HOTELS ARE NOW SAFE HAVENS FOR INVESTORS

by Andrew Sangster       Hotel Report

During its full-year results presentation earlier this month Whitbread’s chairman, Sir John Banham, described the company as “a safe haven in troubled times”. What makes this statement remarkable is that this is a company that derives 52 percent of its core business operating profit from hotels. And more than 28 percent of its profits come from upscale hotels.

During the year to March 2, Whitbread surprised many by being able to achieve £213.4 million of pre-tax profits, about £3 million above consensus estimates in the City.

The company is now beginning to deliver. In the word of Sir John: “Now is harvest time and we are going to enjoy it.”

Even its Marriott hotels are doing their bit. While revenue per available room in the second half dropped 11 percent due largely to September 11 (50 percent of London guests originate in North America), the seven weeks since the year end have seen a decline of 2 percent in like-for-like sales.

The focus for the Marriotts is to improve profit per room. Despite enjoying a 21 percent premium in terms of rooms yield against a comparative set comprising the UK’s top three hoteliers, Whitbread is some £1,300 behind in profits per room on average.

The good news is that the gap has narrowed markedly, a year earlier it was £3,200. Driving the profitability has been non-rooms revenue with leisure sales up 10 percent, golf ahead by 8 percent and food and beverage up 2 percent despite the fall in rooms revenue.

Helping push the numbers in the right direction was the stripping out of £10 million of costs in the hotels division thanks to a 12 percent central overhead shrink-age.

Whitbread has not been alone in confounding the pessimists. The hotel industry has proved far more robust than was feared in the autumn.

Europe’s third biggest business hotel player, NH Hoteles, pushed revenues up 5 percent year-on-year during the first quarter. Revpar slipped but if the effects of Easter are stripped-out the decline was marginal.

And at Europe’s biggest hotelier, Accor, sales were also up in the first quarter. The hotel division did, however, see sales fall by 1.7 percent on a like-for-like basis.

But the fall in revpar was less than had been forecast, coming in at –3.6 percent against the estimate of –4.7 percent for business and leisure hotels in Europe. European economy hotels saw revpar rise by 3.8 percent. The worst performing region was the United States where revpar dropped 4.5 percent and by 18.8 percent for Accor’s non-economy properties on that continent.

American hoteliers in general have felt more pain than those in Europe with revpar falls of about 15 percent at upscale hotels during the first quarter. According to analysts at Merrill Lynch, this decline is set to moderate to between 2 percent and 4 percent in the second quarter for properties defined as upper-upscale. The forecast is for revpar in 2002 as a whole to come in at the same level as achieved in 2001 and to rise by 4 percent in 2003.

The hotel industry appears to have ridden the storm and the key challenge ahead is taking advantage of the upturn. Over at Whitbread, continental Europe seems firmly on the agenda.

David Lloyd Leisure is heading for Brussels and there are five Costa Coffees in Germany. So how long before that other outperforming brand, Travel Inn, makes its way across the Channel?

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HEALTH AND FITNESS INDUSTRY SHAPES UP

·    Revenue per member rises 10% to £460 per annum

·    Average revenue per club up 20%

·    Operating profit margins down

·    Mature market will drive consolidation

Fierce competition and pressure on profit margins suggest that the health and fitness market is maturing and that the smaller chains will become takeover targets from their  larger rivals according to a survey by KPMG.

With consolidation in the health and fitness club sector very likely over the next couple of years business advisers at KPMG are urging health club operators to shift their focus to improving business performance rather than upping membership.

The survey, conducted among 45 health and fitness clubs, analyses membership levels, membership retention, operating costs, revenue and profits.  The findings show that as the industry matures, new clubs entering the market will not enjoy the growth seen previously in the sector.

Membership fees accounted for 75 per cent of total club revenue in both 2000 and 2001.  Average membership per club has risen 15 per cent to 2,250 in 2001.  The average revenue per member is up 10 per cent from £417 in 2000 to £460 in 2001.  The average revenue per club rose by 20 per cent suggesting there is still some potential for growth. Revenue per club is now around £1 million.

Attrition rates, the extent to which members leave or switch clubs, increased between 2000 and 2001 from 40 per cent to 46 per cent which may also point to increasing competition in a maturing market. .  Operating profits (before rent and depreciation) fell from 43 per cent in 2000 to 41 per cent in 2001. 

Rob Bailey, manager at KPMG’s travel, leisure and tourism team and author of the survey, said:  “There has been a twenty five per cent increase in the number of clubs between 1996 and 2001.  The fall in operating profits within the industry suggests competition is intensifying among the clubs and eroding profits.   Operators need to benchmark their trading performance to help identify where efficiencies need to be improved if they are to appeal to investors and fend off any takeovers.”

Payroll costs such as salaries, national insurance and pensions contributions, and rents are a significant drain on costs, and many clubs lose money on food/beverage and retail services.  Rob Bailey adds:  “Operators need to explore innovative ways of unlocking the revenue potential of secondary services such as by out-sourcing, franchising or joint venture agreements.”

KPMG’s Hospitality team comprises a team of professionals who specialise in providing advisory services to large and mid-market clients in the Travel, Leisure and Tourism marketplace.  These services include market studies, strategic planning, financial management,  profit improvement and IT.

GLOBAL REACH: ENGLISH IS NOT THE NET’S FIRST LANGUAGE

Source:  Tourism Technology  -   Non-English speakers outnumber native English speakers when it comes to using the Internet, according to new research from Global Reach.

Around 59.8 percent of the total world online population are from non-English speaking zones, compared to 40.2 percent from English speaking zones.

This is equivalent to 338.5 million non-English Internet users and 22.8 million English speaking users. Spanish is the number one European language for non-English speaking Internet users. Around 40.8 million Spanish-speakers are online.

Speakers of European languages (excluding English) account for 33.9 percent of the total world online population.

This compares to 38.6 million German speakers, 22 million French speakers, and 20.2 million Italian speakers.

Internet users from Asian speaking zones account for 25.8 percent of the total world online population. This is equivalent to 146.2 million Internet users.

Chinese is the number one language in the Asian-speaking zone. Around 55.5 million Chinese speakers use the Internet, compared to 52.1 million Japanese speakers and 25.2 million Korean speakers.

 

 

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Source:  Tourism Technology

NEWS@PATA

PATA AMERICAS TRAVEL MART POSTPONED

PATA will postpone the PATA Americas Travel Mart until 2003, as forecasts indicate that inbound traffic to North America will not reach pre-September 11 levels until approximately mid-2004. The PATA Americas Travel Mart aims to promote North American destinations to buyers predominantly from the Pacific Asia region. The event, originally scheduled to take place in Mexico City in September 2001, was initially postponed until 2002 in the wake of the Sept. 11 attacks. PATA Vice President-Development, Mr. Peter Semone, said recovery from the Sept. 11 impact would be much more tangible by 2003. Postponing the event until 2003 also gives PATA the opportunity to expand the show through a proposed strategic alliance with the Washington, D.C.-based American Hotel & Lodging Association. For further information, e-mail patm@pata.th.com.

PATA SUSTAINABLE TOURISM EVENT ADDS MART

PATA is pleased to announce the incorporation of a mart into the 1st PATA Sustainable Tourism Conference & Mart, October 23-26 in Banten, Western Java, Indonesia. The one-and-a-half day mart component will open up a host of business opportunities for attending delegates. The mart, in the form of table-top displays, will showcase the region's sustainable tourism-related products, facilities and services. Visit http://www.pata.org for registration forms, airline discounts, programme information and tour details. E-mail: pstc@pata.th.com.

SCHOLARSHIPS AWARDED

Two oustanding individuals have received scholarships to the 10th annual Tourism Executive Development Programme at Southern Cross University in Ballina, Australia, June 22-29, 2002. The scholarships, offered by the PATA Pacific Division and the university, were awarded to Mr. Stephen Hayes of Tourism Tasmania and Mr. Severo Tagicakiverata of the Fiji Visitors Bureau.

ADVERTISING OPPORTUNITIES WITH PATA

Target thousands of travel industry insiders through PATA’s in-house advertising vehicles. For example, you can reach 2,000 fellow PATA members by advertising in the 2002/2003 PATA Member Directory; booklet advertisements start at US$500, while banners on the interactive CD-ROM begin at US$150. Reservations and materials must be received by August 15, 2002. You can also advertise in this weekly News@PATA e-newsletter, starting at US$150 for 100 words, with discounts for multiple insertions. Banner advertisements on PATAnet (20,000 users per month) start at US$500 for three months. To request an advertising rate sheet, contact Ms. Paveena Olansuksakul. E-mail: paveena@pata.th.com.

MAJOR INDIA INBOUND/OUTBOUND SHOW IN SEPTEMBER

PATA members are eligible for a 20 percent discount on display space during the 4th International Travel & Tourism Mart, New Delhi, India, September 27-29, 2002. The event aims to position India as a premier tourist destination and to promote Indian outbound travel. Published rates are US$330 per square metre for a built-up stall and US$300 per square metre for space only. The 4th ITTM is organised by Tafcon Projects and sponsored by Department of Tourism, Government of India. For further information contact tafcon@del2.vsnl.net.in. Fax: (91-11) 435-5215, 435-4077. Online bookings: http://www.tafcon.com/ittem.htm. 

MARIANAS VISTORS AUTHORITY SEEKS REP IN JAPAN

The Marianas Visitors Authority has announced a solicitation for proposals from PATA members and other interested companies to provide representation for its sales and promotional services throughout Japan. One proposal is for companies to provide qualified individuals and the other is for companies that can provide sales and marketing services. Both RFPs offer contracts through September 2003, which may be renewable for up to a two years. All submissions must be postmarked no later than June 17, 2002; notice of intent to submit a proposal must be received in writing no later than 1500 on June 17, 2002. For further information contact Ms. Vicky Benavente. Tel: (670) 664-3200-11. Fax: (670) 664-3237. Web site: www.mymarianas.com.

EUREKA MEETS ASIA

The Macau Government Tourist Office is supporting the Eureka Meets Asia technology and innovation event, to be held in Macau SAR from November 25 to 29, 2002. The theme for the event is “Green Enterprises for Sustainable Development.” Subjects to be showcased include natural medicine, information technology and environmental design. For further information, please visit http://www.eureka-asia.org.mo.

PEACE THROUGH TOURISM BICYCLE TOUR

PATA member Japan Airlines, along with its tourism partners in Japan, China (PRC), Korea (ROK) and the World Tourism Organization, is promoting the 2002 China Bicycle Tour, July 21-29, 2002. Participants will travel from Inner Mongolia to Beijing via bicycle and sightseeing bus, carrying their national/regional flags and experiencing local cultures, cuisines and sights along the way. For more information, please visit http://bikenavi.net/tours/cbt_en/index.html.

STRATEGIC INFORMATION CENTRE WORLDWATCH

* Korea (ROK) is serious about attracting international visitors from China (PRC) and why shouldn't they be? Arrivals from China (PRC) accounted for 9.4 percent of total international arrivals in 2001 and became the second largest source of visitors for the country. To continue the momentum, many local businesses are emphasising their Chinese cultural heritage while some cities are injecting cash into the revitalisation of “Chinatown” areas. Incheon, for example, plans to spend more than US$6 million to create an atmosphere attractive to Chinese travellers for shopping, relaxing and dining. And within 10 years, the volume of traffic from China (PRC) is expected to rival that from Japan.

* Meanwhile, China (PRC) itself is preparing for a significant increase in travel demand. At the 2002 International Air Transport Association AGM in Shanghai, attendees were told that annual air passenger volume in China (PRC) is expected to jump to 100 million by 2005 -- a significant rise from the 75.2 million carried during 2001 -- and to reach 140 million by 2010.

* With the Internet proving to be a popular and growing method for booking travel components such as air fares and accommodation, it was inevitable that sooner or later some watchdog body would also take an interest. In the United States, the government has created a nine-member commission to consider whether or not Web sites offering such products should be regulated. The commission’s findings are expected to be made available later this year.

 

 

FORRESTER PROJECTS $6.8 TRILLION FOR 2004 ($B)

Source:  Tourism Technology   -     Forrester Research predicts that by 2004, online commerce will reach $6.8 trillion. This huge amount comprises Forrester's projection for both business-to-business and business-to-consumer transactions online. The analyst firm projects that while the United States and North America currently preside over the majority of online transactions, that will shift in the coming years as Asia and European nations become more active.

 

This shows that the U.S. will have 47% of the world e-commerce, Japan 13%, Germany 5.7%. By region, this gives:

Fuente: Forrester Research, Inc.

 

Source:  Tourism Technology

Millennium Hotels and Resorts venture into Morocco

Set for growth, Millennium Hotels and Resorts is pleased to announce their expansion plans into North Africa. Further to the opening of their first venture in the Middle East, the Millennium Hotel Abu Dhabi, in March this year, Millennium Hotels and Resorts will be managing two new luxurious properties in Morocco.

 

Currently under construction, both the Millennium Hotel Agadir and Millennium Hotel Marrakech are located in prime spots in Morocco. Agadir, the warm sea resort of Morocco, lies besides an immense beach of fine golden sand, over ten kilometres long. A beautiful and secular city set at the foot of the High Atlas mountains, Marrakech is one of Morocco’s four Imperial cities.

MILLENNIUM HOTEL AGADIR (Winter 2002)

Situated on the beautiful sandy beach in Baie des Palmiers, the 5-star Millennium Hotel Agadir is set to become the newest relaxation abode in the city when it opens later in November this year. Taking cue from regional Islamic architecture and the characteristics of Morocco, the Hotel’s Kasbah-like exterior is merely the façade towards a definite feeling of continuity and harmony within space, where one immediately senses the feeling of serenity.

With guest facilities including 291 luxurious guestrooms - of which 6 are Diplomatic Suites and one, a Royal Suite - a magnificent Grand Ballroom and a diverse range of culinary options, the Millennium Hotel Agadir is certainly to be a favourite for the leisure market, as well as the conference, meetings & incentives market alike; its distinctively warm and welcoming ambience assuring you of the impeccable traditional hospitality to follow.

Featuring a richness and clarity that comes through in all aspects of the Hotel, guest rooms are traditionally furnished, complete with a long bath and shower, electronic safe, IDD telephone & voicemail, computer & facsimile data ports, satellite TV, remote internet access via the TV, hair dryer and mini bar. Elegantly furnished, the Royal Suite features its own private pool.