Online travel giants taking aim at Asia-Pacific;

Top three players want a slice of the region's online travel market that's set to cross US$ 8b by 2004

The Business Times Singapore -  In the midst of the worst recession in the travel industry, the online travel players never had it so good. Business in the US and Europe is booming. And the top three players - Expedia, Travelocity and Priceline - have fast-growing Asia-Pacific on their minds.

PhoCusWright says that the online travel market in China, Singapore, Australia, Hong Kong, South Korea and Taiwan will cross US$ 8 billion in revenues in 2004, from US$ 2.7 billion in 2002; only about 3 per cent of all travel bookings are done online now.

IDC Corp says the Asia-Pacific online travel market (including Japan) will grow 138 per cent a year to touch US$ 31 billion by 2005.

NetRatings Inc says travel is now the third largest e-commerce industry in Asia, trailing banking/trading and computer sales.

Last week, the biggest online travel company, Expedia Inc, stepped into the Asia-Pacific. 'We have long considered the Asia-Pacific region as our next expansion target,' says James Vaile, vice-president of Expedia Asia-Pacific. 'It is a huge growth market for travel and tourism, and an extremely wired Internet market.'

In its latest report, the UN Conference on Trade & Development (Unctad) says Asia now accounts for about a third of the world's 500 million Internet users. 'We have no specific market share targets for Asia,' Mr Vaile said. 'But we aim to be the leading online travel company here in the next few years.'

Expedia will initially offer English language partner websites in Singapore, Australia and Hong Kong with its US$ 250 million Win NT-based technology platform. It also plans to sign up major regional hotel chains as partners. It plans in future to develop travel websites under its own brand across Asia.

Last month, Expedia blew market expectations when it reported Q3 results. Revenues for the first nine months were up 98 per cent to US$ 426.7 million. It returned to the black with a net income of US$ 44.9 million - versus a loss of US$ 26.7 million in Q3 2001. And it expects to generate revenues of US$ 830 million and net income of US$ 213 million for the full year.

About 95 per cent of Expedia's revenues came from North America. At its close last Friday at US$ 75.02, its stock, which has risen 88 per cent this year, has become one of the best performing companies on Nasdaq.

Meanwhile, competitor Priceline.com - in which Hutchison Whampoa and Cheung Kong have a combined 40 per cent equity - added its name-your-price model to hotel offerings in Singapore, Thailand and China last month. This follows the launch of its online air-ticket service in Hong Kong and Singapore in Q2 2002.

Priceline was rated the top travel portal site in Hong Kong by NetValue earlier this year. However, its Singapore takeoff has been less spectacular because two major airlines - Singapore Airlines and Cathay Pacific - did not sign up as partners.

Priceline has been struggling due to its heavy dependence on air-ticket sales, where both prices and volumes have been under pressure.

Earlier this month, the company reported Q3 revenues of US$ 302 million, down 20 per cent year-on-year. Its net loss in Q3 2002 was US$ 24 million, compared to a US$ 3.6 million net loss in Q3 2001. Meanwhile, at its close on Friday at US$ 1.80, its stock had lost some 70 per cent this year.

In July, 16 mostly Asian airlines introduced their own online travel agency - Zuji.com - with tech support from US-based Travelocity. With 400 airlines, 56,000 hotels and 50 rental car firms, Zuji claims to be the largest one-stop online travel store in the Asia-Pacific. It has a marketing budget of $ 50 million and expects to be profitable by 2006.

Travelocity is a wholly-owned subsidiary of Sabre Holdings Ltd, one of four GDS (global distribution systems) players in the travel industry. It reported revenues of US$ 83 million in Q3 2002, compared to US$ 78 million in Q3 2001.

Trapped: Hotel Fire

ABC News - On average, a fire breaks out somewhere in the United States every 18 seconds.

When people are caught in a hotel fire, it can be even more disorienting than at home, because they are in unfamiliar surroundings, often asleep. In 1980, a fire at the 26-story MGM Grand Hotel in Las Vegas killed 85 people. A few months later, a fire at the Las Vegas Hilton killed eight more. A 1993 fire at Chicago's residential Paxton Hotel killed 20 people.

To demonstrate the dangers, Primetime staged two demonstrations with the help of the Fort Lauderdale Fire-Rescue Department in southern Florida. In the first, the department staged a controlled "live burn" at an abandoned hotel to show how quickly a fire can turn deadly. In the second, with the help of the Sheraton Yankee Trader hotel, a high-rise on the city's beachfront, the department used theatrical smoke to simulate two fires, each time testing the reactions of 16 volunteer guests. The volunteers were told that they would be participating in a show about survival, but they did not know there would be a simulated fire.

In the live fire at the abandoned hotel, a trashcan fire caused by a discarded cigarette took just seconds to engulf the bed, then the desk and soon the ceiling. Within 30 seconds, thick black smoke had filled the room and started seeping into the hallway. A minute later, the smoke had covered the ceiling of the hallway and begun to descend, extinguishing the remaining light and oxygen. By that point, the heat inside the room was reaching temperatures as high as 950 degrees, shattering mirrors and the TV screen. The oxygen level, at a normal 21 percent of the air before the fire, had decreased to 12 percent, low enough to kill.

With the difference between life and death often a matter of seconds, not minutes, fire safety officers suggest the following tips:

  Check the hallway when you arrive.  As soon as you arrive in your room, check the floor plan on the back of the door that shows the location of the fire exits. Go out into the hallway and count the doors to the closest exits so you will be able to find them in the dark and smoke of a fire. In the experiment at the Sheraton Yankee Trader, none of the 16 guests inspected the hallway when they arrived.

  Leave your room key where you can find it.  When you go to sleep, leave your room key on the bedside table so you can find it quickly.
  If you hear an alarm, check the door for heat.  If the fire alarm goes off, test the room door with the back of your hand to see if it is hot, which could indicate there is fire in the hallway.
  If the door is not hot, open it.  If the door is not hot, open it cautiously and if you have visibility — at least near the floor — make your way to the nearest exit. Do not use the elevator.
  If you leave, take your key but leave your belongings.  If you leave the room, take your room key in case you have to return. Leave your belongings — every second counts. In Primetime's simulation, many of the volunteers took their time leaving, wasting precious time as they debated what valuables to take or gathered up watches, fanny packs and so on.
  Stay low!  If there is smoke in the corridor, stay low. In the live fire at the abandoned hotel, temperature checks showed that just outside the room where the fire was burning, the hallway was a safe 87 degrees near the floor. But at the top of the hallway it was 137 degrees — hot enough to induce third-degree burns, down to the bone, in just five seconds.
  If there is too much smoke, stay in your room.  If you can't see your way to the exit, put wet towels under the door and call 9-11 to report your location. Stay near the window but don't open it, and wait for help.
  If blocked, return to your room.  If you try to get to the exit but find that it is blocked or the smoke and heat are too much, return to your room, seal the doors with wet towels and call 911 to report your location. It is safer to wait inside your room than inside a smoke-filled hallway. In the experiment at the Sheraton Yankee Trader, the 16 guests stayed in the smoke-filled hallway when they found the exit was blocked, yelling and banging at the door instead of returning to their rooms. If the theatrical smoke used in the simulation had been real, they might have died. "They should be back in their rooms defending their place," said Division Chief Stephen McInerny of the Fort Lauderdale department

Marriott Vows to Pass Unit's Profit to Clients

Washington Post  - Marriott International Inc. said it will not keep any profits it makes from its online purchasing unit, Avendra LLC, but will either give hotel owners credits against future purchases or apply the credits against charges for upgrading hotels' reservations and other systems.

Executives at Marriott said yesterday that they are still deciding how the Avendra profits will be divided among owners. They said owners will see profits after Marriott has recouped its Avendra start-up costs.

So far, Avendra has yet to make money.

In the past year, Marriott and Avendra have been named in lawsuits accusing the two companies of illegally keeping vendors' rebates instead of passing them on to hotels. In light of the accusations, Marriott promised hotel owners it would be more open about its relationship with the purchasing unit.

Marriott, the world's largest hotel chain, owns 49 percent of Avendra. Several other hotel companies, including Hyatt Hotels Corp. and Fairmont Hotels & Resorts Inc., and ClubCorp Inc., an operator of golf and country clubs, own the rest.

Avendra gets rebates on goods such as toilet paper, linens and food it buys for hotels. Marriott invested about $5 million in February 2001 to set up Avendra. The online purchasing unit now has 225 employees at its Rockville office, and it expects to have revenue this year of $35 million to $40 million. Last year, Avendra lost $2 million. It expects to make about $2 million this year.

Avendra, which buys for 4,000 hotels, airport concessions, and golf and country clubs, has said that it saves its customers from 10 to 15 percent on purchases because it is able to buy goods at volume discounts.

Bali bets on recovery as peak season draws close

(Xinhua) --Indonesian Minister of Tourism and Culture I. Gde Ardika said Bali's tourism sector might have begun to recover, led by an influx of domestic tourists recently.

He said that some of Bali's hotel occupancy rates had recovered to about 26 percent, from single-digits in the weeks after the terrorist strike.

International arrivals have stabilized at 700 people per day, and now the number of people leaving the island no longer exceeds those arriving. Such positive signals are emerging, even though Bali's peak season is still a month away.

"Although it (the recovery) is very small, indications show that we have passed the low point," Ardika was quoted by the Jakarta Post online news service on Tuesday as saying.

To be sure, domestic tourists account for most of the recent positive signs, while foreigners, who represent Bali's greatest market share, have yet to return.

Yet, the upturn marks a break from the slump that spread across the island's tourism sector following last month's attack.

In the days after the bombings, which killed nearly 200 people, hotel occupancy rates on the island plunged to below 10 percent, from 90 percent before the attack. By Oct. 15, international arrivals dropped to 2,833 a day, from an average of 4,650 in the two weeks preceding the bomb blasts.

But now, Ardika is betting on a steady recovery even after next month's peak season has passed.

"If hotel occupancy and (tourists) arrivals continue to rise until Christmas ... hopefully that will have stirred enough market confidence," he said. "It'll be a turning point for the tourism sector and everything will start to move forward."

Last year, tourism in Bali raised some 1.4 billion US dollars in foreign exchange income, or more than 25 percent of the nation' s total of 5.4 billion dollars.

Tourism accounts for 80 percent of Bali's total income and provides employment to some 40 percent of its population. Official data show that as of last year, 1,400 hotels and almost 750 restaurants were on Bali.

Tourism Challenges Remain Says Australian Tourist Commission

AsiaTravelTips.com  -  Following the release today of the Australian Bureau of Statistics' Overseas Arrivals and Departures for September 2002, Australian Tourist Commission Managing Director, Ken Boundy, says the figures show that Australia is 'holding its own' in a difficult operating environment.

Visitor arrivals into Australia for the nine-month period to the end of September 2002 totalled 3.4 million, representing a total decline of 4 per cent compared to the same period for 2001.

"The figures released today are very much a reflection of the events that are taking place around the world and how individual markets are responding to these factors," Mr Boundy said.

"Despite the impact of global events and factors such as the tendency towards short-haul travel, visitor arrivals to Australia are showing trends of improvement with visitor arrivals for September only down by 2 per cent.

"The key challenge for the ATC will be the ability to respond quickly to changing global events by taking a flexible approach to our marketing activities and by being aware of what is happening within the individual markets.

"A core part of the ATC's promotional campaigns will be to reassure travellers that Australia, which is often at the top of the wish list for most overseas tourists, is still one of the world's safest destinations."

Highlights of the report show:

Europe

Visitors from Europe totalled 779,000 for the nine months to 30 September, a decline of 4 per cent.

The United Kingdom has remained resilient with arrivals for the nine-month period totalling 418,200, showing no change from the previous year.

Arrivals from Germany totalled 91,500 for the nine months to the end of September, signifying a decline of 13 per cent.

The Americas

There were an estimated 320,400 visitors from the United States of America for the nine-month period to the end of September 2002, a decline of 6 per cent. 

North Asia

Visitor arrivals from China totalled 139,400 for the nine months to 30 September, an increase of 17 per cent.

There were 132,300 visitors from Korea for the nine-month period, an increase of 6 per cent.

Visitor arrivals from Japan totalled 519,400 for the nine-month period, a decline of 4 per cent.

New Zealand

There were 577,100 visitors from New Zealand for the nine months to the end of September, a 3 per cent decline.

Source:  ASIA Travel Tips .com

For Corporate Discounts, Size Really Does Matter

NY Times  -  Carolyn Walsh, a Manhattan lawyer, was working on a case on Long Island, arranging her stay at a local Marriott, when she learned the hard way that all corporate hotel rates are not equal. "I found out that the client had a contract with the hotel that gave them a much lower rate," Ms. Walsh said. The client made a phone call, and her stay was included as part of the discounted corporate rate.

Low rates and empty rooms have left many business travelers hoping that they can find deals on Internet sites like Expedia from USA Interactive's and Travelocity from Sabre Holdings that will yield the best rates available. But that is not going to happen, the experts say. Reneta McCarthy, a lecturer at the School of Hotel Administration at Cornell, said the so-called transient business traveler, who is not part of a high-volume corporate contract, would always end up paying more, sometimes far more, than the hotel guest who is.

Most big companies negotiate discounts with preferred hotel chains based on the volume of business they promise to send their way. So when a corporation promises to fill, say, 1,000 Marriott rooms over the next year, it can expect a discount of anywhere from 20 percent to 40 percent off the rack rate, the official room rate posted by the hotel.

No astute business traveler pays the rack rate at most hotels. But many self-employed business travelers, and those in small companies unable to leverage volume for a corporate negotiated rate, are chagrined to find that their transient corporate rate gets them no more of a discount than that of a guest with an AAA or AARP card or anyone who mentions the word "corporate."

Melissa Abernathy, a spokeswoman for the corporate travel department at American Express, said her company could negotiate significant bulk discounts of up to 33 percent for small-business people via its Worldwide Select Hotel program, "but I've seen corporate negotiated rates run much deeper than that."

Bill Dunphy, the director of marketing at the 177-room Mark Hotel in New York, said the standard "international corporate discount rate" of 10 percent that it granted to guests who simply asked for a corporate rate paled next to the concessions of up to 40 percent offered to clients who negotiated annual deals based on their volume, size and profile. "Our corporate rate would be negotiated so it would be less than anything on the Internet," Mr. Dunphy said.

That reflects the experience of an executive at a major Manhattan financial institution who travels frequently for work. He said he had paid as little as $255 for a $325 room at the Ritz-Carlton in San Francisco, which beats Expedia's rate of $276.

Robert Lowe, the director of sales and marketing at the 154-room Mandarin Oriental in San Francisco, said business travelers unaffiliated with a contracted corporation did not receive discounts anywhere close to those negotiated by corporations, though frequent guests might at some point receive special amenities. Corporate travel accounts for three-quarters of the Mandarin Oriental's business, he said, and a company requiring as few as 100 room-nights a year might negotiate a discount of up to 30 percent. That also beats anything that showed up on a search of Expedia.

For some luxury chains, the corporate-negotiated rate is the only meaningful price break. Lisa Bailey, director of marketing at the Four Seasons in Chicago, says the modest discounts on the Internet are the same ones a guest would get at the front desk or on the phone by asking for the current promotional rate. "We do not underbid the competition," she said. Business travelers unaffiliated with a high-volume corporation can expect a nightly discount of $10 off the rack rate, a negligible savings considering room rates during the week range from $390 for a standard room to $1,000 for a two-bedroom suite.

For all the favoritism they show to corporations, hotels can try to penalize them if they fail to produce the specified volume of business. Jill Demone, the director of sales and marketing at the Hilton-owned Drake Hotel in Chicago, says her hotel monitors the performance of corporate clients and in some cases would terminate contracts for those who do not live up to the terms.

Ms. Demone says she takes several factors into account both during negotiations and in deciding whether to forgive a wayward client. She always asks questions about how strongly employees are encouraged to use her hotel. "You have to scratch the surface," she said. "Is the hotel mandated or merely recommended?" She also looks favorably on corporations that spread their business throughout the year, and especially on those that help fill rooms in Chicago's wintry months.

Mark Swetman, director of sales and marketing at the 307-room Hilton at Short Hills in Short Hills, N.J., also keeps tabs on corporations' conformity to their agreements. Mr. Swetman said that most corporations tried to hold up their end, since noncompliance equals less leverage in future negotiations. If he finds a "dramatic difference" between the volume of business they promised and the number of guests they actually produce, he says, he tries to renegotiate terms to lower the discount. "I try not to play cop," he said. "It's a matter of saying, `This is where we want to be, and this is where we are.' "

Despite the tough talk, hotel chains are struggling for corporate revenue in a buyers' market and are often loath to enforce their contracts too rigidly. Ms. Demone, for example, said she would be more lenient about noncompliance "if the discount isn't huge." Indeed, in the last year or two, competing hotel chains have been vying so fiercely for corporate business that some have raided competitors' clients.

Bjorn Hanson, an analyst for PricewaterhouseCoopers who tracks corporate lodging, said the center of negotiating power had been on the side of the hotels until last year. But with corporate rates down for two consecutive years, he said, the balance has shifted to the other side. As a result, he said, corporations are playing hardball in negotiating new contracts for next year, and are demanding that rates be reduced and that phone and fax charges be waived. And, he said, many hotels are bending to the pressure, making concessions that are "unprecedented since the Great Depression."

Hotel industry insiders caution that discount figures that are bandied about can be misleading. For example, the Renaissance Hotel in Chicago, which is owned by Marriott, gives its best corporate customers — those who sign up for 5,000 or more room-nights a year — a seemingly stingy 20 percent discount off its listed rate. But Ashley Kissinger, the hotel's director of sales and business travel, says some hotels inflate their rack rates to make their discounts seem more generous.

Also, the lowest corporate rates may not always apply to every kind of room. At the Mark in New York, all room categories are subject to corporate rates, while at the Chicago Renaissance and the new Ritz-Carlton on Central Park South in Manhattan, only standard rooms are.

The Mandarin Oriental in San Francisco offers to include its most expensive accommodations, like the fabled Mandarin King rooms with bathtub views of the Golden Gate Bridge, but few corporate employees are allowed to stay there. On the other hand, some chief executives cannot resist. "The Fourth of July is especially popular," said Mr. Lowe, the marketing director. "They want to enjoy the whole show from the bath."

UK: October tourist numbers best this year

Caterer.com  - The number of overseas visitors to the UK rose by 4.6% during October, the best figures for a year.

October’s results were the second successive month of increases against the previous year. In September visitor arrivals increased by 3.71%.

But the figures are still well down on 2000, the last “normal” year for UK tourism, before the 11 September attacks and the foot-and-mouth crisis.

This October’s figure remains 21% down on October 2000.

On average, for the first ten months of 2002, overseas visitor arrivals are down by 2.18% on 2001.

Source:  Caterer.com

Denver hotel rates' doldrums continue

Business, tourist travel down vs. '01

Denver Post - Tuesday, November 26, 2002 - Denver-area hotels have stumbled through 2002 with occupancy and average room rates lagging behind year-ago levels, according to the monthly Rocky Mountain Lodging Report.

Average room rates in October were $86.48 per night, compared with $88.43 a year ago - the eighth time this year that monthly rates fell compared with the previous year.

For the year to date, average room rates are $85.11.

The percentage of occupied rooms remains below that of a year ago. So far this year, hotel rooms have been occupied 62.7 percent of the time. Through October 2001, the rate was 65.5 percent.

On a month-to-month basis, occupancy jumped ahead for only the third time this year. Occupancy in October was 59.9 percent, compared with 57.2 percent in October 2001.

Denver has been hit hard by the decline in travel by business executives as companies cut back spending. In addition, tourism suffered during the past summer's mountain wildfires.

"It's pretty depressing," said Bob Benton, a Parker-based hotel consultant who compiles the report. "The markets have not bounced back the way we anticipated eight months ago."

Tourism fell in Colorado during the summer months, but not because fewer vacationers headed to the Rocky Mountain West, Benton said. Travelers in Wyoming, for example, filled 82.7 percent of that state's hotel rooms between June and September, while Colorado occupancy stood at 67.2 percent.

Businesses scaled back travel in the wake of this year's corporate scandals, hitting resort hotels.

Statewide hotel occupancy stands at at 60.1 percent for the year, and average room rates are $95.05. Through October 2001, the occupancy rate was 62.1 percent, and room rates were $96.84.

In October, hotels in downtown Denver charged the highest average rates - $121.46 - and posted occupancy of 70.6 percent. Average rates have been falling steadily for the past year. A year ago, the average rate in a downtown hotel was $126.50.

North Korea pins hopes on tourism

In a fresh move to attract investment, a mountain resort welcomes foreigners 

SCMP - Cash-strapped North Korea has turned a mountain holiday resort on its east coast into a "special tourism zone" in its latest bid to attract foreign investment.

A radio broadcast from Pyongyang's Central News Agency said the country's Supreme People's Assembly had adopted a decree on Saturday that will allow foreigners to invest freely in "Diamond Mountain", or Mount Kumgang.

The decree promises free movement of people within the zone while developers will be eligible for tax exemptions and their property will be protected under the law.

It comes two months after Pyongyang announced the creation of a similar special administration region in northern Sinuiju. Initial hopes were dashed when China detained its first chief executive, mainland tycoon Yang Bin, last month.

The latest push has been welcomed by South Korea's Unification Ministry, which said it would stimulate inter-Korean projects and exchanges in Seoul.

It appears to be the latest in a series of limited economic reforms introduced by the North Korean leadership in the past few months. Other measures have included the adoption of free market forces, financial incentives for workers and the introduction of currency into the economy, as a replacement for a rations system.

The development of the Kumgang mountain resort has been one of the most high -profile of North Korea's attempts to embrace economic reform and has become a symbol of improved relations between the two Koreas.

South Korea's biggest conglomerate, the Hyundai Group, started running regular cruises to the area in 1998. But the project has been a big drain on the company's resources and it is believed Hyundai has only attracted half the number of visitors it needs to break even.

Some half a million South Koreans have visited Mount Kumgang. It is effectively sealed off from the rest of the reclusive nation and visitors get very little sense of ordinary life in North Korea.

The wider reforms have been cautiously welcomed by North Korean analysts, although Bradley Babson, a consultant to the World Bank, has expressed doubts about how far-reaching the changes are.

"No one is questioning the sincerity of the government's initiative," he said. "However, the reforms are not sufficient to assure a turnaround in North Korea's economic crisis and even add new risks, particularly the risk of inflation."

Marcus Noland of the Institute for International Economics said the reform package threatened the very credibility of the North Korean leadership, raising new economic pressures.

While the economic potential may be great, failure could mean the end of the regime, he said.

Three big brands hit Bangkok

Despite the regional downturn, next year will see the arrival of new Westin, Conrad and Metropolitan hotels in Bangkok.

According to The Nation, the Conrad, on Wireless Road, was slated to open iSeptember this year but has put that forward to New Year's Day 2003.

The Metropolitan, on Sathorn Road, will open in the first quarter of 2003.

The Westin group has recently taken over the management of the Grand Pacific Hotel and will begin stamping its brand on the Sukhumvit Road property in early January. It will operate as the Westin Grande Sukhumvit.

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