Newsletter - July 23 , 2002

Raffles Holdings' H1 net profit tumbles 95%

Channel NewsAsia  -  Hotel group Raffles Holdings is reporting a 95 percent slide in first-half net profits in the wake of last year's September 11 terrorist attacks.

Its first-half net profit last year was S$ 349 million, boosted by exceptional one-off gains from property sales.

This time round it is reporting a much slimmer net profit of S$ 16.8 million.

And even if you strip out last-year's one-time gain, profits still fell 12 percent.

The Raffles group owns Singapore's famous Raffles Hotel, plus many others across Asia and now elsewhere in the world following its recent acquisition of Swissotels.

But while room occupancy rates started picking up again over the first-half, average room rates are still below pre-September levels.

Raffles expects the rest of this year to "remain challenging", but it is looking forward to a more "meaningful rebound" next year.

Channel NewsAsia spoke with Raffles CEO Richard Helfer, and asked him how the group hopes to rebound.

He said, "We see growth predominantly in North Asia. And we're doing more of that in our Swissotel operations in Beijing and Dalian. We're also venturing into projects in Shanghai and Hong Kong....we've recently signed a strategic alliance with Japan's number one hotel chain. All of these are ways for us to drive our top line, as well as our bottom line in 2002 and in the future and to increase our network of distribution as we expand our brands."

Source: Channel NewsAsia

Indian Hotels first quarter net profit declines 70 per cent

Business Standard  -  The Indian Hotels Company (IHC) has reported a 70 per cent decline in net profit to Rs 2.02 crore for the first quarter ended June 30, 2002, compared with a profit of Rs 6.65 crore in the corresponding period last fiscal.

Sales and other operating income fell 11 per cent during the quarter to Rs 112.6 crore against a turnover of Rs 126.99 crore in the corresponding period last fiscal.

The above figures exclude the performance of the company's air-catering business, which was hived off, effective September 30, 2001.

Zubin Dubash, executive director (finance), said, 'The 11 per cent decline in turnover was mainly on account of border tensions and travel advisories issued in the beginning of June, which led to a fall in business travellers and inbound tourists.

The performance in April-May 2002 almost equalled the revenue and profit levels of the corresponding months of the previous year.

Total expenditure decreased 6 per cent to Rs 92.22 crore for the first quarter of 2002-03 compared with Rs 98.36 crore in the same quarter last fiscal.

The decrease was owing to a reduction in administration, advertisement and other costs. However, since revenues fell at a higher rate of 11 per cent, margins were under pressure.

The bright spot in the last quarter's results was an 8 per cent growth in food and beverages (F&B) income.

For the first time, F&B revenues, at 43 per cent of sales, was the highest contributor to total revenue.

In the corresponding period last year, F&B revenues accounted for just 35 per cent of total revenues, while room revenue accounted for 48 per cent.

Dubash said, "Pressures on average room rate is likely to persist in 2002-03, while occupancies are expected to strengthen. Yet, border situation and elections in J&K can limit upside."

HVS International Hospitality Report: California

Introduction by: Suzanne Mellen  HVS International

The State of California represents a powerhouse within the U.S hospitality industry and we would like to take this opportunity to provide an overview of the state’s key markets during the current challenging operating environment. HVS International will provide an overview of key markets in this and the next two issues of the HVS Global Report. 

California is the nation’s most populous state, representing 12.2% of the U.S. population.  In comparison, the state comprises 10.9% of the nations rooms supply. Given the economic strength of the state (representing 13.5% of national GDP) and its incomparable diversity of visitor destinations, one would expect the number of hotel rooms to exceed the national norm.  The state’s relatively low supply penetration reflects the high barriers to entry throughout the state.  High land and construction costs, coupled with a challenging approval process, renders development of all product types extremely difficult.  Many brands represented throughout the country have never made it to the west coast, resulting in a healthy constraint on new supply. 

According to Smith Travel Research, the state has a total of 437,181 hotel rooms in 4,583 hotels, yielding an average 95 rooms per hotel, somewhat below the national average of 101 rooms per hotel.  Through April of 2002 the state has witnessed a 6% decline in lodging demand and a 2.4% increase in supply, resulting in an 8.3% decline in occupancy from 67.7% in 2001 to 62.1% in 2002.  Through April the state lost 7.3% in average rate, resulting in a room revenue decline of 12.9 %.  Only one state, Massachusetts, had a greater decline in average rate (10%) and RevPAR (17.9%) than California for this same period.  These two states have been dramatically impacted from the downturn in the tech sector.  The impact of the downturn in lodging demand driven by the technology sector in the San Francisco Bay area has been tempered by relatively solid lodging performance throughout the rest of the state.  By comparison, the technology dependent Boston metropolitan area is not buttressed by any other significant lodging markets within the state of Massachusetts.

In this issue we are please to present an overview of the overall Los Angeles market, together with discussions of the Downtown LA, Hollywood, West Hollywood, West LA, and South Bay/LA markets.

Data according to Smith Travel Research.

Suzanne Mellen
HVS International

Accor Asia Update

Accor Asia is the regions largest international hotel management company with 87 hotels under its Sofitel, Novotel, Mercure and Ibis brands. Accor does not franchise hotels in China or other countries in Asia, preferring instead to develop government approved joint ventures with respected and established Chinese partners. 

Accor was one of the first international hotel management group to enter China in 1985 and currently manages 17 hotels around the country and in Hong Kong SAR. These include four five-star Sofitel properties, nine four-star Novotels, and one Ibis hotel.

An additional five hotels are scheduled to open before the end of 2002, including the first three Mercure hotels in Beijing under a joint venture agreement signed in December 2001 with key Accor partner, the Beijing Tourism Group (BTG).

The initial objectives call for a minimum network of 20 Mercure hotels during the first three years, and growing rapidly to over fifty Mercure hotels after five years in time for the 2008 Beijing Olympics.

Accor's latest joint venture agreement is with China's largest hotel group, Jin Jiang International Management Corporation. The agreement will see the establishment of a sales, marketing and distribution network in China to sell the two groups’ combined hotel inventory. Accor also manages Jin Jiang's flagship hotel, Sofitel Jin Jiang Oriental Pudong in Shanghai.  

News @PATA    

Disney Plans New Asian Theme Park

SkyNews.com  -  Disney is planning to build a third theme park in Asia with Shanghai cited as the next location.

The Walt Disney Company has signed a letter of intent with the Chinese city to build the park, according to reports in the Hong Kong Economic Times.

The theme park will be constructed in the Pudong district of Shanghai, China's richest city.

Disney, which already has a theme park in Tokyo, plans to open another attraction in Hong Kong in 2005/6.

'Commitments'

A spokesman for Disney in California, refused to confirm the report.

'Right now our priority is to successfully open Hong Kong Disneyland," it said.

"We have made no definitive decisions or commitments at this time. We have always stated that two parks in China is a possibility in the future,"

Sources familiar with the project said a team from Disney's US headquarters visited Shanghai last month.

Disney's Hong Kong project is proving to be somewhat controversial.

Marine life

Since the deal was signed in 1999, the Hong Kong government has had to defend itself against criticism that it is weighted in Disney's favour, with the entertainment giant putting up only HK$2.45bn, compared with HK$22.45bn of taxpayers' money.

And earlier this year, it was reported that construction work on the project was adversely affecting marine life in Hong Kong.

Pollutants allegedly released by dredging and land reclamation have killed more than 6m fish, resulting in local fisherman suing the Hong Kong government for £7m

Fine Dining, Culinary Arts, Cookery Courses and Conch Put Turks and Caicos on the Gastronomic Map

/PRNewswire/ -- The first ever culinary arts festival in August signals yet another recipe for success in the Turks and Caicos Islands following new restaurant openings, an exciting partnership with Chef Allen, the prestigious Chaine-des-Rotisseurs contest and a brand new "Exotic Culinary Journey" package which promises to bring tasty possibilities to visitors during and long after their vacations.

The Culinary Arts festival 30-31 August will bring together local and international chefs from across the Islands to create new and traditional dishes.

"Our visitors are often amazed at the quality of cuisine that can be experienced here," said John Skippings, Director of Tourism. "The Culinary Arts Festival as well as our other delicious initiatives will tempt more visitors to spend their vacations here."

Following his success hosting the Chaine-Des-Rotisseur Young Commis competition, manager and professionally trained chef Andre Niederhauser of the five-star Point Grace Resort will be encouraging his guests to discover an island-exotic approach to meal preparation with his home-made "Exotic Culinary Journey" package (October 13-20; December 15-21, 2002).

Andre explains, "Our guests will be able to refine their skills on land, on water and on the beach as classes will be taking place in our resort's kitchen, while sailing to the secluded Dellis Cay and on Grace Bay Beach."

Diners at Chef Allen's restaurant could be taken to paradise quite literally after sampling his Turks and Caicos Conch Ceviche. Clients who order the Turks and Caicos starter at his restaurant in Aventura, Florida will be entered into a competition to win a 3 night stay at Point Grace resort (http://www.pointgrace.com/). The competition runs until 15 August.

Chef Allen comments, "I have been importing conch from the world's only conch farm in Turks and Caicos for a couple of years. This competition highlights the link, I and other chefs have made with this high end island chain."

The 40 islands of the Turks and Caicos, of which eight are inhabited are renowned for their award-winning beaches, diving, fishing and array of first-class hotels, restaurants and spas. Turks and Caicos Tourist Office Toll-Free 800 241 0824. Website http://www.turksandcaicostourism.com/ 

Need to kill time at the airport?

TravelWeekEast.com  -  A network of airport lounges has been set up in the region that caters to the neglected lot – business travellers travelling on economy class.

Plaza Premium Lounges have been set up at Hong Kong International Airport, Kuala Lumpur International Airport and most recently, Singapore Changi Airport.

Set up first in Hong Kong, Plaza Premium touts itself as the first “pay-as-you-use transit lounge” open to all classes of travellers.

It challenges airline lounges which predominantly serve their business and first class passengers, leaving economy class passengers to wonder around the airport departure area waiting for their flights.

The lounges offers services usually found only in business class lounges – shower, buffet counter, massage chair, Internet access, local calls, video conferencing, international publications and private function rooms, among others.

“In the good old days, companies flew their corporate travellers on business class and put them up in five-star hotels. But now, they are flying economy and have to kill time at the airport,” said Debbie Toledanes, sales and marketing manager for the Hong Kong lounge.

Toledanes said an average 600-700 passengers use the three lounges at the Hong Kong airport but “we can accommodate a little more.”

At the Hong Kong airport, the basic entry fee is US$33.

“You can practically stay there the whole day,” said Toledanes.

Cathay Pacific also uses the Plaza Premium lounge for its passengers at the Hong Kong airport.

Plaza Premium has also worked out arrangements with travel agents who can buy their lounge invitation cards and incorporate them with their packages.

With three airports in the last four years, Plaza Premium is looking at expanding but Toledanes would not disclose the details.