Newsletter - January 4, 2002

HILTON  SELLS  RED LION CHAIN 

WestCoast Hospitality Corporation (NYSE: WEH), owner, manager and franchisor of full-service hotel properties in the Western United States, announced today its acquisition of all of the capital stock of Red Lion Hotels, Inc. from Hilton Hotels Corporation (NYSE: HLT), one of the world's premier owners and operators of hotel properties.  The total consideration paid was approximately $50.6 million.

Red Lion's hotel portfolio consists of eight owned Red Lion hotel properties, 11 leased Red Lion hotel properties, 22 franchised Red Lion hotel properties, one owned Doubletree hotel property located in Pasco, Washington, (279 rooms), and one leased Doubletree hotel property located in Boise, Idaho, (182 rooms).  The Red Lion hotels total 6,052 rooms, and are located primarily in the Western U.S., including Washington, Oregon, California, Montana, Colorado, Idaho, Arizona, Nevada, Wyoming, Missouri, Nebraska and Minnesota.

As a result of the acquisition, WestCoast adds critical mass by doubling the total number of rooms in its hotel portfolio, from 8,600 rooms in 46 hotels located in 9 states to more than 15,000 rooms in 89 hotels located in 13 states.
    
Donald Barbieri, Chairman, President and CEO of WestCoast Hospitality Corporation, commented, "The Red Lion acquisition will bring us into 34 new markets and we expect to increase our market share with the combined sales efforts of the two chains.  We are fortunate to be bringing a talented group of associates into the WestCoast family of hotels."  WestCoast's presence will expand into such key markets as San Diego and Sacramento, California; Colorado Springs and Denver, Colorado; St. Paul, Minnesota; Omaha, Nebraska; and Springfield, Missouri.
    
Financing for the acquisition was provided by the WestCoast Hospitality Corporation Credit Facility and redeemable non-convertible preferred stock through Hilton Hotels Corporation.  WestCoast expects the transaction to be immediately accretive and will provide pro forma financials in its Fourth Quarter 2001 earnings release.  On an after-tax basis, Hilton expects the transaction to result in a nominal book gain.
    
WestCoast Hospitality Corporation, headquartered in Spokane, Washington, owns, operates, franchises, acquires, develops, renovates and re-brands full service hotel properties under its proprietary brand, WestCoast(R).  Formerly known as Cavanaughs Hospitality Corporation, the Company completed its initial public offering in 1998, and converted its Cavanaughs Hotels to the WestCoast brand in 2000, after the acquisition of WestCoast Hotels, Inc.  Prior to the Red Lion acquisition, WestCoast's hotel portfolio consisted of approximately 46 three and four diamond hotel properties located in 9 states, all of which service business, convention and leisure travelers.  WestCoast Hospitality Corporation also provides entertainment ticketing through its TicketsWest ticketing network, with operations in many of the markets served by its hotels.  WestCoast believes the combination of entertainment with hotels provides customers with a one stop shopping approach that many consumers are looking for today.
    
Hilton Hotels Corporation is recognized internationally as a preeminent hospitality company, which develops, owns, manages or franchises approximately 2,000 hotels, resorts and vacation ownership properties.  Its portfolio includes many of the world's best known and most highly regarded hotel brands, including Hilton(R), Conrad(TM), Doubletree(R), Embassy Suites Hotels(R), Hampton Inn(R), Hampton Inn & Suites(R), Harrison Conference Centers(R), Hilton Garden Inn(R), Hilton Grand Vacations Company(R) and Homewood Suites(R)
by Hilton.

Red Lion Hotels, Inns and Inns & Suites are well known and respected for serving the needs of business and leisure travelers.  Founded in 1959, Red Lion earned a reputation as the hotel brand of choice in the Northwest and Western United States.  In 1996, Red Lion was sold to Doubletree and subsequently became part of Promus Hotel Corporation when those two companies merged in 1997.  Hilton acquired Promus in November 1999.

Lehman Brothers Inc. acted as financial advisor to WestCoast.
    
This press release contains "forward-looking statements" within the meaning of federal securities law, including statements concerning business strategies and their intended results, and similar statements concerning anticipated future events and expectations that are not historical facts

LAS VEGAS’ MAJOR HOTELS REPORT SELLOUTS FOR NEW YEAR’S

Despite a national economic slowdown and terrorism fears, Las Vegas was a full house this weekend.

Major hotels reported sellouts, visitor counts were expected to be almost unchanged from last year's levels, and travelers leaving Las Vegas packed McCarran International Airport this morning.

"It was busy, and today it is really busy," airport spokeswoman Debbie Millett said. "They're moving smoothly, but a lot of people are flying in and out today. Today lives up to expectations."

But it was a different kind of customer coming to Las Vegas for New Year's 2002.

In years past customers would have to book hotel rooms months in advance to have any hope of staying in Las Vegas on New Year's Eve. If they did manage to get a room, the rates they would pay for those rooms would be exorbitant.

This year much of the New Year's business was booked less than a week before Dec. 31, said John Marz, senior vice president of marketing at Mandalay Resort Group, which owns five Strip casinos.

"People understand there's a lot of (vacancies) in Las Vegas now, and they can wait longer to make their decision to come up here," Marz said. "That's exactly what happened (this New Year's). It was literally within the last five days that these rooms started to sell out."

The story was the same at MGM MIRAGE's five Strip casinos, spokeswoman Shelley Mansholt said.

"Most of our properties did sell out, but what we saw was that a lot of properties did not sell out until the last minute," Mansholt said. "In previous years they sold out many weeks in advance."

But sell out Las Vegas did, or at least it came very close.

"We had a good weekend ... the last two days of the (holiday) weekend, we were full," Marz said.

In terms of number of visitors, the holiday beat expectations, Marz said. At Park Place Entertainment Corp.'s five Strip properties, business was strong enough that hundreds of laid-off workers were called back, Park Place spokeswoman Debbie Munch said.

"It was more an FIT (free-and-independent travel) customer than a casino customer," Marz said. "Our revenues for the weekend met our expectations. We got a good rate this weekend. It was not an incredibly great rate, but it was a good rate."

Mansholt said the weekend was not the revenue generator for MGM MIRAGE that it had been in prior years.

"In terms of rates, they were much lower than in recent years," Mansholt said.

Though final counts won't be known for several weeks, the Las Vegas Convention and Visitors Authority was projecting 282,000 would visit Las Vegas for New Year's 2002, down by just 5,000 over New Year's 2001. That would equate into a 97 percent occupancy rate, compared with more than 99 percent on New Year's 2001.

"Certainly they (resort operators) seemed to be filling (hotel rooms) gradually," LVCVA researcher Kevin Bagger said. "As far as the revenue side, that was difficult for us to quantify. They were guarded about that, because they weren't achieving the rates they saw last year."

Rates for the Strip's hotel rooms did not challenge last year's levels.

When brokerage firm Merrill Lynch conducted a survey of 14 major Strip properties Dec. 20, not one was quoting a higher rate for this weekend over last year. The lowest decline in rates for the Saturday preceding New Year's was posted at Mandalay Bay, where rates were off just 2.6 percent. At the Flamingo Las Vegas, the decline was more than 72 percent. The average decline among the 14 properties was just over 40 percent.

But compared with the last four weeks, rates were up everywhere in the Merrill Lynch survey. The $369 rate quoted by Mandalay Bay was nearly double that property's $192 average weekend rate for the last four weeks. At the Bellagio, rates rose from a $299 average to $499 on Dec. 29; at Paris Las Vegas, rates rose from $163 to $260; and the Venetian reported a rise from $249 to $299.

AUSTRALIAN HOTELIERS CALL ON GOVT TO RETHINK AIR MARSHAL PLAN

Australia's hotel industry is calling on the Federal Government to rethink its position on the air marshals issue.

It comes as discount carrier Virgin Blue also renews its call for the Government to pay for the cost of placing marshals on Australian flights.

The airline says there have been too many extra costs placed on air travel in recent times.

The Australian Hotels Association's Andrew Wilsmore agrees.

"If they're going to force airlines to bear the brunt of the cost to put these air marshals on these flights that ultimately will be passed on to the travelling public," Mr Wilsmore said.

"That's a cost that probably comes at the worst possible time for the tourism industry.

"Airlines have already been hit with several unjustifiable airline increases in recent times relating to increased airport charges, levies, insurance, departure tax increases."

UK HOTELS UNMOVED BY COMING OF EURO


Major hotel chains in the UK have made no big changes to prepare for the New Year introduction of the euro as hard currency in Europe.

Marriott, Travel Inn, Le Méridien and the Savoy Group all said they would accept euros just like any other major currency at the daily exchange rate. None of them planned to introduce dedicated fixed euro rates or change their marketing material.

A spokeswoman for the Savoy Group said: "On one hand it's seen as this monumental change, but on the other it's just another currency."

The euro's launch was the biggest-ever introduction of new banknotes on a single day.

The British Tourist Authority (BTA) has urged tourism businesses to prepare for the euro's arrival. It said that travellers within the euro area would quickly realise the benefits of using a common currency and may expect businesses outside the euro area to follow suit. A spokesman said: "Europeans already have the impression that we are expensive. It is very important that businesses are euro-friendly."

In 2000, visitors from the euro zone accounted for half of all overseas visitors and spent more than £4b - a third of inbound tourism revenue. The BTA said it was "too controversial and dangerous" to predict what effect the decreased transaction costs in the euro zone would have on the number of visitors to the UK.

At the 46-bedroom Derwentwater hotel in Keswick, Cumbria, guests from Holland account for 10% of the hotel's turnover. The hotel does not accept anything apart from sterling, and the euro will not change this policy. Manager David Leighton said: "We only accept sterling and it's never caused us a problem. Most foreign guests have already paid for their holiday upfront through the tour operators, who pay us in sterling. We haven't done anything to prepare for the euro. Obviously, if we start to get prompts from guests and tour operators, then we'd review the situation."

by Ben Walker

Source: Caterer & Hotelkeeper magazine, 3-9 January 2002  www.caterer.com

PHONE DEAL FOR MARRIOTT GUESTS

Every 100th Middle East Marriott and Renaissance hotel guest to check in until January 15 will receive a free top-of-the-range mobile phone.

The promotion will see each 100th guest who registers at any one of 12 hotels in Dubai, Egypt, Saudi Arabia, Jordan, Qatar and Lebanon presented with a Motorola V66.

The model was launched in the Middle East in September and the company says it sold 20,000 handsets in the first month. The phone offers multi-language capability including Arabic and has advanced technology accommodating faster access to the internet.

The handset is tri-band and features voice dialling, voice memo recorder and a WAP browser.
Participating hotels are: JW Marriott Dubai, Dubai Renaissance, Jeddah Marriott, Riyadh Marriott, Beirut Marriott, Cairo Marriott, Sharm El Sheikh Marriott Beach Resort, Hurghada Marriott Beach Resort, Alexandra Renaissance, Doha Marriott, Amman Marriott and the Petra Marriott.

INDIAN GOVT INVITES BIDS FOR 3RD TRANCHE OF ITDC HOTELS
 

The Indian government invited initial bids for the 3rd tranche of state-owned India Tourism Development Corporation (ITDC) hotels, involving sale of 9 properties.

Elite Kovalam Ashok Beach resort in Kerala with 196 rooms along with Hotel Airport Ashok at Kolkata with 149 rooms, are amongst the hotels which have been put on block.

The government has already completed the disinvestment of 6 hotels including Ashok Bangalore which was given out on long term lease, in the 1st tranche.

Bids have already been invited for 10 hotels in the 2nd tranche.

In the 3rd and the latest tranche, hotels that have been offered for sale include Hotel Jaipur Ashok, Hotel Patliputra Ashok at Patna, Hotel Kalinga Ashok at Bhubaneshwar, Hotel Jammu Ashok and Hotel Khajuraho Ashok.

In addition, Hotel Aurangabad Ashok, and Hotel Manalai Ashok have also been put on block in the latest tranche.

Lazard Capital has been retained as global advisors for the sale of these properties, for which last date of submission of EoIs has been fixed at February 15.

As per the eligibility criteria, bidders for the Kovalam property must have a minimum net worth of Rs 150 million (US$ 3.1 million), and for other properties the figure has been pegged at Rs 50 million and Rs 30 million.