Hotel Delinquency Rate Remains Low, Despite Dramatic Declines in RevPAR in 2001, 2002

/PRNewswire/ -- PricewaterhouseCoopers forecasts that delinquency rates will peak this year at 5.5 percent of outstanding loans, well below the levels in 1991 and 1992 of 16 percent. According to PricewaterhouseCoopers' research, the majority of problem loans already have become delinquent or are currently being restructured.

In addition, PricewaterhouseCoopers' analysis reveals low maturity risk for lodging C-Corp and REIT loans, as improvements in RevPAR (revenue per available room) are expected to coincide with the significant number of loan maturities in the second half of 2002 and 2003.

PricwaterhouseCoopers studied data from numerous sources, two of which represent the range of delinquency rates:

During the trough of the recession in 1991, the delinquency rate was 11.0 percent, increasing to 16.0 percent one year following the recession, 1992.

PwC research indicates the following points appear to explain why a significant level in delinquency rates in the lodging industry has not occurred:

PricewaterhouseCoopers is the leader in econometric modeling and providing U.S. lodging industry forecasts based on proven econometric models. The group predicted almost every industry turning point in the last ten years, usually two years in advance of each market move.

In July 1991, PricewaterhouseCoopers predicted a return to profitability for the industry in 1993, and average daily room rates surpassing inflation. In April 1996, PricewaterhouseCoopers issued an early alert that there would be an occupancy decline in 1997. In October 1996, the firm predicted occupancies would decline in 1997. And in September 1997, PricewaterhouseCoopers said room starts would decline in 1998.

In January 2000, PricewaterhouseCoopers forecasted a U.S. lodging industry slowdown in late 2000 and early 2001.

Recently, PricewaterhouseCoopers applied the same econometric modeling to the local level and can now offer forward-looking Market Outlooks. These local forecasts rely on extensive lodging data collection, empirical studies and solid econometric models to support all positions and conclusions. The Market Outlooks are patterned after the structure of the U.S. industry econometric model.

PricewaterhouseCoopers Hospitality and Leisure Group provides services including management, technology, human resources and financial consulting in North America, Europe, the Middle East, Africa and Asia Pacific.

PricewaterhouseCoopers (http://www.pwcglobal.com/) is the world's largest professional services organization. Drawing on the knowledge and skills of more than 150,000 people in 150 countries, we help our clients solve complex business problems and measurably enhance their ability to build value, manage risk and improve performance in an Internet-enabled world.

PricewaterhouseCoopers refers to the member firms of the worldwide PricewaterhouseCoopers organization. 

Bringing Claridge's  Into The 21^st Century

Creating New Vision and Management Style

Written By: Gene Ference  Ph.D.   www.ferencegroup.com

Specialists in Organizational Assessments and Performance Cultures

Here is an interesting challenge: take traditional legendary service of a world-renowned, European hotel and introduce change to implement a continuous improvement, team-based, modern service culture. Top-tier hoteliers the world over recognize that beating the competition depends on meeting and exceeding guest expectations; they also recognize that the ability to beat out the competition depends a great deal on having peak-performing employees and teams. The executive team at Claridge’s in London is no different in recognizing this, and faced exactly the challenge mentioned.

The hotel was established in 1812 and by 1898 became the Claridge’s we recognize today. This legendary hotel, impossible to replicate today, has for over 100 years been providing world-renowned hospitality service to crowned and elected heads of state, senior state officials, leading business people, and the most discriminating leisure guests. To keeping up with the expectations of their guests, by the 1990’s the hotel was undergoing transformations and restorations to a number of its showpiece accommodations.

The restorations and transformations Claridge’s was making were telling signs of what was happening beneath the surface. Meeting and exceeding guest expectations lay in Claridge’s ability to increase the competitiveness of its value network: the systems, processes, decision model, and organization of a company that contribute to product desirability. The value network begins and ends with the expectations of the customer, but its success depends on effective and consistent service-performance and guest-responsive teams. Thus, the challenge for the executive team at Claridge’s:

o        Develop a mission necessary for peak service-performance based on existing organizational fundamentals.

o        Implement a performance tool that measures how well goals are aligned, and facilitates a team workplace.

Enter Gene Ference, PhD, and HVS/The Ference Group & The Center For Survey Research. The tool of choice: the Service-Culture Map^TM – a powerful process that involves periodic employee and customer surveys, with continuous improvement as its central theme leading to real organizational peak performance. On-going and continuous, the map’s four phase, ten-step process moves an organization from competitive strategy (Phase I) to in-depth service-operational insight (Phase II) to performance monitoring, feedback, teambuilding, organization-wide goal alignment (Phase III), and ultimately to a uniquely focused peak performing culture (Phase IV).

The cornerstones to enhance traditional Claridge’s renowned service were jointly laid by the executive team headed by newly appointed general manager Christopher Cowdray and Gene Ference. Based on Claridge’s organizational fundamentals, themes of the mission statement centered on leveraging the hotel’s long history, equating excellence with perfection, acknowledging that the expectations of guests, owners, and employees are equally important, and making cross-functional teams the pinnacle of a competitive value network. From the mission, a performance appraisal was created and designed to work in tandem with survey results. Key elements to the revamped appraisal process included benchmarking performance, a goal factor that aims at aligning performance standards organization-wide, and teamwork and communication skills. The twist: from start to finish, the appraisal is interactive. Having employee and appraiser complete sections individually forms the basis for discussion at the appraisal meeting and facilitates a meeting of minds.

The scope and depth of the reports generated from the survey results prepared executives and managers with the keys required for successful service-performance by providing accurate, real-time snapshots of employees’ perceptions of the value network. Claridge’s magnified the power of the Service-Culture Map^TM  with repeated survey administrations. The first survey administration set the baseline; the second survey established a comparative database identifying the direction; the third survey identified trends within departments, divisions, and property.

Through data analysis, a set of significant impact statements was identified: a concentrated grouping of survey statements with statistically significantly impact on performance and satisfaction, and when taken together provide the executive team and management an effective guide to developing a management style most appropriate for an organization. Significant impact statements are calculated from (1) drivers: greatest mean differences is survey statement score between departments with an increase in score to those with a decrease in score (2) significant impact statements: survey statements that correlate strongly with 30 or more other survey statements. For Claridge’s, the significant impact statements represented 11% of all survey statements and effected 80% of the variation in survey results, i.e., the variation between instances of high or low score. These statements included topics such as (in rank order):

·         Senior management understanding of the front-line work environment.

·         Mid-manager job competence.

·         Balance on emphasis between quality of service and profit.

·         Manager objectivity and honesty in providing feedback and information to and about employees.

·         Openness and approachability of the executive team.

·         Continuous and frequent performance feedback and recognition of special efforts made by employees.

·         Supervisor adequately training employees for the level of expected performance.

Another useful data analysis technique built into the survey is the grouping of survey statements into organizational dimensions: clusters of related of survey statements through which operational insight is gained and management can monitor and implement strategies and objectives.

Dimension analysis enabled Claridge’s executive team and management to focus on activities that are central to the organization’s culture, and to enhance team dynamics and guest-responsive service. When ranked, the dimensions that consistently score highest for Claridge’s are “Quality of Products and Services,” “Training and Career Development,” and “Mid-Management Practices.”

Companies want to attain consistent and high proficiency in such areas and may see them as integral to an effective operation. However, what makes these findings stand out for Claridge’s is that when taken together, the content of each dimension relates directly back to the mission, and to the intent of the interactive performance appraisal.

For Claridge’s, the trend of increasing scores in these dimensions equates to increasing culture alignment. Analysis of survey results by dimension also serves as a barometer for the executive team. By enabling them to monitor the development and phasing-in of competencies necessary for future service-performance success, Claridge’s executive team has significantly improved in critical areas such as leadership, participative/supportive management style, communications, and teamwork.

Monitoring the development and phasing-in of competencies is only a part of strategic thinking. Remember our challenge: take the already legendary service of a world-renowned hotel and turn it around to implement a continuous improvement, team-based, service culture. In every turnaround story there is a group that performs above the average. Another part of strategic thinking is uncovering high-performance groups and transferring their knowledge across the organization. Because development and phasing-in of competencies is a long-term strategic goal, redirecting the data analysis to focus on results by division makes sense.

To be sure, the depth and flexibility of the survey design itself made possible such an analysis. The data were grouped by division, an average score for each survey statement by overall results was then computed, and 95% confidence intervals were constructed by survey statement and division results. Next, we identified differences in the various divisions’ performance, and, indeed, discovered a division that by the second survey administration was outpacing all other divisions, despite performance improvement for Claridge’s across the board.

The obvious question, “What caused this division to outpace all other divisions?” will be the subject of our follow-up article, Fueling High Performance Teams. 

Gene Ference, Ph.D. 
HVS International/The Ference Group 
Riversbend
262 Lyons Plain Road 
Weston, CT 06883 
203.226.6000 
203.221.0068 fax
gference@hvsinternational.com
www.ferencegroup.com

NH Hoteles H1 net 43.9 million euro, up 8.1%; includes 14 million euro one-time gains

Ananova.com  -  NH Hoteles SA said net profit grew 8.1% to 43.9 million euro in the first half to June 30 from a year earlier, boosted by 14 million euro of one-time gains, generated mostly by a "sale and lease-back" operation in February.

Sales climbed 13.2% to 424.9 million euro, while EBITDA declined 6.4% to 105.6 million.

NH Hoteles said the decline was due in part to the lower margins registered at its new hotels.

Hilton finds mold in Hawaiian Village tower - resort closed

(Reuters) - Hotel operator Hilton Hotels Corp. (HLT) said on Thursday it discovered mold in one of its Hawaii hotels, a development analysts said could have liability ramifications from both a real estate and personal injury standpoint.

Beverly Hills, California-based Hilton said in a Securities and Exchange Commission filing it had discovered the mold in guest rooms at the Kalia tower, part of its Hawaiian Village resort, in the "normal course of cleaning."

Since then, it said, the 25-story tower's 435 rooms have been cleared and taken out of service until the source of the mold is determined and the problem fixed.

"Experts in the field have been hired and they are on the property," Hilton said. "They will be providing their evaluation as to the cause and extent and, more importantly, what steps we must take to alleviate the situatio

Hilton said it has received just one report so far of adverse health affects that may be related to the mold. In that case, an employee sustained a rash but returned to work the next day saying she felt fine, according to Hilton.

"However, anyone believing they may have been affected should consult with their physician promptly," the company said. "We will assist with referrals and transportation."

Hilton said it is also keeping in close contact and working with appropriate health authorities.

It did not detail its potential liability from the situation, but companies generally make such filings with the SEC when they believe circumstances may be material to their operating performance, analysts said.

Any potential liability could come on two fronts: from the real estate perspective in money required to remedy the problem; and from the personal injury side if anyone's health was harmed by the mold, said Dan Goodkin, a partner at Liner Yankelevitz, who specializes in real estate and construction litigation.

Goodkin said information in the filing was too vague to determine any exact level of any liability.

On the property front, he said, the liability would depend on the source of the mold at the $95-million building.

"If it's from a window leak, that could be an improperly installed window" that is easily fixed, he said. "If it's a roof leak, that could be a bigger problem."

On the personal injury front, the liability is less clear because precedents are relatively few in that area, Goodkin said. In general, he added, mold-related complaints come from people whose allergies are exacerbated by breathing in mold spores.

"Personal injury is hit and miss," he said. "Right now there's not a real sense in the community whether mold can cause injury beyond exacerbating allergies."

Opened in May 2001 in Waikiki, the Kalia tower is part of Hilton's large Hawaiian Village resort complex, which contains guest rooms, stores, restaurants and other amenities. 

Jordan:  Hospitality industry becoming more acceptable as career choice

'Culture of shame' slackens as young people find employment in hotels, restaurants

The Jordan Times  -  AMMAN — Once looked down upon by society jobs in the hospitality industry are attracting more young men and women who are pushing traditional boundaries to begin their professional climb.

Stigmatised by a “culture of shame,” so-called inferior jobs such as serving or cleaning up in hotels, cafÈs and restaurants subsequently created an industry dominated by foreign workers, mainly Indian, Philippine and Egyptian nationals.

While resistance to working in the hospitality industry lingers, sociologists and workers agree that society's view towards such work is improving.

High professional standards within hotels and public awareness, according to hospitality industry expert Ammar Kanaan, is a key factor in this shift. Official figures reveal exponential growth in hospitality job creation.

With 8,000 in 1989, the number of workers in hotels, souvenir shops, travel agencies, and tour operating offices increased to 22,634 employees by last year, according to the Ministry of Tourism.  Employees in classified hotels alone nearly doubled from 5,782 workers in 1989 to 10,893 in 2001.

Kanaan, who is also general manager of the Ammon College for Hospitality and Tourism Education (ACHTE), said more Jordanians looked to this sector for employment when it no longer became feasible for hotels to maintain foreign staff with the devaluation of the dinar in 1989.

“The situation was much different during the 1980s. There simply weren't any Jordanians willing to wait on tables or work in what is known as the service industry,” said Kanaan.  “But if we look at the hospitality industry today, particularly in three-, four- and five-star hotels, the majority of those working in food and beverage related jobs are Jordanians,” he added.

Encouraging ACHTE graduates to share their experiences during official events and the support of the Ministry of Tourism are two of the ways to promote awareness and shift negative attitudes.

ACHTE, a private college founded in 1981, provides specialised training for up to 600 students each year seeking to join the hospitality industry.  After a two-year period, which includes on-the-job training in local four- and five-star hotels affiliated with the college, graduates earn their diplomas.  Many of these hotels, according to Kanaan, are often keen on taking on those who appear promising during the training period.

Breaking the gender taboo

Sociologist Musa Shtewi said gender-related issues may deter people from working in this sector.

“One factor causing resistance is the perception that working in serving or cleaning is more female-oriented,” he said.

But more professional standards in hotels along with a tight job market are easing the resistance, he said.

Ministry of Tourism figures for 2000 indicate that 7,305 males compared to 437 females were working in hotels across the country.

But Kanaan said that women usually prefer administrative posts such as front desk jobs or public relations and banqueting over housekeeping or waitressing.

At the ACHTE, Kanaan said the number of women varies. In 2000, for example, there were 12 female graduates out of 60 students but last year the institution graduated only one woman.

The marketing communications manager at the five-star Grand Hyatt Amman Hotel, Madian Al Jazirah, said that although the industry has come a long way in attracting Jordanians, there still are few women in this field.

“Even with the progress made, seldom does one find women taking up face-to-face contact duties such bar-tending or waitressing,” said Al Jazirah.

“Those who do are usually Filipina,” he added.

But some women are breaking through professional and social barriers to make their mark in the hospitality industry. Some, perhaps, are luckier than others when it comes to getting their family or friends' support.

Amani Dureidi, 22, concierge clerk at Amman's Grand Hyatt, faced little resistance when she told her parents she wanted to pursue her studies in hotel management at the Applied Sciences University.

“They told me to go ahead with whatever career I wished to pursue, but advised me that it could be a tough job in this field unless I carried myself well,” said Dureidi.

Among her responsibilities, Dureidi handles guest affairs and makes sure the valets, doormen and bellboys are performing efficiently.

The young woman worked her way up from being an operator at the hotel's communications centre, moving on to the business centre and bookshop then to her current post.

“Although it isn't easy being a woman in this profession, the positive change in the mentality of most people towards women in the hospitality industry helps. Still, others look at girls who work in hotels without much respect,” she added.

Apart from late night shifts, which she said caused her family to grumble every now and then, Dureidi said the hospitality industry constitutes a career she plans to unconditionally devote herself to.

Over at the five-star Le Meridien Hotel, receptionist Rasha Al Azza has a different story to tell. Having joined the hospitality industry just over a month ago, 19-year-old Azza, who trained as a secretary, said her friends occasionally criticise her for working at a hotel.

“Many people continue to regard women working in hotels as loose, and there's usually a lot of talk about their reputation being at stake, but it shouldn't be that way,” said Azza.

“It doesn't bother me. My family gave me their support to go after what I wanted to do with my life, and that's the important thing.”

Where it Pays to Stay: Millennium Hotels and Resorts launches “Partnercard”

FREQUENCY REWARD PROGRAM

NEW YORK, NY - July 25, 2002 - Beginning this fall, guests of Millennium Hotels and Resorts properties will enjoy a first-of-its-kind amenity in the United States with the launch of Millennium PartnerCard, an innovative concept in customer loyalty programs.  Rather than earning points for accommodations and dining on property, customers accrue actual dollars for their purchases, which can then be immediately applied to their bill upon checkout, or amassed for future visits.  The program rollout begins with the company's 18 hotels in Europe and the Middle East this summer, with properties throughout the United States introducing it this fall, and Asia and Australisia debuting in early 2003.  No fee is required for participation.

The program operates on a dedicated tracking system that identifies the member from a microchip embedded in the membership card.  Hotels will be equipped with special "Ingenico" terminals at reception and any other relevant point of sale.  This terminal reads the microchip in the card and, each night, the hotels will transmit the day's transaction data to a processing center with accurate conversions calculated for currencies worldwide.  Additional smart technology allows the card to be programmed as a key card during the member's stay (availability to vary by hotel).

The primary benefit for all cardholders - and in particular regular business travelers - will be  percentage rebates on their total expenditures for every stay at a Millennium, Copthorne or Maritim hotel.  This can be accumulated and then used to pay for accommodation or meals in any Millennium, Copthorne or Maritim Hotel in the program.

There will also be a number of additional highlights, including:

*       Late checkout  
*       Welcome amenity
*       Free newspaper (in addition to any currently provided)
*       Airline mileage where appropriate
*       Newsletter with offers and promotions

Joining the Millennium PartnerCard program will be completely free of charge.  Members will be able to join online by visiting www.millenniumhotels.com/partnercard, or by completing a simple application form available on property.  Guests who join online will receive instant confirmation with a valid membership number, and they will be able to check the amount of rebate they have in their account through the dedicated website. Members who use the application form will be supplied with a temporary membership card so that they can begin receiving their rebates immediately.

Millennium PartnerCard has been developed in conjunction with Millennium Hotels and Resorts' strategic alliance partner, Maritim Hotels, and will run alongside their PartnerCard program, which was also launched recently.

Commenting on this new benefit for customers, Tony Potter, Chief Operating Officer of Millennium Hotels and Resorts said, "The creation of Millennium PartnerCard is particularly exciting for us at this time in the company's development and will be of particular interest to our regular business customers.  Through our relationship with Maritim and the continued expansion of our group in the Middle East and North Africa, we are constantly opening up new destinations and increasing awareness of the Millennium Hotels and Resorts brand.  This card will allow us to reward our clients, in a very tangible way, for using our hotels, and those of our alliance partner, whenever they travel.  In time, it will also allow us to tailor the products that we offer to clients' specific needs through the information stored on the card about their preferences."

About Millennium Hotels and Resorts

Millennium Hotels and Resorts (MHR), established in the United States in 2000, is the North American arm of London-based Millennium and Copthorne Hotels plc (MLC).  The MHR portfolio includes 20 holdings in The Americas, and the company operates properties including:  Millennium Broadway Hotel, New York; Millennium UN Plaza Hotel, New York; Millennium Biltmore Hotel, Los Angeles; Millennium Knickerbocker Hotel, Chicago; Millennium Bostonian Hotel, Boston; Millennium Hotel, Minneapolis; Millennium Hotel, St. Louis; Millennium Hotel, Cincinnati; Millennium Harvest House, Boulder; Millennium Hotel, Durham; Millennium Alaskan Hotel, Anchorage; Millennium Resort, Scottsdale, McCormick Ranch; the Millennium Maxwell House, Nashville; Eldorado Hotel, Santa Fe; and the Royal Palm Resort, Galapagos Islands.  MLC holdings outside of the Millennium brand include The Plaza, Millenium Hilton (both in New York) and Sheraton Four Points Sunnyvale (California).

For further information on Millennium Hotels and Resorts, visit www.millenniumhotels.com.

Kingdom Hotels subsidiary exchanges interest in Fairmont management company for a stake in Fairmont Hotels & Resorts Inc.

/PRNewswire-FirstCall/ -- Fairmont Hotels & Resorts Inc. ("FHR") (TSX/NYSE: FHR) announced today that a subsidiary of Kingdom Hotels (USA), Ltd. ("Kingdom"), an affiliate of a trust created by Prince Alwaleed Bin Talal Bin Abdulaziz Al Saud, has signed an agreement to exchange its 16.5% interest in Fairmont Hotels Inc. ("FHI"), the Fairmont management company, for shares of the public company FHR. As a result of this transaction, Kingdom will acquire approximately 4% of FHR's outstanding shares. The transaction will result in the issuance of not more than 3,450,000 shares and not less than 2,875,000 shares, depending on certain future events. Commenting on the announcement, Prince Alwaleed, the president of Kingdom, said, "Kingdom's investment is intended to be a long-term holding and we look forward to our continued relationship with FHR."

Upon the closing of this transaction, which is expected to take place in the third quarter following the obtaining of all regulatory approvals, FHR will increase its interest in FHI from 67% to 83.5%. A partnership managed by Maritz, Wolff & Co. will continue to hold the balance of 16.5%. The shareholder agreement between FHR and the Maritz, Wolff & Co. partnership, which provides for certain rights as between the parties as shareholders, will remain in force. These rights include the Maritz, Wolff & Co. partnership's right to put its FHI shares to FHR and each shareholder's right to acquire the other's position in certain events.

Separately, FHR announced that, in light of the drop in the market value of share prices in the lodging industry, FHR intends to actively repurchase its shares in the market over the next several months pursuant to its normal course issuer bid.

About Fairmont Hotels & Resorts Inc.

FHR is one of North America's leading owner/operators of luxury hotels and resorts. FHR's portfolio consists of 78 luxury and first class properties with approximately 31,000 rooms in Canada, the United States, Mexico, Bermuda, Barbados and the United Arab Emirates. It currently holds a 67 percent controlling interest in FHI, North America's largest luxury hotel management company. FHI manages 38 distinct city center and resort hotels such as The Fairmont San Francisco, The Fairmont Banff Springs, Fairmont Le Chateau Frontenac, The Fairmont Scottsdale Princess and The Plaza in New York City. FHR also holds a 100 percent interest in Delta Hotels, Canada's largest first class hotel management company, which manages and franchises a portfolio of 39 city center and resort properties in Canada. In addition to hotel management, FHR holds real estate interests in 21 properties, two large undeveloped land blocks and an approximate 35 percent investment interest in Legacy Hotels Real Estate Investment Trust, which owns 22 properties.

Source: Fairmont Hotels & Resorts Inc.

CONTACT: M. Jerry Patava, Executive Vice President and Chief Financial
Officer, Tel: (416) 874.2450; Emma Thompson; Executive Director Investor
Relations; Tel: (416) 874.2485, Email: investor@fairmont.com; Website:
http://www.fairmont.com/

End of a tough year Down Under

TravelWeeklyEast.com   -  The Australian Tourism Export Council (ATEC) has described the financial year to June 30 2002 as one that Australian tourism would want to forget.

Australia's latest international visitor arrivals figures for June 2002 saw negative growth of 10.9 percent on the corresponding month in 2001.

"These preliminary arrivals figures for June bring to a close a challenging financial year for the tourism export industry. It started with optimism in June 2001, buoyed with eight months of growth on the back of the Olympic Games, before we encountered September 11, the effects of the slowdown of the world economy and the demise of Ansett," said ATEC managing director, Peter Shelley.

"The overall result for the 2001/02 year in terms of arrivals is a decrease of 6.4 percent on the 2000/01 period. Some 4.7 million visitors arrived in Australia in 2001/02 compared to 5.1 million in 2000/01.

"There is unquestionably an Olympic factor to consider in such a comparison but it is evident that the events of last year have meant we have been prevented from capitalising on the exposure delivered by the Games," Shelley added.

Australian Tourist Commission managing director Ken Boundy said a number of key factors continued to hamper the return to growth for inbound arrivals, including economic difficulties and air capacity constraints.

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