Newsletter - June 5, 2002

TAKING STOCK OF TECH TOYS

Article from the May issue of Lodging Magazine

By Robyn Taylor Parets

In-room entertainment assumes a whole new meaning in the Digital Era.

Even 20 years ago, hotel guests were more than satisfied with a clean room and cable television. Not anymore.

Now, travelers want the same entertainment and technology amenities they can get at home or in the office. This includes pay-per-view television, Nintendo or Sony Playstation, speaker phones, cordless 900 megahertz telephones, fax machines, high-speed Internet, Web access on tv, in-room computers, and more.

When guests check into the Benjamin executive suite hotel in Manhattan, for example, high-tech amenities are standard features. Bose Wave alarm radios, Sony Playstation, and a television Web browser with a wireless keyboard from On Command’s @Hotel pc are just some of the features guests can expect. Other in-room amenities include direct-dial phones, Aiwa stereo systems, @Hotel pc high-speed Internet access, and an hp OfficeJet fax/printer/copier/scanner. When guests are ready to leave, they can check out via their tv sets and receive their folios on their in-room fax machines. "They don’t even have to stop at the desk," says Andrew Labetti, assistant general manager.

Before the Benjamin, a part of the Manhattan East Suites chain that opened in April 1999, "we sweated the details," Labetti says. "We wanted the best for our guests. People on the road want speed, direct-dial phones, and fax machines. We didn’t want them to have to leave the room to work."

The Ritz-Carlton Chicago also places a major emphasis on in-room entertainment and technology. From On Command Web tv to dvd players, Sony Playstations, and high-speed Internet access, guests at the hotel certainly have all the comforts of home and work. In addition, each guestroom features surge protectors and international power converters.

Even mid-market hotels have joined the ranks of properties to offer a full array of entertainment and technology features. Wingate Inns, with 115 properties open, tout standard guestroom amenities such as cordless phones; two-line desk phones with dataports, speaker, conference call, and voice mail capabilities; and high-speed Internet access through LodgeNet. As for entertainment, guests can expect Web tv, pay-per-view movies, and Nintendo games. LodgeNet also is installing digital servers in new Wingate Inns. The digital format allows guests to select from a long list of movies, including foreign films and independent shorts. The digital format also means that guests have the same flexibility they have at home when using their own dvd players, says Wingate ceo Keith Pierce. "They can stop and pause the movie or rewind it. They can even select music."

Another growing in-room technology trend is the use of customized portals that can be used by properties to market restaurants and various services. It also is a great tool for guests to learn more about the hotel and surrounding area. In some instances, travelers can use the website to update their profiles and check frequent guest points.

Fairmont Hotels & Resorts, for example, is currently rolling out an in-hotel portal (www.thefairmont.net) to all of its 38 properties. The site can be accessed by guests via a high-speed connection. Once logged in, a default screen pops up directing guests to information about the hotel, the city, and local attractions. Through links to special sites, travelers may also order theater tickets, make restaurant reservations, book hotel activities, and retrieve detailed maps of local neighborhoods. Guests also are able to check their email and surf the Internet.

New York’s Plaza Hotel takes the concept of a custom Web portal one step further. The property partnered with Aero-Vision Technologies to introduce the Aero-Vision high-speed wireless MicroNode system to Plaza guestrooms. Each room is furnished with a custom flat-screen computer. When a traveler turns on the computer, a "Cyber Concierge" greets them and directs them to organized categories that bring the hotel and Manhattan to life. "Not only is the system easy to use and customized for Plaza guests, but the technology is absolutely unobtrusive with no unsightly wires to mar the historic elegance of our rooms and hallways," says Gary Schweikert, managing director. "This is a primary consideration for a hotel with historic-landmark status such as the Plaza, which balances old-world elegance with leading-edge technology."

Robyn Taylor Parets is a contributing editor of Lodging.

News@PATA

PATA ANNOUNCES PACIFIC DIVISION CHANGES

PATA has announced a restructuring of its Pacific Division. Effective immediately, PATA’s current operations in Sydney have been closed down and the three staff positions in that office have been made redundant. Mr. Ian Kennedy, who headed the PATA Pacific Division from 1986 to 1997, has been asked to assume the position of Interim Representative on a temporary basis. "These changes in the Pacific are a critical part of a multi-phase restructuring for PATA," said Mr. Peter de Jong, PATA President and CEO. "The Pacific area is of vital importance to our Association. We will be adopting a new approach to our presence in the Pacific and to the delivery of our membership services." Mr. Kennedy may be reached in Sydney at tel: (61-2) 4975 4392. Fax: (61-2) 9331-6592. E-mail: iken@pata.org.au.

PRICE INCENTIVE AND MART COMPONENT ADDED

Delegates who register for the 1st PATA Sustainable Tourism Conference & Mart, Banten, West Java, Indonesia, October 23-26, 2002, before June 30, will receive a 10 percent MasterCard earlybird discount on the registration fee. All delegates will also receive a 50 percent discount on air fares to Indonesia on Garuda. A mart component has been introduced to the event. A Seller fee for first delegate with table top display is US$400 per person for PATA members, US$500 for PATA chapter members, US$650 for non-members and US$200 for additional delegates. The Buyer fee is US$170 for PATA members, US$200 for chapter members, US$250 for non-members and US$120 for an accompanying person. The Conference-only fee is US$150 for PATA Members, US$220 for chapter members and US$375 for non-members. Visit http://www.pata.org for registration forms, airline discounts, programme information and tour details. E-mail: pstc@pata.th.com.

PATA TASK FORCE PENANG REPORT OUT NOW

PATA is releasing its PATA Task Force Penang report, priced at US$25 for PATA members and US$35 for PATA chapters and non-members. For further information or to order a copy e-mail: publications@pata.th.com.

HOSPITALITY MARKETS UNDER THE MICROSCOPE

PATA members can subscribe to the Pacific Asia Market Focus Issues of the globalhotelnetwork.com e-newsletter (for the period June 2002 to December 2002) for the special PATA member price of US$108.80. The June 4 edition includes a special report on Pattaya and Hua Hin in Thailand. Other upcoming hospitality reports include Bangalore, Hong Kong SAR, Kuala Lumpur, Manila, Seoul, Shanghai, Singapore, Sydney, Taipei and Tokyo. For further information e-mail: harp@globalhotelnetwork.com.

PATA STRATEGIC INFORMATION CENTRE WORLDWATCH

* The United Nations Environment Programme (UNEP) estimates that the global travel and tourism industry is worth about US$3.3 trillion (11 percent of global GDP) and is responsible for 207 million jobs (eight percent) and US$630 billion in capital investment (nine percent of all capital investment).

* According to the UN, over 400 million people use the Internet, compared with less than 20 million five years ago. By 2005, there will be about a billion users. However, more than half the world's population have never used a telephone.

* Asiana Airlines of Korea (ROK), Spanair of Spain and LOT Polish Airlines have been accepted into the Star Alliance of carriers and should be full members within 12 months. The addition of the three will bring total Star Alliance membership to 17 carriers.

* China (PRC) saw a 10.1 percent growth in arrivals for Q1, 2002. Growth was particularly strong from Korea (ROK) (+45.3 percent) Russia (+21.5 percent), the USA (+10.3 percent) and Japan (+9.4 percent).

* Organising traditional wedding ceremonies for foreigners has become a new tourism tool for Asian destinations such as the Philippines, Indonesia and Thailand. Countries with exotic wedding ceremonies are finding that their colourful nuptial traditions increasingly appeal to foreigners and are underpinning a fast-growing niche tourism sector.

ANALYST HIGHLIGHTS FAIRMONT HOTELS

TWST interview with Michael Happel, Morgan Stanley Dean Witter & Co.  / MICHAEL A. HAPPEL is a Principal of Morgan Stanley Dean Witter & Co.

TWST: Mike, I’d like to begin by asking you to review the performance of the lodging companies and lodging stocks over the past 12 months. In order to do this, is it necessary to divide the period into pre-September 11 and post-September 11?

Mr. Happel: I think that helps. Let me try to give you a quick overview of the fundamentals and the stocks. Going back to early 2001, the US economy was starting to slow, and that was having a negative effect on lodging demand, which was also slowing. Prior to September 11, I was forecasting that RevPAR (revenue per available room) in the lodging industry would be down approximately 3% in 2001, and that would have made it a bad year — a year that was on par with the 1991 recession — but not a disastrous year. Then September 11 came along and travel virtually stopped for a short time period, and that affected the numbers so that RevPAR was actually down about 7% in 2001 — which makes it by far the worst year for the industry on record. This year, 2002, my forecast is that RevPAR will be roughly flat compared to 2001, with the first half of 2002 being weak and the second half of 2002 being much stronger, largely because the comparisons get easier. So September 11 did have a major impact on the industry. In terms of stocks, the stocks actually were performing fairly well in early 2001. At least prior to September 11 they were outperforming the overall market despite the demand slowdown that I described. Then after 2001 the stocks really got clobbered. As a group, they were down anywhere from 30% to 50% after September 11. They have now rebounded quite sharply and, as a group, are trading at prices that are higher than their September 10 prices. So there has been a very sharp rebound in the stocks. I would say they have come back much faster than the underlying fundamentals have come back.

TWST: Mike, you say you are cautiously optimistic. Will you give us the stocks that would illustrate your cautious optimism?

Mr. Happel: I also like Starwood and Host Marriott. The other stock that I would like to highlight is Fairmont Hotels (NYSE:FHR). I think Fairmont is a good buy here still, even at this price. People would probably be quick to point out that it’s trading at something like 10.5 times 2003 EBITDA. That is probably the highest EBITDA multiple in the industry for any of the major hotel companies. What I like about Fairmont is the dry powder on their balance sheet, and the potential for them to do accretive acquisitions in the next 12 to 18 months. Fairmont has roughly 15% debt to total capitalization, and the norm in the industry is closer to 50/50 debt to total capitalization. So you can see from those figures that they have a lot of room to use debt to go out and do acquisitions, and it is a small enough company that they only need to find two to five hotels to make a real impact on the overall company. So I’m excited about Fairmont because of the balance sheet and acquisition story.

Three analysts and top management from eight sector firms examine the lodging sector in this special 47-page Lodging Industry issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info557.htm

ANALYSTS WOULD FOCUS ON STARWOOD

TWST interview with Jake Fuller, Thomas Weisel Partners   /  JAKE FULLER is a Hospitality Research Analyst at Thomas Weisel Partners

TWST: Would it be fair to say that online travel services is the success story of Internet commerce?

Mr. Fuller: Absolutely. Travel is the largest retail category on the Internet and one of the groups to actually achieve broad success in terms of profitability. All of the public companies in the group actually turned profitable in 2001. So online travel is big (3 times the sales of books, CDs and clothes combined), growing rapidly (15% plus over the next decade), and profitable (no distribution centers or inventory to support).

TWST: What has been driving the success of this sector?

Mr. Fuller: First, travel is the ideal “virtual product.” Unlike books or groceries, the retailer does not need to maintain any distribution centers or inventory. Travel is really an electronic product, which makes it profitable to sell. Second, the online retailer shifts power from agents to consumers. Travel pricing has always been murky at best, but now the consumer has access to real-time pricing and availability information and does not have to rely on an agent. Finally, suppliers have made better prices available over the Internet. Online travel is now a $20 billion plus segment, close to 10% of the total travel market. How do you invest in that? It is no secret that online travel is successful and valuations have risen dramatically as a result. From my vantage point, companies like Expedia, priceline and Hotels.com are all very attractive businesses, with appealing growth prospects, but prices have moved to levels we generally view as full. In specific, we are neutral on Expedia and Hotels.com. priceline is a different story. They have not performed as well recently as the other two, but the stock is valued at a sharp discount and we expect performance in its lagging ticket business to improve.

TWST: Looking at the large hotel corporations in your coverage, Hilton, Starwood and Marriott, how do they look to you today and how would you differentiate among the three as investments going forward?

Mr. Fuller: I would look to focus on Starwood (NYSE:HOT), which appears to be the most highly leveraged to the industry recovery and might be in a position to capture market share. Starwood bought its flagship brands, Sheraton and Westin, in the late 1990s and has deployed significant capital to upgrade both. We expect that investment to yield big dividends over the next several years. What it all boils down to is growth. We expect this company to outpace the other big chains.

TWST: Jake, what kind of time frame should an investor have, as a general rule, when they buy hotel stocks?

Mr. Fuller: Remember, these stocks have significantly outperformed the market, so I would argue that performance could be volatile in the short term. So an investor should be willing to hold these stocks for a year or more.

TWST: And the risks to owning these stocks?

Mr. Fuller: I think the risks are pretty clear. The market has built in some fairly high expectations at this point. The market is expecting this recovery to continue at a fairly rapid pace. So there is a risk that the broader economic scenario does not unfold as anticipated. There is also the risk we cannot quantify — further attacks or negative developments in the war effort.

Nine sector firms examine the online travel sector in this special 37-page report from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info558.htm.

ATHENS OLYMPIC OFFICIALS REVEALS AVERAGE HOTELRATES FOR GAMES
 

Xinnhua  -  The average daily rate for a deluxe room at an Athens hotel for the 2004 Olympics including taxes and breakfast will be around 480 euros (450 U.S. dollars), an official of the organising committee (ATHOC) for the Games said Thursday.

Spyros Capralos, one of three executive directors of ATHOC, told a news briefing that average hotel rates for first class hotel rooms will be about 250 euros and for second class hotel rooms about 175 euros.

He added that the hotel owners would keep 90 percent of the fees while the remaining 10 percent will be given to ATHOC.

Capralos said that private rooms would be allowed to be rented by Athens residents to visitors during the Games but that rates have not been set as yet.

Three thousand cruise ship cabins will also be reserved for members of the Olympic family.

Capralos said that 15 of 28 international sports federations that have visited Athens so far have given their approval to accommodation recommendations made by ATHOC for game officials and judges.

Capralos said that 151 nations have already sent their applications to participate in the men's soccer tournament while 86 countries have applied for the women's competition.

He added the first test event for the Olympics would be the sailing competition that will be held August 13-25 this year.

RAFFLES SINGAPORE HAS NEW GM

Raffles International has appointed Javier Rosenberg as general manager of Raffles Hotel, Singapore.

Prior to this appointment, Rosenberg was the general manager of Swissôtel Atlanta in the US. Rosenberg has 12 years of hospitality management experience, beginning in Argentina after graduating from Boston University with a Bachelor of Science degree. Since then, he has worked in a variety of operational and management positions with international deluxe, five-star properties in Puerto Rico, Spain and the US.

CANADA’S TOURISM IS COMING BACK

But industry optimism is cautious in face of Victoria's cost cutting

Canada.com  -  As Tourism Vancouver held its annual meeting on May 30th, tourism officials throughout B.C. are "cautiously optimistic" that the industry is on the rebound this year.

Tourism is one of B.C.'s largest industries, providing about 112,000 jobs in the province, so its health, or lack of it, is critical to the B.C. economy.

And the industry was looking distinctly sickly throughout the winter. After last year's Sept. 11 terrorist attack in New York, coupled with an economic downturn, tourism was severely dampened worldwide.

Most recently, more turmoil was added when Victoria's cost cutting resulted in cutbacks in provincial parks, forest service roads and recreation sites.

The cuts have a severe impact in the North and other rural recreation regions.

However, officials say anecdotal information, some statistics, and a large dollop of optimism -- in some regions -- point to a general return to health for the industry. It's expected to to generate about $9.4 billion in revenues this year, up 3.4 per cent over last year.

"There are many reasons for calculated optimism," said Rick Antonson, head of Tourism Vancouver. "We share the international challenges, but have a few opportunities here that may help us turn the corner.

"Vancouver is still one of the most desired travel destinations, and we've had all sort of new marketing programs to help us with different markets."

Antonson pointed out that next month's Shriners convention, which will bring about 15,000 people to the city, should inject welcome cash -- as much as $30 million -- into the industry's coffers. Also, there are many new promotions and festivals in the city which may prompt residents to vacation at home this year.

And then there are surveys that show Canadians and Americans are going to forgo foreign vacations for closer, more accessible, holidays. This, said Antonson, should draw more Canadian tourists to Vancouver.

It should also draw more Americans, because they see it as a safe, nearby, yet somewhat exotic, destination, he said.

Much of that American traffic may also come from cruise ships, which have remained quite popular with the American travelling public.

Vancouver has increased its cruise ship-capacity this year and expects to see a bump in visits in that area.

The wild card in tourism expectations is offshore traffic, which has been dropping considerably in recent times. Because a large part of that traffic, especially from Europe, comes to B.C. to drink in the province's wilderness, the cutback in backcountry facilities may have a big effect.

Dan Stefanson, head of the Northern B.C. Tourism Association, says the elimination of campgrounds and reduced access to the backcountry may irritate and drive away visitors.

CUBA FLIRTS WITH EURO TO DRAW EUROPEAN TOURISM

iWon.com   - Cuba began accepting payment in euros from European tourists this weekend at its prime beach resort, adding a fourth currency to its complex and battered socialist economy.

If the experiment works, the communist government plans to extend the use of the European currency to all tourist spots, in an effort to draw more visitors to its Caribbean beaches and earn badly needed foreign exchange.

"It's a great idea. It means we don't have to change our euros into dollars and we can automatically use our own currency on holidays," said a sun-baked Louis O'Connell, from Listowel, County Kerry, in Ireland. "We weren't aware of it. We almost certainly would have brought euros with us."

Cash registers at restaurants and shops print out receipts in dollars and euros, and blue signs with the euro symbol have been posted at all hotels and other outlets in Varadero, a peninsula two hours drive east of Havana.

At Varadero shops, European cigar smokers can now pay 80.47 euros in cash for a box of 25 Montecristo No. 4 cigars, or 420.40 euros for the most expensive Cohiba Esplendidos.

Even the highway tollbooths entering Varadero are ready to take euros and give change in the European currency, though small change below one euro will be returned in dollar equivalent coins issued by Cuba's Central Bank.

"So far, no one has paid me in euros," said a barman at the Spanish-run Melia Las Americas hotel, as he prepared rum punches and daiquiris for tourists.

"Europeans won't have to go to the bank anymore to change their euros," said taxi driver Fernando Landa, waiting for a fare in a black Mercedes outside a Varadero hotel.

A sign saying "You can pay in Euros here, too," hung from the mirror, showing an exchange rate of 1.14 dollars to the euro. The rate was lowered to 1.11 over the weekend to reflect the strengthening of the euro against the dollar.

DOLLAR RULES

Authorities equipped taxi drivers and bartenders with tables and calculators to convert to euros for services priced in dollars, the main currency used by foreigners.

Since the collapse a decade ago of its Cold War ally, the Soviet Union, Cuba has opened up to foreign investors and tourism, trying to maintain its socialist system.

In 1993, President Fidel Castro's government legalized possession of the U.S. dollar, despite four decades of political enmity and a damaging U.S. trade embargo that bars Americans from visiting the island just 90 miles (140 kms) off the Florida keys.

Cuba's $2 billion-a-year tourist industry generates 43 percent of the country's hard currency revenues. But the slowing of worldwide travel after the Sept. 11 attacks in the United States has hurt the Cuban economy, which relies on foreign exchange to pay for vital oil and food imports once subsidized by the Soviet Union.

In the first four months of this year, tourism in Cuba dropped by 15 percent, according to official figures. Authorities hope the euro experiment will attract more Europeans. At present, more than half the tourists visiting the island come from the 12 European Union nations that began using the euro at the start of this year.

JUGGLING CURRENCIES

Cubans working in the tourist trade will have to juggle with four currencies in their daily lives: the Cuban peso, the dollar, the euro and the convertible peso, which is issued by the Central Bank as an equivalent to the U.S. dollar, but, like the peso, has no worth outside Cuba.

The Cuban economy is dollarized in a quasi-official way, and the legalization of the U.S. currency created social differences in an egalitarian society, since access to luxury and even essential good depends on having dollars.

Shops selling in Cuban pesos have lower quality goods and much less variety.

A popular Cuban saying is that Cuba is the only country where people earn one currency -- pesos -- but must have another to survive -- the dollar.

Many Cubans have access to some dollars, either tips from tourists or bonuses from foreign employers. But by far most of the dollars come through family remittances from Cuban exiles living in the United States. These are estimated by the United Nations Economic Commission on Latin America to total about $800 million a year.

Cuba's government has flirted with the idea of replacing the dollar with the more politically acceptable euro. But economists advise against a switch because of the Caribbean island's natural proximity to the United States, where big business is lobbying hard to lift the trade embargo to gain access to the Cuban market.

Economists Archibald Ritter and Nicholas Rowe, of Canada's Carleton University, believe a forced adoption of the euro would create more problems for Cuba that it could resolve.

"It would be unwise to adopt a currency that was economically and geopolitically inappropriate for Cuba, given the inevitability of a normalization of relations with the United States at some time in the future," they wrote in a recent study.

HOW A HOTEL-HARDENED TRAVELLER MET HIS MATCH IN A BASIL FAWLTY

The Scotsman  -  I HAVE been about a bit and know a thing or two. WhiIe I have never, on Uzbek uplands, watched half-wild Aryan horsemen in their gambols, glimpsed in some dim-lit Mongolian teahouse, wild, uncouth dances or swum in the snow-cooled waters of the infant Tigris, I am an hotel-hardened traveller, ready for anything management and staff can throw at me.

I have been in hotel rooms so small you could hardly brush your teeth sideways. On the other hand, I have stayed in luxury hotels where the towels were so thick and fluffy, guests could hardly close their suitcases.

Most hotels I have visited were passable for passing through and I have left without complaint, but only in the Lake District have I encountered anything like the one in the hilarious television series, Fawlty Towers. The original building was revealed recently as Tor-quay’s Hotel Gleneagles and the man who inspired John Cleese’s comic creation as the late Donald Sinclair, allegedly unpredictable, unbearable and rude.

There may be hotels like Basil Fawlty’s still existing in Britain but one was enough for my wife and me, especially, since, after five days of a fortnight’s holiday, we were were ordered to leave and banned for life from re-entering their premises.

The small hotel was commanded by a middle-aged couple. The male half had a face as severe as a book of rules and a body that had a field-marshall’s stiff-backed authority. His wife, big, blonde and bosom-rich, resembled a cross between Coronation Street’s Bet Gilroy and the armoured figure of Germania on early Teutonic postage stamps.

"Remember, this is a quiet hotel," the proprietor barked when we arrived. "We expect guests to arrive promptly for meals and be in their rooms by 11.30 pm," boomed his bigger half in tones of echoing corrugated iron.

By Gable’s Greatness and Helvellyn’s heights, we were from Edinburgh; they could expect no trouble from us.

That was 25 years ago and the hotel lounge, dining room and bedrooms had Silver Jubilee portraits of the Queen on walls or were festooned with paper red, white and blue decorations. "God Save Her Majesty" was wall-emblazoned in the entrance hall, a pleasant change from the popular, "The Wages of Sin Are Death".

On our first night, we realised that the couple was striking a new note in management-guest relations. On the lounge television set came the National Anthem. "Everybody stand," ordered the proprietor. Sheepishly, with hang-dog looks, we stood, even the arthritic, adiposal and varicosal.

The next night, we returned from a hill-walk, 20 minutes late for dinner. "Get a move on," bellowed the proprietor, banging on our room door.

After showering and changing clothes, we were in time only for prunes and custard - served cold. "We’re not here to cater for people who can’t arrive on time," the commandant said heatedly.

His normal dressing-down signal to guests for some transgression such as meal lateness or asking for a well-known brown sauce with dinner, was to curl his right forefinger and say curtly, "Come into my office." And after days of cold or missed meals, the dread summons came for me.

"You are obviously unhappy here. I want you and your wife to leave and never come back," he said

Asked for an explanation, he went on: "Two days ago, you turned on a tap noisily at 11.45 pm and yesterday, at about the same time, you used the toilet." I protested that people used toilets at all times and that taps were occasionally noisy.

"If you are incontinent," he snapped, "you should have told us."

He also revealed that he regarded us as troublemakers since he had heard us mention to a fellow guest that it was a pity that the hotel had no bar licence.

"We’ve been flung out," I announced dramatically to my wife in the lounge. Guests gasped and when the proprietor entered - doubtless checking for any anthem inattention - they stood up to him and delivered a flurry of complaint shafts.

We left our holiday hell with relief. Later, I heard that the couple had sold up.

If I meet them again - perhaps in some Mongolian tea-house, or perhaps attempting to influence Aryan horsemen to become upstanding citizens - I will let them know that I am one traveller who will refuse to rise to the occasion.