Newsletter -August 15, 2002  

Candlewood Hotel Company Reports Second Quarter 2002 Results

/PRNewswire-FirstCall/ -- Candlewood Hotel Company, Inc. (NASDAQ: CNDL) , a leading owner, manager, and franchisor of high-quality, value-oriented, business-travel hotels, today announced results for its second quarter ended June 30, 2002.

Second Quarter 2002 Results

Comparing the operating results of the Candlewood hotels owned, leased and managed by the Company for the second quarter of 2002, occupancy increased 5.3 points to 78.9 percent, compared to 73.6 percent in the second quarter of 2001. Average daily rate (ADR) for the quarter was $55.13, an 11 percent decrease, compared to $61.92 in the second quarter of 2001. Revenue per available room (RevPAR) was $43.51, a decrease of 4.5 percent from $45.56 in the second quarter of 2001, but a sequential improvement over the first quarter 2002 RevPAR of $40.72.

"Given the challenging environment in the lodging industry, we are quite pleased with the 5.3 point gain in our occupancy this quarter over the comparable period last year," commented Jack P. DeBoer, Chairman and Chief Executive Officer. "In addition, our 4.5 percent decline in RevPAR for the second quarter of 2002 compares favorably to our peers. During the 2nd quarter we sold 18,500 more rooms to guests staying seven or more nights as compared to last year. This increase in extended stay business - which is typically priced at a lower ADR when compared to our other guests - had a direct affect on our overall ADR for the quarter."

Hotel operations revenue for the three-month period ended June 30, 2002 was $32.4 million, compared to $33.4 million for the same period in 2001. Income from hotel operations (hotel operating revenues less hotel and related corporate operating expenses and hotel opening costs) was $11 million for the second quarter of 2002, compared with $14.2 million for the comparable period in 2001.

The Company reported a one-time $2.1 million loss on extinguishments of debt in the 2002 second quarter, as part of the previously announced sale- leaseback transaction with Hospitality Properties Trust (HPT). Loss before preferred dividends was $4.3 million for the three months ended June 30, 2002, compared with a gain of $947,000 for the same time period in 2001. The net loss over the comparable period during 2001 was primarily attributable to four factors. These include: the one-time loss on extinguishments of debt of $2.1 million in accordance with GAAP; a decrease in revenue of 2.9 percent - partially attributable to the operating results from the properties in the weaker Chicago market, and an increase in hotel operating expenses, inclusive of a greater allocation towards the sales and marketing efforts, as well as higher insurance costs.

During the second quarter of 2002, two franchise hotels opened, bringing the total additional properties year-to-date to three new franchise hotels and one acquisition. As of June 30, 2002, there were two Candlewood franchised hotels under construction.

Financial Position

During the second quarter of 2002, the company completed a sale-leaseback transaction with Hospitality Properties Trust for 21 Candlewood Hotels, and improved the Company's financial position through refinancing and the repayment of debt. Commenting on the financial position, Warren D. Fix, the Company's Chief Financial Officer, said, "We have made strides in providing the Company with financial flexibility this quarter, using the proceeds from the previously announced HPT transaction and GMAC refinancing to reduce our mortgage debt level by 66 percent, repay the $15 million note due to Hilton and extend the maturity of the Company's $59 million of outstanding debt until 2006. In addition, we have $14.6 million in cash available as of June 30, 2002, enabling us to continue to focus on our strategy of growing RevPAR."

Form 10Q Certifications

The Company filed its Form 10Q Report for the quarterly period ended June 30, 2002, on August 13, 2002. The Form was accompanied by the certificates of the Chief Executive Officer and Chief Financial Officer, as provided in Section 9.06 of the Sarbanes-Oxley Act of 2002.

About the Company

Candlewood Hotel Company, headquartered in Wichita, Kansas, owns, operates and franchises Candlewood Suites and Cambridge Suites -- hotel properties that offer high-quality accommodations for all guests, while catering to mid-market and upscale business and personal travelers seeking multiple night stays. Jack DeBoer, Chairman and CEO and founder of Residence Inn, started Candlewood Hotel Company in late 1995.

The financial results may not be indicative of results for future periods. The matters in this press release include "forward looking statements" within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and are qualified by cautionary statements contained herein and in Candlewood Hotel Corporation filings with the Securities and Exchange Commission. Factors which may affect our results include: the impact of terrorist attacks or general economic recession on our results from operations, the inability to extend or modify the terms of our outstanding indebtedness, the inability to secure additional market share due to competition and other factors, the inability to improve RevPAR through the management of occupancy levels and pricing, the risk that overbuilding in the hospitality industry will adversely affect occupancy levels and pricing, our ability to lower operating expenses and gain market share through sales efforts, operating performance of our hotels and general economic conditions, the availability of financing to franchisees on acceptable terms, the market acceptance of the Candlewood brand, the ability to attract and retain franchisees, the risk that signed franchise agreements may not result in the construction or opening of hotels, the ability to attract and retain quality personnel and the risk that openings may be delayed. Actual results may differ materially from management's expectations.

The forward-looking statements made in this release reflect the opinion of management as of the date of the release. Please be advised that subsequent developments are likely to cause these statements to become outdated with the passage of time. We do not intend, however, to update this press release or any statement made herein prior to our next quarterly earnings release

Hyatt's expansion under way

Hyatt International’s global expansion project is taking off in 2002, with three hotels opening worldwide in August and a total of 17 being under development for opening over the next three years.

Hotels opening in August are the 235-room Hyatt Regency in Kolkota (formerly Calcutta), the 470-room Grand Hyatt Sao Paulo in Brazil and the 188-room Park Hyatt Paris Vendome.
India will see four Hyatt properties open this year – apart from the Regency in Kolkota, there will be the 410-room Hyatt Regency in Mumbai, the Grand Hyatt Mumbai and the Hyatt Regency Goa Resort and Spa.

The Grand Hyatt Sao Paulo is in the new business district of Marginal Pinheiros, close to the city’s World Trade Centre. It features a 2,800-square-metre convention centre and 16 meeting rooms, capable of hosting up to 1,500 people.

In France, the Park Hyatt Paris Vendome, near to the Place de la Concorde, will have six function rooms accommodating up to 130 guests.

Also opening in France is the first Country Inn and Suites by Carlson, which will be located at Charles de Gaulle airport. This opening represents their first venture in France and is part of their planned European expansion.

Other Hyatt hotels under development include 11 in Asia, one in Latin America and two more in Europe.

BFA to host first tourism conference in Guilin

The Boao Forum for Asia (BFA), a non-profit organisation made up of senior Asian leaders will host its first tourism-focused conference in Guilin this year.

In a joint press conference in Beijing yesterday, the China National Tourism Administration (CNTA) and the BFA announced a new tourism forum will be held from November 10-13 in Guilin.

The focus of the forum will be the future of Asia's tourism sector in terms of resources; sustainable development; tourism and poverty alleviation and employment.

Alhaj Syed Abul Hossain, spokesperson for BFA said the organisation is responding to requests for regional cooperation and exchange of ideas for tourism alone, and thus the need to launch this new forum in November. BFA expects about 500 senior state leaders and tourism industry heads to attend.

In the past, BFA has hosted two forums in the city of Boao, in eastern Hainan. The most recent conference was in April this year, but received criticism from Premier Zhu Rongji who said Boao played poor host to the event. Guilin has been chosen this time around because of its 'scenery and dedicated efforts toward environmental production through sustainable development', Hossain said. He added that Guilin, as a destination, is experienced in handling large-scale conferences.

BFA was initiated back in 1998 by the former Prime Minister of Australia Robert James Hawke, former President of the Philippines Fidel Ramos, and former Prime Minister of Japan Hosokawa Morihiro. Their idea for the forum was to bring together senior leaders throughout Asia to discuss regional economic development, population growth and the environment.

Australia seeks to revive Japan market

The Australian government has launched an action plan which it hopes will lead to a revival of growth in Japanese tourists Down Under.

The Australian Tourist Commission and the Australian Tourism Export Council have joined a high level industry-government working group which is studying recommendations made by the government's Department of Industry, Tourism and Resources.

Australia had record historical growth in Japanese international travel until the late 1990s, since when the flow of visitors has slowed. Japanese are tending to favour popular short-haul destinations, particularly Korea, China and Thailand, the report noted.

The four key areas that the action plan's research identified as market impediments are:

·  Aviation - the loss of capacity ex Japan from Ansett and ANA,        
   and the subsequent loss of access to the Star Alliance network

·  Product - the type of product offered may not reflect the       
   changing needs of the Japanese market

·  Distribution arrangements - the industry in Australia needs to
   be better informed about the changing nature of the Japanese
   distribution system and its various selling practices

·  Information issues - there is a shortage of current market intelligence and
   statistics, and even when these statistics are available, there is a general lack of   
   understanding of them and of their implications

Source: TravelWeeklyEast.com

Accor hosts largest gathering of travel writers in Vietnam

Accor recently hosted the largest gathering of travel journalists in Vietnam when 180 Australian travel journalists and tourism PR executives attended the 2002 Australian Society of Travel Writers Association's Annual General Meeting. Held at Sofitel Plaza Saigon in Ho Chi Minh City, the event was sponsored by Vietnam Airlines, Vietnam National Administration of Tourism (VNAT) and Accor.

A series of pre- and post-tours meant that many of the group travelled to other parts of Vietnam, currently the fastest-growing outbound destination for Australians. With Vietnam Airlines about to increase its schedule into the country from October, Vietnam looks set to continue its growing popularity with travellers from down under.

Accor has seven hotels in Vietnam, including the historic Sofitel Metropole Hanoi, Sofitel Plaza Hanoi, Sofitel Dalat Palace, Novotel Dalat, Novotel Garden Plaza Saigon and Novotel Coralia Ocean Dunes Phan Thiet. Some journalists also took the chance to make a side trip to Cambodia to see the temples of Angkor Wat, during which they enjoyed a visit to Sofitel Royal Angkor, the country's leading spa resort.

Accor has operated in Vietnam since 1990 and is now the leading hotel chain in the country, offering the widest choice of premium locations, from the vibrant cities to the romantic central highlands and beautiful beaches in the south.

Singapore:  Tourist arrivals   from China and India to sharply increase
 

The Straits Times  -  Chinese  and Indian tourists are expected to contribute $ 578 million and $ 938 million respectively to Singapore's economy in 2006 - more than doubling their contributions in 2000.

In all, Chinese visitors are expected to contribute 0.33 per cent of Singapore's gross domestic product (GDP) in 2006, up from 0.12 per cent in 2000.

Indian visitors are projected to contribute 0.53 per cent of GDP in 2006, an increase from 0.3 per cent in 2000.

The local economy is expected to get a boost as more tourists from these two giant markets pour into the Republic and spend more money in the years to come, the Ministry of Trade and Industry (MTI) said in a special paper released yesterday.

According to the study, MTI expects the number of Chinese visitors to more than double to 1.03 million in 2006 from just 497,000 last year. Their real total expenditure is expected to hit $ 753 million in 2006, more than three times what they spent here in total in 2000.

As for Indian visitor arrivals, the total number is expected to hit 456,000 in 2006, up 34 per cent from last year.

They too are expected to spend more: Total real expenditure is projected to rise to $ 1.2 billion in 2006, more than double 2000's $ 539 million. The surge in visitor arrivals from the world's two most populous nations is expected to generate more jobs here, MTI said.

The paper said the greater influx of Chinese visitors is expected to account for 11,283 jobs in 2006 - up a staggering 8,039 jobs from 2000.  And the jump in visitor arrivals from India is expected to account for 19,551 jobs in 2006 - a hefty 10,718 more jobs than in 2000.

The expected surge in tourist arrivals from the two countries is in line with their rapid economic development.

This has led to an increasing number of affluent middle-class individuals with the income and desire to travel.

'As India and China's economies develop, the rise in incomes would unleash their nascent pool of overseas travellers, providing tremendous economic benefits for Asean's tourism and related industries,' the MTI paper said.  Given the rising tourist arrivals from the two nations and the increasing popularity of multi-destination tours, MTI said 'large benefits' exist for deepening Asean-wide collaboration to tap visitors from these markets.

It suggested that Asean places an emphasis on the removal of tourism-related barriers, such as liberalising visa requirements, in ongoing talks of the Asean-China Free Trade Agreement.

Dorint expands further

German hotel group, Dorint Hotels and Resorts, has opened the doors of two new hotels in Hamburg and Switzerland and plans six more openings across Germany in 2002.

The three-star Dorint An Der Messe, located next to the Hamburg Exhibition Centre, is the third Dorint Hotel in the city, joining the five-star Dorint Am Alten Wall and the four-star Dorint Airport-hotel. The hotel’s 180 rooms over 10 floors feature ISDN connections and the latest communication features.

The three-star Dorint Basel is next to the Swiss town’s Exhibition and Congress facilities, making it ideally placed for business travellers and conference guests. All 171 rooms include the same communications facilities as the Dorint An Der Messe.

Both new hotels have a restaurant and bar, underground parking, meeting rooms and conference rooms.

The Dorint Group is one of the leading hotel chains in Europe, operating 90 hotels in 10 countries. Their new openings will be in Bad Bruckenau, Dusseldorf, Mannheim, Aachen, Berlin and Frankfurt.

Business booming in Dubai according to Le Meridien

AsiaTravelTips.com  -  Business in Dubai is better than ever, according to Russel Sharpe, senior vice president sales and marketing, Le Meridien Middle East and West Asia, as occupancy regularly hits 100 per cent in available rooms over the normally quiet summer period.

The luxury hotel operator Le Meridien has the largest room stock in the city under one flag, and has just added to its portfolio with the opening of Al Sondos Suites by Le Meridien – the group’s first all-suite property – as well as the resumption of management of the Abu Dhabi Grand.

For a while, it looked as if events of last year would leave hotels with an unrecoverable loss of business, but Sharpe maintains that Le Meridien reacted swiftly, refocusing attempts on tourism sectors that were not as badly affected.

“MICE business – meetings, incentives, conferences and exhibitions – normally makes up 60 per cent of our business, but the sector is suffering without a doubt. It is evident that this will be the case for the rest of 2002, so we concentrated on achieving business growth in other areas. 

“Many hotels groups have been accused of being slow to recognise trends - and of being even slower to react - but we have shown that a flexible approach can really affect the bottom-line result in both the short- and the long-term.”

Principally, this involved focusing on the GCC, since regional travel this summer is on the rise. Backing this strategy is Naif Zureikat, general manager of Al Sondos Suites by Le Meridien, where occupancy is already more than 60 per cent – a notable achievement for a newly opened property.

For Zureikat, the appeal of an all-suites property to GCC visitors to achieve reasonable occupancy levels at a time when more established properties are struggling.

He said: “There has been a tremendous demand for our product from the GCC and we have made a conscious effort to target our marketing strategy to appeal to these countries – and that is beginning to pay off. 

“While longer-term corporate business is a target for us as well, it became clear at the end of last year that business in this sector had not picked up enough to sustain us in isolation. Our director of sales and marketing, Osama Mariam, undertook a 21-day GCC sales blitz a few weeks after Le Meridien took over management of the property, and we have attracted repeat business from this sector that should see us achieve overall occupancy of 70 per cent at year end.”

With Le Royal Meridien Beach Resort & Spa and Le Meridien Mina Seyahi, the luxury hotel group manages two hotels by the sea. This gives the flag a combined stock of more than 711 rooms – 20 per cent of the total beachfront rooms in Dubai – giving it a position of strength on the coveted kilometres of Jumeirah beach. 

As a result, the group has registered strong business in the traditionally leaner summer months, and this year is no different. In the month of June, occupancies were hitting the high 80s, with full occupancy at times. Last summer, too, both of the flag’s beach hotels topped the 90 per cent mark with Le Meridien Mina Seyahi Beach Resort & Marina reaching 100 per cent in August – traditionally a slow month for beach tourism. 

Michael Scully, general manager of Le Meridien Mina Seyahi, picked up on another theme that ran through May’s Arabian Travel Market – that of the Far East as a prospect for in- and out-bound travel.

“The Japanese business has come back to us after September 11 – but it has doubled in size,” he said. “For the month of June, we performed better than any summer before, with occupancy averaging 82 per cent, and yield up a massive 30 per cent on last year, to achieve turnover figures of Dhs750,000 for that month alone.”

Meanwhile, a key alliance with Dubai Summer Surprises has seen Le Meridien Dubai register occupancy levels of more than 95 per cent throughout July. 

General manager Ranjan Nadarajah noted that the DSS initiative has added to the trend of an increase in GCC visitors over the summer to date. He said: “We have seen a substantial increase in bookings from the region – some of which can be attributed to Dubai Summer Surprises, but also seems to be down to a wider trend.

“While this means our occupancies have hit the heights, it has also filtered down to our F&B outlets, which are clocking in 1,000 visitors a day. We have made a deliberate effort to focus on F&B delivery through the summer, and as such have instigated a number of value-added promotions including our 50 per cent back lunch promotions. 

“After all, while we are delighted to attract more visitors from abroad, every hotelier knows that local custom in the restaurants and bars is just as critical for success.”

ASIA Travel Tips.com