent compared to $10.5 million for the second quarter of 2001.

Reed launches Asia Business Travel Market

TravelWeeklyEast.com  -  Reed Travel Exhibitions is set to announce the launch of Asia Business Travel Market (ABTM), a dual location exhibition and conference targeting the Greater China business travel market.

In a sneak preview to TravelWeekly, event director Andrew Lee said the event, set to debut in September 2003 in two major Greater China cities, would fill a gap in the market.

"Our successful experience with the corporate travel element of the PATA Mart this year shows that with the formula right, we can do a dedicated show for the corporate business travel market."

Lee said that with the target market being very high yield, and with rapid globalisation, corporate travel into China was the right segment to target. Regional MNCs would be the target buyers, he noted.

Suppliers would likely spend more per square metre for booth space, but less overall, as booths would be less grand and elaborate than at previous marts, he said.

Lee admitted that profit was not the target for the first year of ABTM.

"We are not looking at profits in the first year, but probably take-up. That's the first thing. I will judge it a success if there's a strong response to this event. If that happens, the money will come in."

The dual-city format back to back would bring in the element of a sales mission to the show, said Lee.

Source: TravelWeeklyEast.com

Asia-Pacific traffic recovers

TravelWeeklyEast.com   -  Members of the Association of Asia-Pacific Airlines (AAPA) continue to claw back business lost after September 11.

AAPA international passenger traffic, measured in revenue passenger kilometres (RPK), rose by 3.7 percent in May this year, compared to May 2001, while the number of passengers carried was up 4.9 percent. Seat capacity declined by 1.5 percent, resulting in a 3.5-percentage point increase in load factor to 70.9 percent.

The number of passengers carried within the Asia Pacific region grew by 5.6 percent as compared to 3.8 percent in April, while between Asia Pacific and Europe the growth was 10.8 percent. The Transpacific route, in contrast, remained subdued, dropping by 6.2 percent, although the rate of decline moderated when compared to April, which was down by more than 11 percent over 2001.

Director general of the AAPA, Richard Stirland said, "The May passenger traffic saw the first significant improvement in over a year."

At some hotels, dog days have dawned

Hurt by travel slump, they're now pet-friendly

Crain’s  -  Chicago's poshest hotels are putting on the dog. Make that putting up the dog.

With a surplus of rooms amid a prolonged travel slump, local hotel managers figure that an array of services for traveling pooches and other pets will give them an edge in competing for the traveler who won't leave home without his or her best friend.

The Peninsula Chicago is offering dog massages at $85 a session; room service for pets, with entrees such as chopped-beef salad and foie gras pâté, and walks down Michigan Avenue with uniformed men in pillbox hats.

Not to be outdone, the Hotel Monaco Chicago offers canine visitors a silver bowl, a fluffy dog bed and treats. To emphasize its dog-friendly atmosphere, Hotel Monaco is searching for a dog mascot, whose face will grace the front desk.

Appealing to pets as a marketing device has picked up recently because it draws impulse travelers, many of whom would stay home if they had to board Fido, says Theodore R. Mandigo, president of the Elmhurst-based hotel consultancy T. R. Mandigo & Co.

"It gives travelers more flexibility. They don't have to call up the neighbors, and they can leave with little advance notice," he says.

That group of travelers — those who can jump in the car and go — make up a larger share of local hotels' business since Sept. 11, says a Peninsula Chicago spokeswoman. "It's much easier to get in a car" than to fly, she says.

But the first pooch to use the hotel's 45-minute dog massage service — the Jack Russell terrier who plays Eddie on television's "Frasier" — bucks that trend. He flew in with his handler as part of a promotion for the Lyric Opera of Chicago.

The Peninsula holds dogs to a 30-pound weight limit, but many of its competitors place no restrictions on the size or type of animal traveler.

"If you brought a giraffe, we'd have to find a room," says Thomas Mathes, manager at the Hotel Monaco, which has put up roughly 500 pets in the last year on the two "pet-friendly floors" of the 14-story hotel.

The job of catering to pet guests often falls to hotel concierges, who arrange walks, day care and even gift baskets for pets whose birthdays coincide with their hotel stays.

Although the business strategy carries some risks — damage to hotel rooms, the possibility of upsetting other guests — the hotel representatives interviewed say they've never had a pet damage a room or bite a guest.

"The majority of animals that travel are not the destructive type," says John Price, executive assistant manager of House of Blues Hotel in Chicago, which has three to five canine guests at any given time in the 367-room hotel. But, he recalls, "we had a couple of boxers make use of the couches in a nuptial sort of way."

Tourism won' t offset biz travel dip

Spending more to woo less-profitable market

Crain’s -  The map-wielding meanderers on Michigan Avenue, the impatient out-of-towners waiting to be captured by a Navy Pier caricaturist and the long lines at hotel concierge desks tell the story.

As Chicago's peak summer tourist season heats up, an array of public- and private-sector initiatives is drawing more leisure travelers to the city.

But the nominal increase in tourist traffic — those in the local hospitality industry hope to see a 5% increase this year — isn't compensating for the drop-off in business travel to Chicago. While the convention business that sank in last year's recession and plummeted after Sept. 11 has rebounded, the most lucrative segment for the local hospitality industry, transient business travelers, shows no sign of a turnaround.

Little can be done to spur the sales calls and business meetings that generate that kind of travel, but government and industry leaders are trying to energize the more marketing-sensitive leisure segment.

City and state agencies are spending about $30 million this year to promote Chicago as a tourist destination, benefiting businesses such as tour operators and mid-priced hotels. Meanwhile, higher-end hotels and restaurants are vying for leisure travelers with discounts and promotions.

"Our boat rises and falls with Chicago's popularity as a destination for leisure tourists," says Bastiaan Bouma, director of marketing and visitor services for the Chicago Architecture Foundation, who is predicting a 10% increase in attendance for the foundation's tours this year.

Better than nothing

The 10.6 million leisure visitors who stayed overnight in Chicago in 2000, the last year for which tourism breakdowns are available, represent fewer than a third of the 32 million total visitors that year. But all travel to Chicago plummeted last year, when the city's hotels saw a 10% drop in room nights from 2000, a banner year that culminated a decade of growth.

The downward trend is extending into 2002. In spite of increases on the leisure side, the average occupancy rate last month in the city's hotels was 68%, compared with 73% in May 2001 and 85% in May 2000.

Business travel dropped more dramatically than leisure last year and is failing to rebound this year, industry sources say, which compounds the negative economic impact.

Hotel rates are usually about a third higher for business travelers, and total per-capita daily spending in 2000 averaged $195 for those here on business, vs. $145 for tourists not on expense accounts.

James R. Reilly, president and CEO of the Chicago Convention and Tourism Bureau, acknowledges that the retail marketing — advertising to a general audience — under way to boost tourism is considerably more expensive than the wholesale efforts the bureau employs to build convention business, such as events it hosts for meeting planners. But even if the city is spending more to draw less-profitable travelers, it is worth the effort, he insists.

"There is no way this can make up for the decline in transient business travel, but some business at a lower rate is better than no business."

Bureau statistics attributed $3.3 billion in direct spending to leisure travelers in 2000. That more than justifies the $5 million Mr. Reilly's agency will spend this year on leisure-related marketing.

Local hotel operators, most of whom have recently redoubled efforts to draw leisure tourists, are embracing a market segment once treated as an afterthought.

Tom Kelly, general manager at the Ritz-Carlton Chicago, where current promotions include free room-night offers and other discounts, says those efforts have boosted the hotel's leisure tourist traffic 15% this year.

"Unfortunately," he adds, "our transient business travelers are down by about the same percentage."

A coordinated marketing effort by the city's tourism office and the convention bureau has logged reservations in the first weeks of the summer season nine times higher than for the same period last year.

Advertising aimed at the Midwest region touts Chicago events and attractions, focusing most recently on the Music Everywhere program launched late last month that is trying to generate buzz by staging hundreds of spontaneous events around the city.

"We're creating a sense of urgency for potential tourists, telling them that if they don't come to Chicago now, they will miss it," says Dorothy Coyle, director of the city's tourism office.

Occupancy up, revenues down

A hotel building boom that added about 5,000 rooms in the past three years — many of them in the budget category that caters to leisure tourists — necessitated the marketing push.

Peter Capell, director of sales and marketing at Embassy Suites Hotel Chicago Downtown, says bookings are up so far this summer. But with the reservation window narrowing from several weeks out to days or even hours before arrival, Mr. Capell says forecasting has become nearly impossible.

And with budget-minded tourists doing more booking via the Internet to get the best deals, the least-profitable segment of the hotel industry gets squeezed further. "Even with our occupancy up, revenues are down," says Mr. Capell.

Kevin Brown, president of Chi-cago-based Lettuce Entertain You Enterprises Inc., says a higher proportion of business is coming from leisure tourists this year. But unlike the hoteliers' experience, the gap between the tourist' s average dining check and the business traveler's is narrowing considerably.

"The big blow-out business dinner with lots of wine and extra courses really went away about a year ago," Mr. Brown says.

Attractions that cater to leisure tourists also are faring better than those more reliant on business travelers.

The Field Museum saw the number of out-of-town visitors jump to 87% of total attendance in the first five months of the year, compared with 77% for the same period last year.

But at Navy Pier, officials say that for the 12-month period ended last month, revenues for all its businesses were down about 7%, largely owing to a 25% drop in revenues for the pier's chartered boats, tied to a drop in corporate bookings.

Hotels to make room for online surge

C/Net   -   The use of Web sites to book hotel stays is poised to explode, and it could force hotels to pare the prices they charge for rooms, according to a new report from Bear Stearns.

"The online travel agencies, merchants and auctions, as well as slower business demand, put increasing pressure" on rates, analyst Jason Ader said in the research report.

Ader's research predicts that corporate room rates will be flat or show a slight decrease in 2003. "We believe that commoditization is taking place. Just how far it will go has yet to be seen," he said.

Travel is the largest segment of e-commerce and is still growing relatively fast. Jupiter Media Research recently predicted an annual growth rate of 23 percent in the online travel industry through 2006, with lodging growing at 26 percent annually during the same period to hit $15.5 billion.

Much of that growth is coming through travel sites such as Travelocity and Orbitz, as opposed to the sites of hotel companies such as Marriott International or Starwood Hotels & Resorts Worldwide. Expedia's Web site, for instance, saw more than four times the volume of visitors in June as Marriott's, which was the highest-ranked proprietary hotel site for the month, according to Nielsen/NetRatings.

Hotel chains have tried to fight back. Starwood and Six Continents, which owns the Holiday Inn and Crowne Plaza brands, recently launched campaigns guaranteeing that the room rates available on their sites would always be the least expensive available.

"With the advent of the Internet, hotel companies must manage their rates almost hourly to ensure that they are properly yield-managing their inventory," Ader said.

The changes in the hotel market are fairly closely mirroring the situation with airlines, Ader said. Once airfare rates began to be published online, consumers increasingly sought out deals and bargains, driving overall prices lower.

Airlines have struggled with how to handle discounted fares online. A few companies have fought back by launching Orbitz, a booking site owned by a consortium of airlines. Five hotel chains have tried to copy this model, opening Travelweb.com in February. Travelweb has been fairly successful, Ader said, grabbing 4 percent of the online lodging market. But it could face the same legal troubles related to antitrust issues that Orbitz has run into.

Hotel chains face other problems too: independent hotels and franchisees. Independent motels and hotels have found it easier to reach wider audiences through online travel sites. And franchisees, which account for a substantial number of rooms in the major chains, may be prompted to challenge rate and marketing decisions made by their corporate parents.

"Franchisees and independent hotel operators have embraced the Internet and have changed the balance of power away from the brands and into the hands of third-party Web sites," Ader said. "Combined with sometimes unwise pricing strategies employed by less sophisticated competitors, the hotels managed by the major hotel companies have been forced to lower their rates and offer up a larger percentage of their inventory to the non-proprietary distribution channels."

Business travel: Hotel lore from female travelers

New York Times   -  A lot of women think hotels have a lot to learn about female business travelers.

That conclusion is based on the hearty response by readers to last week's column, in which a female business traveler compared her experiences on one trip at two hotels, one an all-suites brand and the other an airport hotel, owned by the same company. The all-suites brand scored high; the airport hotel did not.

"Her hotel experience had me nodding in recognition, but here's my great insight: Airport hotels are to hotels as airport food is to food," wrote a woman who asked that her name not be used. Airport hotels, she declared summarily, stink.

"Get a real hotel, in town, preferably one that offers a shuttle to the airport," she said. Airport hotels "cater to business meetings, hapless tour groups and business travelers who sell to firms located in the nearby industrial parks," she said.

On the road, one meets interesting characters. Women, though, meet some of the most interesting of all.

At a Four Seasons hotel, Linda Davis encountered a strange man who "plopped himself down at my dinner table and asked me if I would accompany him to his room where he would show me his laptop," she wrote. The restaurant's maitre d' "immediately approached the table and in a stern voice asked, 'Ms. Davis, is everything all right?' " she said. "I replied that this nice man was just leaving, and the maitre d' stared the guy down until he exited the restaurant."

Many women, including the ones already quoted, had practical advice for ensuring better service and for maneuvering around the poorly run hotel, the pest or the misogynistic clerk. Some also insisted that hotels don't need to elaborately style themselves as being specifically friendly to female business travelers.

"Employees must understand that there is a fine line to walk between condescending to a single woman and treating her with respect" and with an understanding of "certain security matters," wrote Joan Blair Wyer.

Regina Eisman wrote that "when hotels do tout 'female friendly' rooms, I find myself rolling my eyes at the rather silly descriptions." She pointed out that the rude clerks and sloppy buffet tables that figured in last week's column "would annoy men as well."

"My main interests are helpful, prompt service; a safe environment; and a clean, well-tended room -- things that I believe are important to everyone, not just women," she said.

Others disagreed, and said that gender should explicitly matter in the way hotels design their services and facilities, and train their staffs.

Naturally, when the subject is women, there's always a wise guy at hand. In this case, it's a reader who simply signed himself "Mike" and who scoffed at the complaints made by the woman in last week's column.

Mike wrote: "Read your travel story today. Lady sounds like a piece of work. If she's married, bet her husband is glad she's on the road as much as possible."

Tourism industry to push for national marketing corporation

(AP) -- Tourism industry leaders plan to ask for a national organization to sell the United States as a destination to international travelers.

Travel Industry Association president and chief executive William Norman plans to argue in a speech Monday that a national marketing corporation would go a long way toward restoring the weak international market that has slowed the U.S. tourism industry's recovery, according to an advance copy of the speech.

Norman will make his speech before the Florida Governor's Conference on Tourism. Gov. Jeb Bush was scheduled to address the group Sunday night.

The United States currently is the only major industrialized nation in the world whose government doesn't directly spend money on marketing tourism abroad.

Leaders of the nation's $546 billion tourism industry plan to ask Congress this fall to create a national tourism marketing corporation, according to Norman. International travel to the United States is a $103 billion market annually.

International travelers are seen by many as the key to growth for the U.S. tourism industry because the domestic market is considered mature. International travelers also spend more money and have more time to spend on holiday than do their American counterparts.

"We're losing market share in global tourism," Cathy Keefe, a spokeswoman for the Travel Industry Association, said Sunday. "We're not marketing ourselves as a country internationally."

Popular tourist destinations, such as Orlando and Las Vegas, must rely on their own campaigns and the efforts of state tourism offices to market to international travelers. A national organization would let U.S. destinations compete in international markets they ordinarily wouldn't be able to reach on their own, according to Norman.

The tourism slowdown after the Sept. 11 attacks worsened what had already been softening tourism demand last year. The travel industry is slowly recovering but the international and business travel segments have been the weakest areas, according to the Travel Industry Association.

International airplane passenger traffic to the United States is down 12 percent for the year and international arrivals to the United States declined by 11 percent last year. Pleasure travel in the United States this summer, though, was expected to increase by 2 percent over last summer.

At one time, the U.S. government played a role in marketing tourism abroad, but the United States Travel and Tourism Administration and its $16 million annual budget was eliminated by a Republican-led Congress in the late 1990s.

The governments of most other industrialized nations have joined in public-private partnerships to their country's travel destinations.

The Canadian government leveraged $67 million last year for tourism marketing through the Canadian Tourism Commission. The United Kingdom had a tourism promotional budget of $89 million last year, and France's tourism industry used government-matching funds to spend $46 million on marketing.

"The creation of an umbrella tourism marketing organization for the nation can provide the same kind of benefits to the states that have limited resources when it comes to promoting themselves," said Tom Flanigan, a spokesman for Visit Florida, the state's tourism marketing agency. "It will focus greater international attention on us."

Introducing the Travel Tourism and Leisure group

The Travel, Tourism and Leisure Industry is going through an unprecedented period of change. Companies working within the industry are being faced with increasingly complex issues surrounding branding, operational excellence, asset ownership, emerging technologies and growth.

Travel, Tourism and Leisure is the world’s largest industry, accounting for almost 11 percent of world GDP (source World Travel and Tourism Council). In the aftermath of September 11, once consumer confidence in travel safety has returned,  the industry can expect to grow faster than many other industries. Indeed, this growth is expected to total 3.6 percent per annum in real terms in the period 2001 – 2011.  

Meeting the Challenge

Leading businesses recognise that to create value and compete in this growth environment they need to maximise these new opportunities through the launch of new products and services, the use of emerging technologies and a renewed commitment to the customer.

Customers are becoming more sophisticated and product educated – the challenge is to create real customer loyalty by understanding issues such as the aging population, the high disposable income of youth and the rise of eco-tourism and redefine products and services to meet their needs.  

The distribution channels used by the industry are in a state of flux – inventory control and yield are more challenging than ever. Companies are recognising that they need to focus in the value chain on products and services that reflect their core competences.  

Businesses are re-inventing themselves, and looking to joint ventures and alliances to grow.  Stock markets find it difficult to value travel, hotel and leisure companies that are not clearly focused. M&A will often involve cross border issues and will always give rise to challenging post-merger integration issues.  

Both the business and leisure customers view the various segments of the industry as providing one single experience.  The customers of any one sector are typically customers of others.  Only by focusing on integrated solutions to business issues, can the industry expect to maximise customer loyalty.  

Deloitte & Touche’s Travel Tourism & Leisure group (TTL) focus on a deep understanding of the industry and business issues pertinent to each individual client, ensures an excellence of service unequalled in the marketplace.

Our response

Deloitte & Touche’s vision reflects the integrated customer experience. Uniquely in the professional services field, we have assembled a dedicated team of industry experts, led by Alex Kyriakidis, providing integrated services in each of:

·         Assurance
·         Risk Management
·         Tax
·         Management Solutions
·         Transaction Services
·         Reorganisation Services
·         Human Capital Consulting
·         Corporate Finance – Advisory

We have established eleven dedicated teams serving businesses in each of the following industry sectors:

·         Airlines and airports
·         Rail and bus passenger operators
·         Cruise Ship Operators
·         Travel Agents and Tour Operators
·         Global Distribution Providers and other technology providers
·         Hotels and resorts
·         Theme Parks and Visitor Attractions
·         Betting and Gaming
·         Restaurants and bars and night clubs
·         Fitness clubs and spas
·         Sports