Newsletter September 11, 2002

‘Cool’ Hotels equal  ‘Cool’ Profits

TravelWeeklyEast.com  -   It took Juergen Bartels time to realise that hotels pushing themselves as boutique, designer or “cool” were more than just a passing fad.

“Of course, some boutique hotels are more outrageous than others. After all, who wants to sit on the lips of Mick Jagger?”

After purchasing Le Meridien with the help of the banks, Bartels looked at a “cool” hotel next door to one he wanted to buy in England.

“It was enjoying 83 percent occupancy and had a £120 higher average room rate than the one I was buying – a traditional hotel in the same location with similar service standards.”

Bartels said the one he wasn’t buying had style and that’s when he realised this type of hotel was there to meet the needs of a changing, younger customer.

“When we started in the hotel business in the 1950s, companies had a single design for their hotels all over the world. Everything looked the same and hotels rooms became a commodity.

“The first designer hotels were successful but before long clients began to focus on service, which became part of the package.”

Bartels’ bid to introduce rooms with style was boosted by a promise from the investment banks to press ahead with a US$450 million renovation programme agreed prior to September 11.

Then a chambermaid told Bartels that the hotel he had just purchased in London, the Russell, was losing customers because the rooms were ugly.

“She was right. She told me, ‘JB, If you don’t renovate, people will think you don’t care’.

“So the first thing I did was to build a new, cool Art+Tech floor in an ugly hotel.”

Bartels says the RevPAR for unrenovated rooms at the Russell is now £26, while RevPAR for rooms renovated in traditional style is £46.

“However, RevPAR on the cool floor is £118, four times the non-renovated return. What this says to me is that the customer is willing to pay for style.”

Source: TravelWeeklyEast.com

News @ PATA

DE JONG REFLECTS ON 9/11

PATA President and CEO Mr. Peter de Jong told the September 9 edition of Travel Impact Newswire: "Exactly 12 months have passed since a brutal act of terrorism dealt a devastating blow to the global travel and tourism industry.... While it can be said that Pacific Asia, on the whole, hasn't suffered quite as much as some other regions have, PATA's research points out that travel and tourism in our region is still considerably down for many individual destinations and that recuperation for some is painstakingly slow." In an appeal for peaceful solutions, he said: "Travel and tourism is all about building bridges between cultures, learning to understand and respect divergent viewpoints." On Wednesday, Sept. 11 at 0730 Bangkok time, Mr. de Jong will participate in a live CNBC broadcast about how 9/11 changed the travel industry.

PATA AND CEI ASIA PACIFIC COMPILE MICE REPORT

PATA and CEI Asia Pacific magazine will present the industry’s first annual report on the region’s corporate meeting sector. PATA and CEI are compiling a list of questions to gauge the latest trends and likely direction for the meetings industry. The full results will be released in the CEI Asia Pacific January 2003 edition and extracted in the PATA Compass January 2003 edition. For further information, e-mail johnk@pata.th.com.

SPOTLIGHT ON CHINESE AVIATION

PATA Publications is offering new reports from the Centre for Asia Pacific Aviation. Annual subscriptions to the monthly PDF-format Essential China: Airports, Airlines & Tourism are US$595 for PATA members and US$695 for non-members. The Essential China Book 2002: Airports, Airlines & Tourism has updated all the statistics and forecasts contained in the 2001 edition to provide the latest airport, airline and tourism overviews. It also covers the major forces for change in China (PRC)'s aviation system, plus the latest analysis of airline consolidation, airline alliances and hub potential. It costs US$245 for PATA members and US$295 for PATA chapters and non-members. It is a 140-page A4 spiral-bound report produced annually. For further information e-mail publications@pata.th.com.

DISPLAY YOUR BROCHURES AT ITF

PATA is offering a catalogue show at the Taipei International Travel Fair (ITF) 2002, Chinese Taipei, November 23-26, 2002. Priced at US$300 for PATA members and US$800 for non-members, PATA will display company logos and names at the PATA booth, assist in distributing brochures and catalogues to prospective buyers, compile buyer contact information and provide a post-show market report to each participating company. The deadline for registration is October 31, 2002. For more information, contact:  Mr. Aaron Tan, PATA Manager-Development. E-mail: aaron@pata.th.com. Tel: (66-2) 658-2000 ext. 25. Fax: (66-2) 658-2010.

PATA STRATEGIC INFORMATION CENTRE WORLDWATCH

PATA's Strategic Information Centre is putting the finishing touches to a mid-year report looking at arrivals to 22 destinations within Pacific Asia for the period January-June 2000, 2001 and 2002. Of particular importance is the comparison of pre- and post-9/11 figures. In addressing such questions as, "Is the U.S. market returning to Pacific Asia?" the study shows that:

* Arrivals from the U.S. market to China (PRC) grew by more than 10 percent for the first six months of 2002 when compared to the same period 2001.

* The percentage growth between 2000 and 2002 (first six months only) was 27.7 percent.

* The German outbound market remained strong throughout.

Apart from China (PRC), countries such as Myanmar, New Caledonia and Thailand also did well over this period. The full report will be released at the end of September. For further information e-mail: publications@pata.th.com.

U.S. Hotel Room Revenues Down in August

(Reuters) - U.S. hotel room revenues fell 3 percent to 5 percent in August, as sluggish demand from business travelers kept the industry in a rut, according to preliminary data released on Monday.

The decline in revenues per available room or revpar, a widely watched industry benchmark, came as average hotel occupancy declined between 1 percent and 3 percent for the month compared with August 2001, according to hotel data tracking firm Smith Travel Research.

The latest decline in room revenues was wider than the 2.1 percent dip in July, but a slight improvement over a 5.6 drop in June and a 5.2 percent drop in May.

Among various industry segments, luxury hotels continued to see the biggest room revenue drop in August, as cost-conscious travelers traded down for cheaper accommodations.

The industry's ongoing weakness stems from continued softness in business travel, as corporations wait for more concrete signs of an economic recovery before loosening their travel budgets, said Credit Lyonnais Securities analyst Bryan Maher.

"Revpar is stuck in a rut until business travel ramps back up," he said.

August marks the last month of useful year-to-year hotel data for comparative purposes, since year-ago data for September, October, November and December will be tainted by the steep decline in travel that followed last year's Sept. 11 attacks on the Pentagon and World Trade Center, analysts said.

Last September alone, room revenues plunged more than 23 percent, as people canceled their travel plans en masse in the weeks after the attacks. Year-on-year declines eased after that but continued in the double digits through January.

Accordingly, year-on-year comparisons will become positive, but will be less useful starting in September, Maher said. Instead, he added, analysts will have to start looking for other benchmarks.

"Looking back to 1998 and 1999 would be good comparative years," Maher said. "But simply looking back to 2000, which was an unusually strong year, or 2001, which was unusually weak, would be a mistake."

The nation's largest hotel operators are Marriott International Inc. (MAR), Starwood Hotels & Resorts Worldwide Inc. (HOT) and Hilton Hotels Corp. (HLT).

Yotel! to bring spaceship Japanese hotels to London

Money.telegraph.co.uk  - It is the dream hotel for businessmen who have their best night's sleep flying first class with British Airways. Yotel!, a revolutionary new "spaceship" hotel chain that aims to offer tiny but stylish rooms, will open in London next year.

Yotel! will provide accommodation that is a modelled on a Japanese "capsule" hotel which offers "box-size" rooms. There will, however, be significant differences to make an overnight stay more comfortable than for those who stay in the Japanese hotels.

Each Yotel! will have more than 100 rooms, each just seven by eight feet and seven feet high, with a communal bar and lounge. The hotel, which will hire rooms by the hour, is the idea of Simon Woodroffe, who launched the Yo! Sushi restaurant chain in Britain five years ago.

He asked the designers of British Airways reclining first-class sleeper beds to come up with a prototype.

The chain will offer a 24-hour check-in with rooms costing from £50 for an overnight stay. It will be aimed at people "with attitude" particularly young business travellers who are on a restricted expenses budget. The design of the rooms, revealed for the first time today by The Telegraph, has just been completed after more than 150 development drawings.

There will be an intercom system to reception and internet access. Premium, as opposed to standard, rooms will also have a working area. Every room will have a separate en suite bathroom of six feet by three which will have a shower with a digitally controlled temperature system. The rooms will be made from aluminium, fibre-glass and dense plastic.

Woodroffe first came up with the idea of launching a hotel chain four years ago, but he did not think that Japanese capsule hotels would work in Britain without variations.

Capsule hotels are popular in Japan among businessmen looking for a last-minute place to stay, but with "rooms" less than three feet high they have been likened to hiring a coffin to sleep in for the night. Woodroffe felt that British customers would not tolerate spending the night in such a confined space where they could not stand up.

"I was looking at the whole idea of hotels with very small rooms when I was lucky enough to be upgraded to a first class seat on a British Airways flight to the Middle East," he said. "I thought: 'This is it'. We should mix the concept of a capsule hotel with British Airways first class. I decided to track down the guy who had designed the reclining bed in the sky."

For the past year, Woodroffe has worked with Russell Mulchansingh and Stuart Banham, from Opius, the London design company, to come up with a prototype for the rooms. "The end result is the feeling of travelling first class on an aeroplane but in a tiny room," said Woodroffe, who has yet to decide on the exact site in London for the first hotel.

"We want people's stay at Yotel! to be experiential. If people have a good experience they will come back and have that experience again. With some budget hotel chains you get a big room but you get treated like a travelling salesman.

"We will give people a very small room, which will feel as if they were in a spaceship, but they will be treated in the same way as business or first class on an airline. We consider the rooms are as well designed as the inside of a Mercedes motorcar."

Woodroffe launched the Yo! brand in 1997 with his life savings of £150,000. He has since expanded into fashion, music, spas, books and, now, hotels. Provided the launch hotel is a success, other hotels will open at cities and airports throughout the country.

There are also plans to open hotels abroad, initially in New York and Paris.

UK tourism 'still fragile'

BBC News -   Only a small proportion of UK residents turned away from air travel to holidaying at home, after the events of 11 September, new research suggests.

According to research from the English Tourism Council, 88% of UK residents said they did not change their travel plans, as a result of the terror attacks

Spending by UK residents on domestic tourism increased in the first half of this year, which was good news for the beleaguered industry which has suffered since the foot-and-mouth crisis and the US terror attacks.

But the industry is "still fragile", the council warned, with an increasing number of businesses becoming less optimistic about its prospects during the second quarter of 2002.

The council's figures show that between January and May 2002, more UK residents took tourism trips in England - up by 15% to 52.4 million - compared with the same time last year.

Spending was also up - by 21% to £7.7bn.

But, while the council says this was encouraging, the increases are still only in line with 2000 levels, and the industry still faces a huge task to regain lost growth.

Business gloom

According to the survey, 68% of businesses say they have now recovered from both 11 September and the foot-and-mouth crisis, but the number who do not expect it to recover until 2003 has increased from 10% to 23%.

Mary Lynch, chief executive of the English Tourism Council, said more needed to be done to encourage UK residents to holiday at home.

"It's clear that people living in the UK hold the key to further recovery and there are signs that people's appetite for tourism trips is much greater than last year.

"But we do need to make sure that UK residents are encouraged to take more short breaks, day trips and holidays at home. If not, the British economy will continue to lose money to our overseas competitors."

Philippines sustains three months of growth

July was the third consecutive month the Philippines recorded positive growth and visitor arrivals for the first seven months of this year grew by 1.5 per cent.

There were 1,127,143 visitors between January and July this year, compared to 1,144,230 for the same period last year.

For July alone, the National Statistics Office reported 170,831 visitors, an increase of 10.6 per cent from 154,480 in the same month last year.

The growth in July was the highest in the past 61 months or since June 1997. The US, South Korea, Hong Kong and Taiwan were the star markets.

The US supplied the bulk of visitors in July, accounting for 18.6 per cent of total traffic. The number of visitors from the US reached 31,844, inching up 2.2 per cent over last July¹s 31,163 visitors.

The Japanese market was number two, contributing 31,343 visitors, but this was 3.5 per cent lower compared to the 32,490 visitors recorded last July.

Travellers from Korea, the third largest group, surged 41.2 per cent with 25,978 visitors, compared to 18,399 last July.

Hong Kong, the fourth largest group, supplied 13,605 visitors, 38.6 per cent higher than last July's 9,816 visitors.

Taiwan, the fifth largest group produced 9,957 visitors, up 21.1 per cent from 8,219 visitors last July.

By region, visitors from ASEAN rose 4.5 per cent to 11,355 against 10,867 last July.

East Asia supplied the bulk of traffic for July, with 83,561 visitors, rising 18.2 per cent from 70,688 a year ago.

Tourists from Australia continued to flock to the country's tourist spots as visitors registered the largest growth rate of 48.5 per cent. There were 8,423 visitors in July compared to 5,672 a year ago.

Travel optimism was also reflected in Europe as visitors from Western Europe totalled 9,865, an increase of 3.1 per cent, while Southern European visitors numbered 1,540 or an increase of 0.7 per cent.

Of markets which declined in July, South Asia dropped 9.5 per cent to 1,481 visitors, and the Middle East contracted 4.4 per cent contraction to 2,574 visitors.

Chicago still feels post-9/11 impact

Craine  -  The Sept. 11 attacks and the months of business paralysis that followed were a brutal, abrupt end to a long run of prosperity. The specter of thousands of people dying in office buildings as they began a normal workday was deeply unnerving, all the more so to executives who lost colleagues in the attacks.

One year later, corporate Chicago proved resilient to the panic, chaos and personal isolation that had been predicted to follow. Rather, it was the hangover from the prosperous but decadent ’90s—accounting scandals, revelations of corporate looting, the stock market crash and economic downturn—that became a far greater challenge.

“We’re living with depressed corporate profits and nervousness on the part of investors,” Daniel Donoghue, managing director of U.S. Bancorp Piper Jaffray Inc., says from his office in the Sears Tower. “It’s hard to say how much of that is from 9/11.”

Although the fight against terrorism goes on, fears of new attacks on home turf have given way to layoffs, stock losses and worries of a prolonged downturn. Irony is not dead, as some had predicted; neither is the 24-7 lifestyle, as employees work harder than ever to hold onto their jobs.

For many executives, business—which virtually halted for 60 to 90 days after the tragedy—has largely returned to normal. “We had 35 meetings set up for the month after Sept. 11, the majority of which didn’t happen,” says Alan Warms, CEO of Participate Inc., a Chicago software and services company. “My take (at the time) was that the software and technology market had bottomed out. Spending is not coming back quickly, but it’s not going to fall any more.”

However, the events of the past year have taken a toll on the airline, real estate and conventions businesses, all of which have links to the elements of the attacks: airplanes, travel, skyscrapers. Bomb-sniffing dogs and barricades now control the flow of traffic at the Sears Tower, one of several Chicago trophy buildings that turned into real estate pariahs overnight. While the tallest building in the country has a healthy 95% occupancy rate, it has lost much of its former allure for new tenants.

North Michigan Avenue is busy again, but with a different clientele. Free-spending business and convention traffic has fallen from pre-Sept. 11 levels, replaced, in part, by parsimonious tourists from neighboring states.

That switch explains the slower sales for Magnificent Mile retailers. After enjoying 5% to 7% sales growth in recent years, they will be happy to stay on par with 2001 levels, says Russell Salzman, president and CEO of the Greater North Michigan Avenue Assn. Goods from wine glasses to DVDs continue to be strong sellers, as consumers retreat to their homes, although stores catering to the wealthiest shoppers are also faring well, he adds.

Number of tourists to Thailand unaffected by Sept. 11

(Xinhua) --A year after the tragic events in the United States shook the world and sent international tourism into a tailspin, the flow of visitors to Thailand remains steady, the Nation newspaper reported Monday.

Juthamas Siriwan, the newly appointed governor of the Tourism Authority of Thailand, was quoted as saying that she expects nothing out of the ordinary to happen and visitor arrivals to continue as usual.

Thailand has been affected less than neighboring countries, she said, adding that there are no reported cancellations from overseas tourists planning to come to Thailand on Sept. 11.

In the first half of the year, the country saw the number of American tourists declining 3.6 percent to 252,825, while Malaysia experienced a drop of 30.14 percent, Australia reported that the number of US tourists was down 14 percent and Singapore welcomed 11.9-percent fewer visitors from the United States, the report said.

However, 5.36 million people from all over the world arrived in Thailand in the first six months of this year, 6 percent higher than that in the first half of last year.

A spokesman for Northwest Airlines in Bangkok said the US carrier expected its operations unaffected this week as demand on the Bangkok-US route remains on a par.

Thai Airways International (THAI) was no exception. The flag carrier had to cut back its Bangkok-Los Angeles service from seven to three flights a week. But as passengers turned to "safe" airlines, THAI resumed its daily flight scheduled to the United States and recently embarked on a fleet expansion.

The Tourism Authority of Thailand projects 10.5 million tourist arrivals this year -a slight improvement over the 10.06 million posted last year.

The country's tourism agency had adjusted its marketing strategy for the American market by switching its focus from the incentives sector to senior citizens, the report said.

Millennium Hilton to stay closed until early 2003


The Millennium Hilton at 55 Church St. will remain shuttered at least until early next year as its owners work to refurbish the 561-room property, which is located directly across from ground zero.

Workers from the hotel will be rehired starting in January, says Paul Underhill, president for North America for Millennium & Copthorne Hotels, the hotel's London-based owners. The company will extend health benefits for workers, which had been set to expire this month, as part of a joint program with Local 6, the hotel union.

Australia pins hopes on China, as tourists stay away
 
AFP  -  Hoteliers in Sydney could name their price for a room with million-dollar views of the Opera House and the Harbour Bridge during the 2000 Olympics in Australia.

Now more than half the city's habourside hotel rooms stand vacant as Australia's tourism industry endures a two-billion-dollar (1.11 billion US) downturn that experts fear could be permanent.

Federal Tourism Minister Joe Hockey cited the empty five-star hotels as a symptom of the problems plaguing Australian tourism, the second largest export earner generating 17 billion dollars a year.

Virtually all key markets in Asia and Europe are down and industry experts have no short-term solution to the crisis which has seen the number of overseas visitors slump 10 percent from the average yearly figure of five million.

Long-term, they hope growth will come from Asia, particularly China, but say the full benefits from this market might still be a decade away.

Last year's September 11 terror attacks in the United states, collapse of domestic airline Ansett and a worldwide economic downturn have all been blamed for making foreigners leave Australia off their itinerary.

A series of often fatal attacks on visiting backpackers has also generated negative publicity about one of the few market segments that continued to grow after September 11.

Karl Flowers, general manager of the Tourism Taskforce, said because Australia is a long-haul destination from Europe and the United States, it was hit hard by the fear of flying that followed the terrorist attacks.

Flowers said the tourism decline was particularly galling because it comes a time when Australia expected to be riding a boom fuelled by global exposure gained during the Sydney Olympics.

"These were supposed to be the good years," he said.

"Instead it's as if there's was some type of international conspiracy to ensure that everything that could go wrong did go wrong."

Figures from the Tourism Taskforce show international arrivals from Singapore were down 30 percent in July compared to the same month last year, visitors from Britain dropped 17.7 percent, the United States 8.4 percent, Indonesia 3.8 percent, Thailand 13.7 percent, New Zealand 25.5 percent.

South Korea and Taiwan posted modest increases of 1.2 percent and 2.6 percent respectively.

Hockey called the situation a "bloody disaster" and accused the industry of failing to capitalise on the Sydney Olympics and address the easily-anticipated decline in plane users following the September 11 attacks.

"'She'll be right mate' is no longer the slogan for the tourism industry," he said, calling on tourism chiefs to contribute more creative ideas to a 10-year plan he is developing for the industry.

But Australian Tourism Export Council managing director Peter Shelley said tourism operators were already seeing wafer-thin margins and could only sit tight and hope to ride out the crisis.

He said the industry needed to face the possibility that the downturn was not merely a blip caused by cyclical factors and the double digit growth seen in past years would not return.

"We can't see an upturn going forward," he said.

"It involves structural problems, we've got a flattening of the growth curve and its getting harder to recover."

However, there are some bright spots for the tourism industry.

Visitors from Japan, one of Australia's largest tourism markets, recovered to be down just 1.4 percent in July, after falling more than nine percent at one stage.

Shelley attributed the Japanese recovery to an advertising campaign featuring Australian swimmer Ian Thorpe, who he said was phenomenally popular in that country.

But China is the market that Australian tourism chiefs see as their saviour.

The number of visitors from mainland China was up 38 percent in July and growth is expected to continue because the Chinese government has designated Australia as an approved destination for its citizens.

Last year about 163,000 Chinese visitors travelled to Australia - a 75 percent increase on 1999.

By 2012 the Australian Tourist Commission forecasts the number will skyrocket to 1.4 million, making China the Australia's biggest tourism market.

2012 is also the year Asian visitors are expected to outnumber those from elsewhere. The milestone was almost reached in the 1990s but remained elusive as tourist numbers plummetted after the Asian financial crisis.

"The potential in China is amazing," Flowers said.

"Asia generally has been quite good for us because their economies are faring reasonably well and Asians haven't stopped travelling because of September 11.

"Over the next decade or so we'd expect numbers from Asia to rise as the middle class in Asia expands.

"The numbers from Europe will probably remain about the same but Asia's probably where the growth will come from."