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Newsletter - February 21, 2003

 

First shots fired for Six Continents

Hugh Osmond, the pubs entrepreneur, yesterday confirmed he was considering a multi-billion pound bid for Six Continents in a move that could spark a takeover battle for the demerging pubs and hotels group. In an audacious move, Mr Osmond is structuring the cash and shares bid via an Aim-listed cash shell, Capital Management and Investment, which holds £14m of Six Continents shares.

Mr Osmond, who has a 6.56pc stake in the company, yesterday became its executive chairman, while his business associate Alan McIntosh became finance director.

Capital Management said it was "considering making a takeover offer for Six Continents" but added: "No assurance can be given that any offer will be made".

It said "a further announcement will be made in the near future". Six Continents shares rose 35.5 to 590p, valuing its equity at £5.1 billion. It also has £2.5 billion of debts. Capital Management shares rose 1.75 to 19p, valuing it at just £44m.

Mr Osmond, who has lined up billions of pounds of debt from CSFB and other banks, was last night working on the bid's structure, which is being discussed with the Takeover Panel.

He may try to persuade Six Continents' existing lenders, led by Barclays, HSBC, JP Morgan, Royal Bank of Scotland and Salomon Brothers, to help finance his bid, secured against Six Continents' £7.5 billion assets.

Mr Osmond plans to break up the group, possibly retaining the Mitchells & Butlers pub business. He has held talks with Hilton Group about selling on some of Six Continents' hotel assets.

Six Continents said it had not received any approach from Capital Management, adding: "The board will review and consider on its merits any proposal that offers a combination of compelling value and certainty of delivery."

Richard North, the chief executive of the hotels business, said: "I always anticipated he [Mr Osmond] would do something." He insisted the demerger, due to be voted on by shareholders on March 12, was the "best route to generate value", adding: "I sincerely believe I can do something special with this hotel division."

David Liston, fund manager at 1pc shareholder Gerrard, said "I do have some doubts over Hugh Osmond's ability to fund a bid", adding that he failed to deliver a mooted offer for Pizza Express. - Source:  money.telegraph.co.uk 

Osmond picks CSFB as adviser

Entrepreneur Hugh Osmond,  said on Thursday he had appointed Credit Suisse First Boston (CSFB) as nominated adviser and joint broker.

Osmond's bid vehicle, Capital Managament & Investment Plc <CMIP.L>, said it had appointed CSFB with immediate effect. Brewin Dolphin Securities Ltd remains as joint broker to the company.

(Reuters News Service)

Osmond eyes full listing for Six Continents bid

Hugh Osmond, said on Thursday he would seek a full listing for his bid vehicle if his offer is accepted.

The move would remove one of the key obstacles to Osmond making an all-share bid for the hotels and pubs group, as institutional investors would be unlikely to want to hold shares in bid vehicle Capital Management and Investment plc <CMIP.L>.

Osmond also said his bid was contingent on Six Continent's planned demerger into two separate hotels and pubs companies not going ahead.

He said he had held "substantive discussion" with banks and potential strategic partners about his bid, which would see Six Continents broken up.

(Reuters News Service)

Heartbreak hotels: Shareholder dissatisfaction, a poor record on acquisitions and now Hugh Osmond all mean big trouble at Six Continents

Hugh Osmond has built a reputation for audacious investment manoeuvres which have left many a veteran City deal broker slack-jawed with disbelief. Yesterday, there was confirmation that he hopes to attempt his most ambitious turn to date - a takeover of hotels and pubs operator Six Continents.

A bid through his Capital Management & Investment would be one of the biggest reverse takeovers the Square Mile has ever seen.

While CMI is a shell company with cash reserves of pounds 41m, Six Continents has a value, including debt, of pounds 6.6bn and is the largest hotel operator in the world, running the Intercontinental, Crowne Plaza and Holiday Inn brands. In the UK, the company also runs the Britvic soft drinks business and 2,000 pubs and restaurants, including the All Bar One and Harvester chains.

Speculation over how much Mr Osmond may pay ranges between pounds 7bn and pounds 8bn, but his interest alone was enough to add pounds 315m to Six Continents' market value yesterday, as well as to prompt a 10% rise in CMI shares. Any offer is expected to be substantially paper-based. - The Guardian

Europe's Hotel Industry: 
2002 Drop in Business Encourages Operators to be Prudent in Terms of Development

  • The year 2002 closes with a drop in the RevPAR by 1.0% in Europe.
  • France does better than Germany, the United Kingdom or Spain at end 2002.
  • Budget categories resist perfectly, the 4* a bit less. 
  • Fewer buyouts in 2001, the supply of the top 10 European groups grows by 3.7% versus 17.6% the previous year.
  • French chain Accor strengthens its position as number one hotel group in Europe (+13.2%). The hotel supply of the American groups Marriott and Choice progress by more than +5%.


Annual results of chain hotels
at end December 2002

 

Occupancy rate 2002

Change 
02 / 01

Average daily rate 2002
(in euros incl VAT)

Change
02 / 01

RevPAR 2002
(in euros incl VAT)

Change 
02 / 01

Europe*

66,9%

-1,7

94,4

1,4%

63,1

-1,0%

0*

75,1%

-1,6

26,0

4,6%

19,5

2,5%

1*

73,0%

-2,3

34,8

5,3%

25,4

2,1%

2*

70,7%

0,5

67,7

4,4%

47,9

5,2%

3*

64,5%

-2,2

87,3

2,6%

56,4

-0,8%

4*

65,8%

-2,1

133,8

0,2%

88,0

-2,9%

France

68,9%

-0,9

71,1

3,1%

49,0

1,7%

Spain

68,9%

-2,1

92,3

2,9%

63,6

0,0%

Germany

58,4%

-2,7

85,2

-1,0%

49,8

-5,3%

UK

72,3%

-0,4

127,7

-1,3%

92,3

-1,9%

MKG Consulting – February 2003 –* preliminary data 
Official statistics of hotel groups

 

Business down slightly in Europe in 2002

 

In Europe, the preliminary data of MKG Consulting for the year 2002 show a drop in the RevPAR by 1.0%. The increase in average daily rates by 1.4% is not enough to compensate for the drop in occupancy rate to as far as 1.7 points. This performance nonetheless translates as a slight improvement with respect to 2001 (-2.6% at the end of the preceding business year). Hoteliers did not give in to panic in 2002 and generally opted for slightly increasing rates.

 

A positive fact is that the budget segments (0/1/2*) confirm their excellent health in 2002 with a RevPAR up by 5.2% in 2* for example. On the other hand, the mid- and up market segments post a drop in revenue per available room (respectively –0.8% and –2.9%). These categories, for which the average occupancy rate is around 65%, continue to suffer from a lack of international clientele.

 

On the top four chain hotel markets in Europe (which in all account for more than 75% of the supply of chains in Europe), France withdraws thanks to a 1.7% increase in RevPAR. Spain also posts activity that holds up well. Despite a non-negligible drop in occupancy rate (-2.1 points), the country closes the year 2002 in perfect stability with respect to 2001.

 

On the other hand, the United Kingdom, which is more dependent on American clientele, sees its RevPAR drop by 1.9% with respect to 2001. As for Germany, the economic slump experienced by the country is largely responsible for the significant drop in the RevPAR (-5.3%). It may be observed that on the whole Southern Europe experienced fewer difficulties than the North. In 2002 the Mediterranean countries benefited from carryovers of clientele that limited the drop. 

Annual ranking of the top 10 ten hotel groups
in Europe (01/01/2003)

 

 

 

 

Hotels

Rooms

Change

2002 Rank

2003 Rank

Group

Country

2002

2003

2002

2003

Rooms

%

1

1

ACCOR

F

1 799

1 965

179 423

203 127

23 704

13,2%

2

2

BEST WESTERN

USA

1 122

1 120

70 713

70 570

-143

-0,2%

3

3

SIX CONTINENTS

UK

414

418

65 580

64 848

-732

-1,1%

4

4

LOUVRE / ENVERGURE

F

915

869

62 705

60 535

-2 170

-3,5%

5

5

HILTON INT’L

UK

235

243

49 312

51 514

2 202

4,5%

7

6

MARRIOTT INT’L

USA

232

254

38 438

41 427

2 989

7,8%

6

7

SOL MELIA

SP

213

200

41 946

41 380

-566

-1,3%

9

8

CHOICE

USA

419

435

31 861

33 704

1 843

5,8%

8

9

TUI(1)

GER

154

154

33 587

33 587

0

0,0%

10

10

NH

SP

298

195

31 767

27 228

-4 539

-14,3%

Total top 10 groups

 

5 801

5 853

605 332

627 920

22 588

3,7%

MKG Consulting – February 2003
Official statistics of hotel groups    (1)     Supply at end September 2002

Growth continues for the top 10 European groups

 

The top 10 European hotel groups finally resisted the slowdown of business with a room capacity that gains 3.7% and 22,588 rooms. This volume is equivalent to the growth posted by the French brand Accor, the indisputable leader of the European hotel industry with 1,965 hotels and 203,127 rooms (+13.2%). The Accor group’s advance on these "challengers" increased significantly at the end of 2002. This development essentially took place in Germany, with the move of hotels of the German group Rema to the Mercure brand in April 2002 and the acquisition of around 30% interest in the capital of Dorint.

 

No change in the ranking of the top 5 groups, but significant movement in the second part of the ranking

 

The three "followers" of the group Accor, Best Western, Six Continents and Louvre / Envergure show a slight drop in their supply (respectively –0.2%, -1.1% and –3.5%) but these drops do not challenge the ranking of the top 5 groups. 

 

The 4.5% increase posted by Hilton International is not enough to make the British group gain a rung in the 2003 ranking. Next to these drops, it may be observed that the drop posted by Louvre / Envergure results from the strategy of brands in the group to rationalise brands. Concerning Six Continents, the group pursues the unrolling of Holiday Inn, of Express by Holiday Inn and of Crowne Plaza in Europe while the chain Posthouse (acquired in 2001 from the group Compass) has disappeared from the British territory. 

 

Meanwhile, the American group Marriott, which made Europe one of its priorities for development, posts a strong increase as of January 1, 2003: +7.8% and 2,989 additional rooms. Another significant move is that of Choice whose supply grows to 1,843 rooms (+5.8%) and rises a rung in the ranking.

 

Finally, among the first 10 groups, the Spanish group NH posts a fairly significant drop (by more than 14%). In fact, in February 2002, NH sold the brand Golden Tulip – which it had acquired just a few months earlier – to the franchise’s managing team. This drop in the Spanish operator’s supply could nonetheless be compensated in part by one of the most spectacular operations of the year: the acquisition of the German brand Astron (one of the major operators on the domestic market) by NH.

Globally, the year 2002 will have been marked by a great deal of prudence in terms of development. The top 10 groups saw their supply progress by 17.6% at the end of 2001.

 

The slump in the hotel business for some emblematic destinations (the capitals), the depression of the financial markets and the uncertain political perspectives are largely responsible for this. Even if the perspectives for 2003 are not precise because it is difficult to forecast the consequences of an intervention in Iraq, the performance of European hotels improved in the second semester. With the confirmation of this trend in the first semester 2003, the European hotel industry could show once again that it holds up better to international events than in the past.

 

Methodology

 

The business results in this study are based on a sample of 5,000 corporate operated chains in Europe, representing 500,000 rooms. The data, gathered monthly from each hotel, are adjusted according to the distribution of the corporate operated hotel chain supply, and by the weight of each country in the European Union.   

The ranking presented in this study is applicable to all hotel groups with more than 1,000 rooms established in Europe. Only the top 10 groups are presented herein.  

These results come from figures provided by hotel chains present in France and in Europe, for which MKG Consulting provides official statistics. The complete dossier about the hotel business in France and in Europe will be published in the February/March issue of HTR magazine.

 

Any mention of Europe refers to the 15 countries of the European Union.

MKG Consulting has the largest hotel database in the world, outside the United States, with the best coverage of all the hotel segments.

The complete results of this study will be disclosed on March 6, 2003 at the Press Club de France, when MKG Consulting will present its outlook for the hotel sector in France and in Europe as it does every year

Convention Center Financing –   Public Entities / Private Entities -
Who Should Take the Risk?

Jones Lang LaSalle Hotels recently published FocusOn Convention Center Financing – Who Should Take the Risk? FocusOn is a regular research series that addresses current issues affecting the hotel real estate  investment community. Focus On Convention Center Financing explores the benefits and inherent risks of public versus private sector financing, public/private partnerships, public and private contributions and how to construct the deals as related to convention center projects.

According to report author Anwar Elgonemy of Jones Lang LaSalle Hotels, public sector incentives and financial vehicles for a convention center hotel can come from a variety of sources.  “The funding can be derived from contributions of land, infrastructure and parking facilities; direct subsidy payments; contingent pledges of financial support; or converting hotel ownership to a public entity and thus providing potential access to tax-exempt bond financing,” explained Elgonemy.

Just as there are different alternatives for public sector incentives for convention center hotels, there are also varieties of specific financing methods from which to choose.  The fundamental difference among the financing alternatives is the allocation of risk of the hotel operation.  The risk of the hotel’s operating profitability must be prudently allocated among the owner (city or county), the lenders (banks or bond investors) and the property manager (hotel operator). 

In today’s unpredictable economy investors are unwilling to acquire bonds without the owner (city or county) assuming a reasonable share of the inherent risks, comprised primarily of:

Construction Risk:
Taxable financings are often paired with significant equity investments.  In the event of construction cost overruns, the equity investor, rather than the debt provider, is expected to fund the unexpected costs.  However, the publicly owned hotel financings lack this feature, so there is a correspondingly greater priority in containing construction risk.

Horizontal Risk (Uncertain Income Streams):
As the project is yet to be built, and given the inherent uncertainty of any cash flow projections, bond investors will impose higher debt coverage levels, require strong legal protections and aggressively discount future growth of revenues.

Performance Incentives:
An investor concern in publicly owned hotel financing is the relative absence of strong performance incentives.

Rationale for the Project:
The public entity must present bond investors with evidence of a considered strategy that justifies a potentially significant public contribution to support the city or county’s meetings and lodging  industry.

Debt Service Structure:
Bond investors require a generously funded debt service reserve requirement for first-lien bonds. 

THE ROLE OF PUBLIC FINANCING

In the past two years, new full-service hotels have been extremely difficult to finance. Convention hotels, furthermore, are generally regarded as being of even higher risk -- a result of the uncertainty related to occupancies and above-average development costs. As a result, public financing can be the catalyst that makes a convention center hotel viable.

“While tax-exempt public bond issues are subject to ‘private purpose’ limitations, there are techniques that can blend in public funding to privately owned and operated hotel ventures,” said Arthur Adler, Managing Director and CEO-Americas, of Jones Lang LaSalle Hotels. “These include financing and leasing back the ‘public’ areas of a hotel (or parking garage) facility. Public revenues from hotel taxes or real property taxes may be designated for the facility through non-tax exempt issues. In addition, cities or counties may offer certain operating guarantees, such as payment of debt service, for a specified period of time.”

Miami Beach, for example, agreed to issue $52 million in bonds as its share of land and construction of the $158 million, 800-room Loews convention hotel. The hotel developer -- St. Moritz, a joint venture of Forest City and the Loews Corporation -- contributed $15 million in equity, with the balance financed with conventional debt.

In some cases, cities have made equity investments in convention hotels. The municipality may become the junior equity partner in the hotel with “first-in” risk capital, and “last-out” return. In a broad policy sense, the city's rate of return is potentially greatly enhanced by a vitalized local economy, higher visitation and associated tax revenues.

PUBLIC/PRIVATE PARTNERSHIPS (PPPS)

“What tools can city/county governments bring to attract private hotel investment by improving their underlying economics,” asked Elgonemy. “How can a hotel developer work with local governments to close the economic gap and make a development click? These are critical questions that are constantly raised in the arena of public sector financing for convention center hotels.”

The 1986 Tax Reform Act pointed the way to creative forms of PPPs serving the interests of convention centers and their headquarters hotels. The City of Miami, for example, provided an array of incentives to attract hotel development in support of the James I. Knight Center. The city acquired land, provided a 45-year lease with attractive terms and furnished off-site improvements, as well as site utilities. The hotel additionally was awarded the food and beverage concession for the convention center, and real estate property taxes were abated during construction.

However, not all PPPs come together, despite concerted efforts on the part of both private developers and public entities. In Tampa, Florida, studies had indicated a strong need for a convention hotel to support the city’s new convention center. A city commission then approved a proposed 900-room Marriott hotel, estimated to cost more than $140 million, and to be owned by a private “not for profit” corporation. Public financing for the hotel, however, was rejected by the Tampa City Council in 2001.

“At their best, PPPs make it possible to reduce hotel development costs, set the stage for more profitable hotel operations, and allow a government jurisdiction to safeguard public investment and achieve local economic development goals,” noted Adler.

PUBLIC AND PRIVATE CONTRIBUTIONS

Generally, public contributions that can drive development of a hotel may include land at favorable lease terms, off-street parking facilities, construction/use rights of public space and marketing support. Hotel developers may also be granted the convention center’s food and beverage service concession; this ancillary revenue can be an important step to offset the lower room rates often associated with associations business. Among the contributions made by the hotel developer are equity funding, the track record of team members, a superior product development plan, strong management and strategic marketing.

“In addition, the public and private entities must have controls in place to ensure that relationship objectives are maintained,” said Elgonemy. “A convention headquarters hotel, for example, must commit room nights to the convention center, even at the cost of displacing higher rated business. Conversely, the convention center must book events, which generate room nights, perhaps foregoing higher revenue-generating consumer shows that tend to be oriented to a local audience.”

PUTTING THE DEAL TOGETHER

From a development and operational standpoint, there are a number of challenges facing hotel companies as they consider convention headquarters hotels. In addition, many deals have failed because a city has insufficient resources to close a transaction, or lacks an understanding of the dynamics needed to support these developments.

“What is fundamentally at stake is swaying a portion of the risk from the developer to public entities, since the public jurisdiction stands to benefit economically if the hotel is a success. There are many ways to structure a convention center hotel deal, and the strategic advice of a hotel real estate investment bank is paramount,” concluded Adler.

Sample of Major City-Backed Convention Center Hotel Projects and Status

City - Project

Status

Denver, CO - 1,100-room, $347-million Starwood hotel.

Under construction. City of Denver has set up a nonprofit corporation that will own the hotel on behalf of Denver taxpayers.

Washington, D.C. - Proposed 1,500-room, $500-million  Marriott headquarters hotel.

Hotel will be attached to the new 2.3-million sq. ft. Washington Convention Center due to open in March 2003.  The hotel should be completed in 2004.

Fort Lauderdale, Florida - Initially proposed 500-room headquarters hotel.

On-hold.  Likely to be built by 2005.

West Palm Beach, Florida - Yet to be determined.

The $80-million Palm Beach County is scheduled to open in 2003.  Plans for a  scaled-down 350-room hotel have been postponed.  County is in negotiations with the developer (The Related Group).

Boston, Massachusetts -  Proposed, $170-million, 1,120-room convention center hotel.

Project was delayed  for 3 years, but only recently a lease was signed between the Massachusetts Convention Center Authority (MCCA) and Starwood to develop the hotel. 

Charlotte, North Carolina -   700-room convention center Westin hotel – opening 12/2002.

The project was subsidized with $16 million from taxpayers.  The cost of the hotel totals $143.7 million, of which, $75 million is in the form of construction loans by Wachovia Bank, Bank of Nova Scotia, BB&T, and First Union Bank.  An additional $25 million was obtained through a bond issue supported through parking payments from the city, with the remainder of the financing being arranged by Portman Holdings and a grant from the City of Charlotte.

Pittsburgh, Pennsylvania -  Proposed, $100-million, 550-room convention center hotel.

City is looking into the possibility of floating tax-free bonds to fund the project.

Austin, Texas - Proposed, $110-million, 800-room convention center hotel.

The city selected H.L. Hotels LLC in 1999 to develop the project, but has been unable to find a buyer for the revenue bonds that would back the project.  H.L. Hotels has agreed to buy $15 million in subordinate bonds. HL Hotels is a venture of Hilton Hotels Corp. and Austin based Landmark Organization Inc. 

Dallas, Texas - Proposed 1,200-room convention center hotel.

$130-million expansion of the Dallas Convention Center completed in 09/2002.

Fort Worth, Texas - Proposed, $130-million, 600-room convention center Hilton hotel.

Fort Worth City Council agreed to proceed with plans to finance the deal through the sale of Certificates of Obligations (COs).  COs are similar to bonds and are sold by cities and other government agencies, typically to finance large public projects. They do not require voter approval.  The IRS has determined that municipalities can issue debt for a hotel that is tax-exempt only if the project serves a “public purpose.”

Houston, Texas - 1,200-room, $300-million Hilton hotel.

City-backed convention center opening in mid-2003.  Financing via tax-exempt bonds issued through a nonprofit corporation created by the City of Houston.

Irving, (Las Colinas) Texas - City officials hope to lure a major hotel with the promise of land adjacent to its planned convention center, and other incentives.

A plan to establish a $100-million hotel by creating a city-backed, nonprofit entity to hold the bonds for a hotel venture met with strong opposition from representatives of the city's hotel industry, who disliked the idea of competing with a city-backed facility.  A recent attempt to finance the hotel via a bank loan has failed, but other financing mechanisms are being explored.  The hotel-motel tax was already raised 2 cents to help fund the project.

San Antonio, Texas - Proposed, $300-million, 1,300-room convention center hotel.

Hotel would be built on city-owned garage site; city is investigating whether they want the financing to be all public, all private or a mixture of public and private funds.

Source: Jones Lang LaSalle Hotels

About Jones Lang LaSalle Hotels:

Jones Lang LaSalle Hotels, the world’s leading hotel investment services group, provides clients with value-added investment opportunities and advice. In 2002, its success story includes the sale of 6,747 hotel rooms to the value of US$862 million in 36 cities and advisory expertise on 116,877 rooms to the value of US$17.8 billion across 170 cities. Jones Lang LaSalle Hotels’ services include transactions, mergers and acquisitions, financial advice and capital raising, valuation and appraisal, asset management, strategic planning, operator assessment and selection and industry research.  Jones Lang LaSalle (NYSE: JLL) is the world’s leading real estate services and investment management firm, operating across more than 100 key markets on five continents.

Jones Lang LaSalle Hotels

Issenberg to run Accor Asia/Pacific

In what it says is a move to strengthen the synergies in its Asia/Pacific operations, Accor has appointed senior executive Michael Issenberg to the position of managing director for the full region.

Issenberg has been managing director of Accor's Australia, New Zealand, South Pacific and Japan operations for over five years, and was previously chief executive officer.

During this time, the company has grown to become the largest and most successful group in that region, with 110 hotels (over twice the size of its nearest competitor), as well as a range of tourism and services businesses.

Kim Mooney, who is currently chief financial officer for Australia/New Zealand/South Pacific/Japan, will also have his responsibilities expanded to cover the full Asia Pacific region.

The appointment follows the announcement that Accor Asia Pacific deputy chairman, Jochen Dobel, who has been in charge of Asia region for the past three years, will return to Germany as president of Dorint Hotels. Accor recently acquired a 30 percent interest in Dorint AG, which operates 93 hotels, 77 of them in Germany.

It is understood that the move was taken in light of the fact that while Australia and New Zealand was now a mature market, markets such as China and Japan, in particular, have been identified as global priorities for Accor.

“Mr Issenberg was already looking after Japan and his skills at building networks are highly regarded, it was considered that his experience could now be used for all of Asia, following Jochen Dobel's return to Germany,” said spokesman Tom Racette.

Announcing the new positions, Accor Asia/Pacific chairman, David Baffsky, said that the appointments were significant. "Maximising the strengths of the whole Asia Pacific region is a priority, and the appointment of Michael Issenberg as managing director of the Asia/Pacific region reflects that priority," he said.

"While the new appointments will integrate the geographic divisions within the Asia/Pacific region, we will also be focusing on providing country-based resources to cater for the individual market conditions that apply in each country."

Baffsky praised the contribution of Jochen Dobel, saying that under his leadership Accor had made major advances throughout the Asia region. “He will be a great asset to Accor in Germany because of his ability to run a very efficient and financially-sound operation. His outstanding work in Asia has provided a very solid platform on which to build our business further in the region.”

Hotel for sale in £7 internet draw  

A baronial-style hotel with dramatic views over one of Britain's most beautiful stretches of coastline is being put up for sale for a price tag of less than £7.

The Kimberley Hotel in Oban is valued at more than £1 million, but its Austrian owners have opted to sell it through an Internet-based prize draw rather than on the open market.

A total of 350,000 "roof slates" costing 10 euros (£6.93) each are up for sale, with the owner of the winning slate scooping the 17-bedroom property, complete with staff and bookings for the summer.

Austrian businessman Wolfgang Baldauf, who clubbed together with three friends to buy the property seven years ago when it was a disused maternity hospital, said he was giving up the hotel with a heavy heart.

Mr Baldauf, an Innsbruck-based economic adviser, said: "It's a pity, but if you have another job it's not easy to run a hotel on the side.

"My main job is taking up more and more time because of the situation in the world economy and I haven't been able to spend so much time on the hotel."

Mr Baldauf added that although there is no legal obligation to continue the business, he hoped to be able to give the chance to run a hotel to people who could not normally afford to own one.

He said: "It's just a wish, because we have no influence on what the new owners do with the property - once we've sold it they can use it as a private house if they like.

Mr Baldauf and his friends stand to recoup more than £2 million if all 350,000 roof slates are sold, although to date only 50,000 have been purchased.

If any slates are unsold by the cut-off date April 30, the property will be sold to a private investor and those taking part in the competition will not be charged. The draw is scheduled to take place on May 13.

Singapore offers post-grad hotel management course from 2004

Business Times  -  The  International Hotel ManagementSchool (HMS) is off to a good start. Next year, it will offer Singapore's first graduate hotel management programme with America's prestigious Cornell Hotel School and Nanyang Business School.

HMS is a joint venture between the Singapore Tourism Board and six hotel companies - Raffles International, Shangri-La Hotels and Resorts, Millennium & Copthorne International, Hotel Properties, Pontiac Land and Far East Organization. It was started in August last year.

The Masters course will be a two-year full-time programme conducted jointly by Nanyang Business School and Cornell. The 50 or so post-graduate students will spend one year in Singapore and the other at Cornell University in Ithaca, New York.

'The hotel school has been on our agenda for a very long time,' HMS CEO Yeo Khee Leng said. 'After my time was up as CEO for STB, we decided to really just take the bull by the horns and do it. This marks an important milestone for us and sets the tone for the coming months.'

It has not been decided where classes will be held in Singapore. The school is aiming for local students and international students from elsewhere in Asia and the Middle-East. The six hotel groups can send staff on the programme, although acceptance will be by merit.

Raffles International CEO and chairman of HMS Jennie Chua said there is a lack of research on the Asian travel market and this will be tackled by the school.

HMS dean David Butler said: 'We look at Singapore as an excellent choice for the Cornell Hotel School's regional presence in Asia. The strong emphasis on education in Singapore is key to providing the human capital for Asia's continued economic and social growth.'

Creation of economy hotel chains starts in Russia

RBC News  -  Russia has at last started creating chains of “economy” hotels, which our country really lacks, the Vedomosti newspaper reported today. This week, the USA – Russia Investment Fund will announce a project of the creation of such a chain. Joint-Stock Financial Corporation Sistema is preparing the implementation of a similar project; so does the Moscow regional government. According to research data, the demand for hotels with a room price below $100 per day is currently the highest in Moscow and St. Petersburg.

President of the USA – Russia Investment Fund Davis Jones is to present a project of constructing economy class hotels in Russia this week. As a source familiar with the situation reported, the Fund’s partners will be Radisson SAS Hotels & Resorts, an international hotel operator and a part of Rezidor SAS, and a group of foreign investors, which have not been named so far. The participants of the project are planning to build eight hotels with 100 rooms each within four years. Three of these hotels are to be constructed in Moscow. The room price at them will be $70 to $90 per day, the source says.

However, the Russian Sistema corporation has already acquired a plot of land for its first economy hotel. Felix Evtushenkov, the Vice President of the Sistema-Gals company, a division of the Sistema corporation, has recently declared its intention to create a chain of three-star hotels jointly with the France-based hotel operator Accor. Accor currently manages two Novotel hotels in Moscow, one near the Sheremetyevo airport and the other at the Novoslobodskaya metro station. These are four-star hotels. The construction of the first hotel of the chain will start soon as a part of the office and the trading center at Pokrovka Street, where the pulled-down Ural hotel was located. As Accor’s representative in Russia Vladimir Ilyichov reported, the 200-room hotel is to be built by 2005. The cost of the project will not exceed $12m. The hotel will operate under the IBIS brand, which has not beet represented in Russia yet. The price of a room without booking will be $80 to $90

Analysis: Thai tourism prospers despite war looms

e-Turbo.com  -  "The good news is that Thai tourism industry is doing well, in spite of the difficult global political and economic conditions." Juthamas Siriwan, governor of the Tourism Authority of Thailand (TAT), hardly concealed her great confidence in Thailand's tourism industry in a recent interview with Xinhua. Juthamas has every reason to keep optimistic about the performance of Thai tourism. According to the latest data released by the Immigration Bureau of Thailand's Police Department, a total of 10.87 million foreign tourists visited the country in the year of 2002, an increase of 7.31 percent over the previous year compared to the 5.8-percent growth in 2001

Besides, Thailand had 157 billion baht in foreign exchange earnings during January-June of 2002, which equals roughly 3.64 billion US dollars. This was an increase respectively of 5.14 percent and 7.64 percent over the same period of 2001. Thai tourism's extraordinary performance in 2002 also provides the TAT a brighter prospect of 2003's market. "The TAT is targeting visitor arrivals of 11.13 million in 2003," Juthamas told Xinhua. The TAT expressed the hope that foreigners visiting Thailand in 2003 would averagely stay 8-10 days with a target expenditure of 4, 000 baht (about 95.24 dollars) per person per day, which would generate foreign exchange earnings of 360.60 billion baht (about 8. 59 billion dollars).

Given a possible war in the Middle East, TAT's goal for 2003 could be called ambitious. But Juthamas reassured that Thai tourism has kept its normal pace ever since the Bali explosion in Indonesia last year and the terrorist attacks on the United States on Sept. 11, 2001. She said, in the first two months of this year, Thai tourism has witnessed growing foreign visitors, most of whom were Chinese and Japanese. Regarding to the fact that a possible US-led war on Iraq might reduce the number of tourists, Juthamas noted, the Thai government and TAT will carry on a series of measures to attract more tourists and guarantee their security.

"Thailand is also mobilizing m At the same time, TAT is making efforts to prevent Thailand from facing the severe stagnation which has swept over the world tourism industry. The plans include three major strategies: more direct- to-market promotions, development of new potential tourist destinations, and restructuring the administrative systems. Thailand has paid much attention to the huge tourism market of China, which was acknowledged as the most potential market in a survey conducted by the Pacific Asia Travel Association early this year. Among TAT's 18 worldwide offices in charge of business in 43 countries, two are based in China. One is in Beijing, and the other in Hong kong Cooperation with China to develop tourism resources in the Greater Mekong Subregion is one of TAT's priorities for 2003aximum possible resources to ensure the security and safety of visitors," she noted

At the same time, TAT is making efforts to prevent Thailand from facing the severe stagnation which has swept over the world tourism industry. The plans include three major strategies: more direct- to-market promotions, development of new potential tourist destinations, and restructuring the administrative systems. Thailand has paid much attention to the huge tourism market of China, which was acknowledged as the most potential market in a survey conducted by the Pacific Asia Travel Association early this year. Among TAT's 18 worldwide offices in charge of business in 43 countries, two are based in China. One is in Beijing, and the other in Hong kong Cooperation with China to develop tourism resources in the Greater Mekong Subregion is one of TAT's priorities for 2003

Accor hotel group vows to protect children

Bangkok Post  -  International  hotel group Accor has signed a code of conduct to protect children from sexual exploitation in travel and tourism.

Accor has signed up to the ECPAT (End Child Prostitution, Child Pornography and Trafficking of Children for Sexual Purposes) code. Western tour operators have joined previously, but Accor is the first big hotel group to do so.

Accor employees will be trained to monitor suspicious guests bringing people aged under 18 years old to the hotel for sex.

``Suspicious guests may include not just your big fat foreign guy, but also Asian and local business people,'' said ECPAT international tourism coordinator Sendrine Fabie.

Unicef believes 200,000 children and women are sold or sell themselves for sex in Thailand.

The scheme will also be adopted to other Accor properties in Laos, Cambodia, Singapore and Indonesia.

India’s hotel industry hit hard

TravelWeeklyEast.com   -  India’s  hotel industry is moaning wounded by the after-effects of 9/11 and fear of a Gulf war and has missed another peak season to regain losses. It suffered a decline in revenue earnings by 15 percent compared to the previous year.

If the trend continues, the hotel industry will suffer heavy losses and it might also lead to closure of some hotels, federation of hotels and restaurants association, president, Vivek Nair, has warned.

The association has expressed deep concern over lack of special measures to promote tourism and encourage the hospitality industry.

India has set what many call an unachievable and unrealistic target of attracting five million visitors by 2010. However, there are just 1200 hotels in the classified categories of one star to five star, with 70,000 rooms.

There is also a concern over constraints on airline seat capacity, directly affecting flow of foreign tourists, resulting in them skipping India.

Good showing for Malaysia’s tourism industry

Despite the current economic woes, the aftermath of the October 12th Bali blast and the imminent of a US-led war against Iraq, Malaysia continues to record a growing number of tourists.

Last year Malaysia received 13.3 million tourists, a four percent growth compared to 2001. It contributed an estimated RM42.6 billion (US$11.21 billion) to the national gross domestic product.

Tourism Malaysia’s aggressive marketing in its key markets of Singapore, Thailand and Indonesia was the key factor for the impressive growth. The low value of the ringgit vis-avis foreign currencies made Malaysia a value-for-money destination and the year-long activities, all played a pivotal role in the increasing arrivals.

Malaysia will continue with its strategy of tapping the ASEAN and Asian countries, which filled in the vacuum caused by the shortfall in arrivals from longhaul markets following the September 11 terrorist attacks in the US.

The top 10 markets for Malaysia in 2002 were:

  • Singapore with 7,547,761 tourist arrivals
  • Thailand, 1,166,937
  • Indonesia, 769,128
  • China, 557,647
  • Japan, 354,563
  • Brunei Darussalam, 256,952
  • UK, 239,294
  • Taiwan, 209,706
  • Australia, 193,794
    India, 183,360

Bali Recovery Program

e-Turbo.com  -  "The people of Bali are putting their lives together after last year, as are so many others. In time, we want people to consider Bali for a holiday and when the time is right, I can assure you that the Balinese will be waiting to welcome Australians and the world in their own warm and friendly way. We like to appeal to all of you to keep Indonesia and particularly Bali in your mind, not as a flaming bombsite, but as the island of God, where people smile and are waiting to welcome you in their own friendly way . Bali is still the same, our hotels, our beaches and our smiles - all still there," said Minister for Culture and Tourism of Indonesia, Mr. I Gede Ardika in his interview with publisher Thomas Steinmetz of eTurboNews during AIME2003 in Melbourne.

"With improved condition and serious government efforts nin recovery the Indonesia tourism we predicted in 2002 will achieve the number as of 4,7 million visitors, but the earnings will be going down to US$ 3.8 billion, because of a shorter stay average from 10 to 7 days. In 2003 we are looking to a meager increase of arrivals to 4.8 million tourists, constituting US$ 4.5 billion in earning, if the National Tourism recovery program is consistently implemented.

The rehabilitation phase during the first 6 months of 2003 is a period and effort of quality enhancement of products and services. These new products and services of course need proper human resources to handle and will assure jobs. We should be no longer claim our tourism strength solely on the "smile on our face" and "fabled Indonesian paradise" myths. Therefore we have to train the tourism human resources to be professional, efficient and to serve the more sophisticated and seasoned tourists with enhandced products and services. Following the rehabilation phase by mid 2003 the normalization period will commence. This is the time to standarize products and services. The second half of 2003 will also see the real marketing build up

Many security improvements have already been introduced to Bali. We have increased the number of police in Bali to 5000, that is more per capita than Sydney. We have introduced comprehensive "Screen In- Screen Out" security checks at each entry/exit point into outof Bali - and there are only four points of entry to Bali. ID cards have been introduced and must be carried by all citizens and visitors in Bali. Visitors are subject to physical checks and ID scrutiny. Bali's own communities have imposed security measures on their own customary villages. This works like Australia's Neighbourhood Watch where senior and highly honoured authority figures known as "Pecalang". These unarmed village elders work alongside the police to ensure their villages are secure and their people are acting appropriately. This role is undertaken along cultural and religious customs. Hotels, supermarkets, cultural events and even weddings are subject to tight security checks upon entry. We believe the security steps we have taken will establish Bali as a secure and safe icon destination well into the next decade.",Ardika explained

Ireland gets 87 new hotels in five years


Since 1998 there have been massive changes - and improvements - in hotels right across the country, Joan Scales writes

Irish Times
  -  The past five years have seen a huge growth in indigenous conferences and events. This is evidenced by the large increase in hotels in that period. In 1998 there were 771 hotels with 30,445 rooms: by 2002 that had grown to 858 hotels with 42,156 rooms.

Not only has there been an increase in numbers of hotels, but existing hotels have greatly improved their facilities, with many adding conference rooms, leisure centres, and state-of-the- art technological features. ISDN lines are standard in most hotels and it is estimated that up to 30 per cent have TI, multi-ISDN facilities which can take satellite access.

"Hotels have improved dramatically," says John F Burke of Beacon Conference and Incentive. "I've seen wonderful developments in the market. International groups such as Marriott and Radisson SAS are bringing new business to Ireland, though improvements by local hotel groups have been hugely welcomed."

He cites the Fitzpatrick Hotel Group and the Citywest development, which can feed 2,000 people and house up to 1,500, as examples of what is going on in the market: "The only drawback to growing inbound conference business is the limited air access to destinations beyond Dublin. Galway is an example of the city that could increase business with improved access from Britain and Europe. At the moment there are Aer Arann services to Dublin and Luton."

Visitors to Galway often arrive at Shannon. However, the lack of air services is not perceived as a problem to the recently opened Radisson SAS Hotel. Sales manager Brenda Murphy says: "Galway airport is a limiting factor but business is going well. We are getting a lot of big Irish conferences, including the Irish Hotel Federation, which will hold its annual event here next month. Up to 1,000 guests can be accommodated in the main conference area and up to 780 seated for dinner."

Predictably, value for money is a big concern with customers at the moment. "Our daily delegate package at the moment is E45 per day per delegate and includes all room hire, technical facilities and meals," adds Ms Murphy.

Outside Galway city, the Connemara Coast Hotel near Oughterard can accommodate up to 700 delegates for conferences with full technical support. However, the hotel which has a terrific location overlooking the water, is also well-suited to smaller meetings with lively local entertainment.

Access is also important for a hotel that is the pinpoint centre of Ireland. The Hodson Bay Hotel has the honour of Hodson's Pillar in its grounds, marking the point. The hotel, near Athlone, is 10-years-old in November and in that time has grown from 46 rooms and conference facilities for 400 to 133 rooms and facilities for 1,000 people.

Location, as always is important, and much business at the Hodson Bay comes from companies and organisations that are located nationwide. Delegates attending courses at the hotel can take part in twice-weekly evening wine-tasting classes or participate in an aqua aerobics class before business, each morning. "It's important to give people added value," says the hotel's Nicola Ross. "Partners can stay free and the in-house beauty salon has two full-time beauticians." Adare Manor, set in 840 acres of rolling Limerick countryside, caters for the smaller end of the market - up to 150 people. Ann Sheehan, finds "that people like to mix business and pleasure and at Adare the selection is extensive. Golf, horse-riding, clay-pigeon shooting, archery, fishing, walking and some of the activities on offer." Adare was recently voted the number one hotel in Europe by the readers of Conde Nast's Traveller magazine.

Location is also vital to Great Southern Hotels. With properties at or near rail stations and airports, they have seen good growth in day business, particularly people flying in for meetings. The Great Southern at Dublin airport has been so successful it was necessary to build on an extra 30 meeting rooms. The M50 and good car- parking facilities make this a very popular venue. The Killarney GSH reopened last June after a six-month restoration and enhancement project that allows them to cater for up to 900 delegates at a conference.

The GSH Eyre Square is closed until April and will re-open with improved facilities. The recently opened City of Derry hotel, the first venture in Northern Ireland, is proving a winner with its selection of function rooms for up to 200 guests.

This year may be an even better year here because, as John F Burke says, "we are perceived as a very safe destination."

Event organisers may decide to come west rather than go east, and this will be to our benefit.

Events already planned for this year include the World Association of Newspapers conference, the Association of Corporate Travel Executives, Newsworld International, the conference for the world's television and radio executives, and Microfocus Global Marketing.