Refinance your hotel now: borrower utopia – finding the sweet spot

By: Mark Earle & Emil Iskandar  HVS International

Imagine a world in which interest rates are the lowest in decades, lenders’ treasuries are bulging with cash looking for a home, and your hotel’s net operating income is looking pretty good, pulling away from the worst months of last year and making your mortgage lender crack a smile when she looks at the positive outlook on your debt coverage cushion (which my not have existed a few months ago).

Now imagine that these hotel lenders have almost no new hotels to finance since fewer are being built these days than at any time in the last 10 years. What do they talk about at their weekly project meeting? Apartments? Retail? Office buildings? The answer is usually “show me the numbers.”  But their discussion always returns to their first love, hotels, and the buzz of refinancing, which are beginning to show themselves in recent months. The reason for this long standing love affair with hotels is that they have historically provided the highest risk-adjusted returns among different real estate types. So for hotel owners this rare, nearly-perfect line-up of circumstantial “stars” appears to add up to hog heaven for them and their bottom lines. After all, they know very well that company earnings growth is three pronged, depending historically on rooms inventory pipeline growth, operating profits, and financial leverage (including cost of capital).

But all may not be quite so rosy in the eyes of the lenders, who have been spooked by a squirrelly economy and painful stock market, to say nothing of the bad press and defaults in their favorite investment category. Remember, they are uncomfortable at best as visionaries, even in light of solidly improving current bottom lines - so they peer steadfastly at “T12 NOI’s” (the last twelve months net operating income) on refinancing applications. In addition, they have been fortifying themselves against any unforeseen creatures from the hospitality “chamber of horrors” by insisting upon a lower risk profile for the same required rate of return on their investments. These include requiring a higher spread over interest rate benchmarks, taller debt service coverage ratios, shorter loan-to-value ratios, credit enhancements, or a combination of these and other factors.

The mission becomes clear for the savvy borrower despite this apparent belt-tightening:  to secure the current bargain basement interest rates now without having to wait another 3-4 months before the disquieting months between September ‘01 and, say, March ’02 are excluded from the T12 NOI calculations (as of the beginning of the fourth quarter of this year, interest rates on a permanent first mortgage for hotels were 50 to 150 basis points lower than a year ago). Can the borrower possibly convince a lender to do a little forward looking based on his steadily brightening T12 NOI’s and improving forecasts? The answer is often “yes” - when these two positives are viewed in concert.  The resonance of these two factors is hard to resist if the deal can make it through the lender’s other “gates” (and the account executive has that weekly meeting to think about). When the lender begins to see daylight on your deal based on a passable history and brighter prospects, you are nearing what we call the “Sweet Spot”.

Due to the fact that most of today’s T12 NOI’s fall short of what is required to service the desired loan amount, the key to getting to the Sweet Spot is to creatively compensate the shortfall in T12 NOI in arriving at what is known as the lender’s “Underwritten NOI”. The main premise of the Underwritten NOI is that it reflects stabilized and sustainable operating performance, not just a snapshot at one point in time during the loan term. In a typical hotel and resort refinancing, loan amount is determined by, among other factors, Underwritten NOI meeting certain debt-service-coverage-ratio (DSCR of 1.50 to 1.65 times) and loan-to-value level (LTV of 60% to 70%).

What can be done when T12 NOI’s do not quite make it to the lender’s established minimum debt service coverage and loan to value ratios? There are a series of steps that should be followed:

Assess or “size” your borrowing prospects based on a worksheet analysis that uses the underwriting criteria of several institutional lenders. This initial “sizing” is an extremely valuable step in finding the Sweet Spot, as it helps identify the potential borrowing/underwriting issues.

Once the underwriting issues are identified, the challenge is  come up with alternatives to address these issues before the transaction goes to market. Once a lender has said “no”, it is harder to turn him around to say “yes”.

Here are some of the ways to address these underwriting issues:

-Creatively structure the right "capital stack"- choose among the variety of financing formats and options available. 

-Make sure the solutions are "risk/adjusted" - fine tune risk and reward tradeoffs and structure preferences for both borrower and lender. 

-Utilize appropriate credit enhancements - if necessary, capitalize on the strengths of the borrower.

It is most important to remember that there is nothing to be gained by delaying the first step. There is a lesson to be learned from the current state of the residential refinancing markets, where early applicants (in what is now a deluge of paperwork) got great deals and latecomers are seeing higher spreads or long delays based on what is now bulging demand facing limited processing resources.

Mark Earle
Emil Iskandar
HVS Capital Corp.
1777 South Harrison St.
Denver, CO  80210
303-758-3100
303-691-3799  

Thistle denies bank-driven business review

e-Tid.com  -  Thistle Hotels has issued a statement to the Stock Exchange denying reports in yesterday’s Sunday Telegraph which said that Thistle’s banks had asked Ernst & Young to review the business.

Thistle’s statement was a three-pronged denial: “Thistle confirms that neither the Royal Bank of Scotland [Thistle’s main bank] nor Ernst & Young has had any discussions with Thistle in this connection. 

The Royal Bank of Scotland has confirmed that it has not instigated any such business review. Thistle currently has no outstanding loans or debts with any Bank including the Royal Bank of Scotland’.

The Telegraph’s copy suggested that the banks were ‘alarmed at Thistle’s precarious trading position’ while questioning whether the current management could ‘steer the company through a period of uncertainty’ in the market.

Thistle issued a trading update in mid-Jan in which it said that its FY to 29Dec02 would meet expectations although it declined to give any 2003 forecasts.

Hotelier's note to self: For best ratings, empower employees

LA Times  -  The highest marks go to luxury chains that train staffers to take charge, anticipate client needs.

Cressida Roth was smitten last Valentine's Day.  By a hotel.  Like many modern love stories, this one began in bed.

It was 2 a.m., and the Valencia attorney couldn't sleep because creaky bedsprings woke her at every turn.

"I thought, 'Here I am at the Four Seasons Hotel Las Vegas, paying a pretty penny for a junior suite. I shouldn't have to put up with this.' "

So she dialed housekeeping, which assured her it would take care of the problem.

In less than five minutes, the housekeeping manager, in suit and tie, materialized at her door with two assistants, carting a brand new bed still wrapped in plastic. Apologizing profusely, they instantly made the switch.

"It was awesome," Roth recalls. "I was stunned. I kept thinking: 'I love this hotel.' "

Already a frequent Four Seasons guest, she wouldn't think of staying anywhere else when she visits Las Vegas.

Good service at a hotel makes a lasting impression.

So do service glitches, especially on a memorable occasion.

Take Mitchell Fine and his wife, Alexi.

When the Tarzana couple arrived at the Bacara Resort & Spa near Santa Barbara last August to celebrate their 20th anniversary, they were greeted by "a most unfriendly young lady" at the front desk, Mitchell says. Blaming a crush of departing guests, she said their room was not ready for the early check-in they had requested a month before.

The couple returned about three hours later, then waited and waited to be shown to their room while the hotel searched for their paperwork. When Mitchell complained, an employee "snapped at me and said he got my packet just five minutes ago." The couple canceled their stay on the spot.

In a letter, General Manager Katharine Monahan apologized to the Fines and offered them an upgrade on a future visit. (Bacara officials declined further comment for this article.) But the Fines are still angry.

"They came as close as they could to ruining a very important weekend," Mitchell says.

There's some disagreement about whether service in the U.S. hotel industry overall is improving or getting worse. But experts agree that service is the No. 1 reason guests like or dislike hotels and that good service has certain key features. Also, with some notable exceptions, the more expensive the hotel, the better the service.

"The key is treating every guest as if they're the only guest," says Linda Hirneise, partner and executive director of hotel practice at J.D. Power and Associates, a marketing firm based in Westlake Village.

Another key is "taking ownership of a problem," says Peter Ostrowski, vice president of NFO Plog Research, a New Brunswick, N.J.-based market research firm that conducts an annual travel survey of 9,000 U.S. households. Ownership involves following through and keeping guests informed.

"It's never 'It's not my area' or 'It's not my job,' " says Jonathan Barsky, partner in Market Metrix, a market research company in San Rafael, Calif., that does a quarterly survey of 30,000 U.S. hotel guests.

Consistency, anticipating needs and handling the basics well, especially the mechanics of checking in and checking out, are also critical.

First and last impressions count.

In the latest Market Metrix survey, Ritz-Carlton gets the highest service ratings of any hotel chain, followed by Walt Disney World Resorts, Outrigger Hotels and Four Seasons. Individual Las Vegas hotels, such as the Mirage and Bellagio, are also near the top.

Service ratings generally follow price in lock-step: highest for luxury chains ($206 average room rate), lowest for economy ones and in between for the rest.

But there are some over- achievers that Barsky dubs "diamonds in the rough." These modestly priced chains, which near or exceed the average score for luxury hotels, include Homewood Suites, Candlewood Suites, Drury Inns, Country Inns & Suites by Carlson and Wingate Inns.

The Market Metrix survey breaks service into seven aspects, such as friendliness and efficient check-in. Luxury hotels beat the average on all seven, but where they soar is in employees' can-do attitude and knowledge of the hotel and its facilities.

Different surveys get different results.

In the latest annual one by J.D. Power and Associates, which covers 13,000 North American hotel guests, Four Seasons, not Ritz-Carlton, received the highest service ratings among luxury chains. Four Seasons also had the lowest rate, 7% versus 14% for luxury hotels overall, of guests who said they experienced significant problems during their stay, Hirneise says.

I asked Debbie Brown, Four Seasons' vice president for human resources in North America, how the chain trains its employees to deliver service. The key, she says, is hiring the right people in the first place.

"We tend to hire people for how they think -- if they are passionate about the business and love to serve others," she explains.

Each applicant undergoes four interviews focused on behavior. People who are structured or rigid are rejected.

New hires go through four weeks of orientation. "We teach people a culture, a mind-set," Brown says. That mind-set involves such practices as addressing guests by name, establishing eye contact and perfecting what she calls "anticipative service" -- observing guests to see what they might need instead of waiting to be asked.

Like many top chains, Four Seasons keeps computer profiles of frequent guests' preferences, such as for corner rooms or bottled water. And to augment technology, they employ some old-fashioned sleuthing.

How do doormen know your name?

"They grab your luggage and glance at the tag in a very discreet way," Brown says. "We hope it's not the ex-wife's luggage."

If it is, not to worry. Four Seasons spends a lot of time teaching employees how to rebound from problems, Brown says. And a classy rebound can lock in the loyalty of a customer for life.

Just ask Cressida Roth.  

33 die in China hotel fire

A fire on Sunday killed at least 33 people in a hotel in Harbin, capital of China's Heilongjiang province, state media and officials said.

More than 100 people were evacuated from the Tiantan hotel to safety, the official Xinhua news agency said, citing local sources. Ten people injured in the blaze were rushed to hospital but were out of danger, it said.

A Harbin fire department official told AFP all the hotel occupants had been evacuated. "Everyone has been brought out of the building," she said, adding that it was difficult to give an absolute death toll at present.

The fire broke out in the hotel around 6:00 pm on Sunday and had been extinguished by 6:22 pm, Xinhua said. The cause of the fire was still under investigation, the fire department official said. It was not yet known whereabouts in the three-storey hotel the fire had broken out, she said. The local government had ordered a thorough safety inspection throughout the city, Xinhua said.  

Inadequate safety measures in buildings in northern China, particularly a lack or blocking of fire exits, has often lead to high casualties from fires in high-population density areas.

Like the rest of China, Harbin was celebrating the weeklong Lunar New Year holiday -- China's biggest festival. China welcomed in the Year of the Goat on Saturday and tourists have flocked to the city for its famous Ice Lantern festival, which features enormous sculptures made from snow and ice.

Fireworks and fire offerings play a major part in the New Year festivities and, despite repeated safety crackdowns, cause many deaths and injuries every year.

Last year, the number of blazes in the Chinese capital Beijing over the holiday increased more than four-fold from the year before, with over 700 fires recorded in the city.

China's most deadly blaze to date was at a disco in Luoyang which left more that 300 people dead in December 2000.

Germany - Difficult times reverse 20-year travel binge

Travel industry experts anticipate no revival of foreign spending by Germans this year, even without an armed conflict in the Near East. "Even in an optimistic scenario, we are looking for stagnating outlays under these circumstances and because of the low starting level," predicted economist Renate Finke in Dresdner Bank's yearly analysis of the German travel account. Unveiled for Stuttgart's winter CMT travel industry fair, her study said that the murky geopolitical situation evoked by the words Iraq and oil would influence the global economy and conditions for travel in 2003. 

Without this drag, however, the economic outlook isn't entirely bleak. Business sentiment has perked up in the EU, except for Germany. This could lift spending by foreign visitors in Germany by around 2 percent to nearly EUR21 billion from last year's EUR20.4 billion, even if a weakening dollar keeps Americans at bay. But a spiking oil price could spoil this outlook in the event of upheaval in the Near East, depressing Germany's travel receipts by scaring off some foreigners. While a minor setback from a temporary jump in the oil price during a brief conflict could be absorbed, the unforeseeable effects of a protracted confrontation are impossible to measure, said Dresdner.

Much the same would apply to spending by German travelers abroad. Even in a favorable geopolitical scenario, the study said, insecurity about jobs and a prevailing economic gloom would cause people to skimp on vacations. A survey by Forsa market research institute found that 60 percent of German households would have less to spend abroad this year, even if tour organizers reduce prices. And the limp economy would also discourage business trips. Two decades of rising spending by German travelers abroad reversed in 2002 after having ended in stagnation the previous year. Yet foreign visitors, especially close neighbors and U.S. tourists, left more money in Germany last year, shrinking the chronic net outflow in the national travel account. Extrapolating from Deutsche Bundesbank's preliminary balance of payments data, Dresdner estimated the German travelers spent about EUR50.5 billion abroad in 2002. This was about 2.5 percent less than the EUR51.6 billion they spent the previous year and in 2000, when an unbroken 20-year rise in foreign travel outlays culminated. Germany's receipts from foreign visitors, however, rebounded last year from EUR19.2 billion in 2001.

Dresdner tentatively traced the improvement to visitors from neighboring countries, where the slump in consumption hasn't been as pronounced as in Germany, although people also became more inclined to pick destinations reachable by train or road rather than airplane in the aftermath of the New York terror incident of Sept. 11, 2001. Germany held its place as the seventh most attractive country to visit. The world's list of travel destinations continued to be led by the United States, followed by Spain, France, Italy and Britain. China had ousted Germany from sixth place in 2001. Germany attracted mostly European visitors in 2002, although the strong dollar helped to lift U.S. visitors into third place by nationality last year, ahead of the French and Austrians. Dutch travelers formed the biggest group of foreign spenders, leaving behind nearly 12 percent of Germany's travel income from foreigners. The Swiss were second with 11 percent. 

The poor economy and terrorist incidents in Tunisia, Bali, Kenya and Moscow affected private and business travel plans last year. The disposable income of private households was curtailed by new taxes and cuts in bonuses for vacations and Christmas. The new euro cash, which was supposed to promote tourism, quickly became associated with higher prices, especially for services, restaurant tabs and package tours, hiked by 10 percent by the organizers in 2001.

Discount airlines and Internet bookings offered an alternative. Travel firms initially responded to falling 2002 bookings by reducing capacity. Only late last summer did they try to boost demand by reinstating price cuts. Vacation flights were down by 9 percent through last October; tours by road or rail benefited. The tour packagers fared considerably worse than the broader market for business and private travel. Tui, Europe's biggest travel company, last month slated a layoff of 1,000 after its travel business earnings fell an estimated 30 percent. "In the past travel year, which normally ends for the branch on Oct. 31, the tour organizers had to swallow a sales drop of 6 percent to 9 percent," Dresdner analyst Hans-Peter Muntzke said. "The number of providers fell somewhat more steeply." Italy, meanwhile, overtook more distant Spain as the No. 1 foreign vacation spot for Germans. SOURCE: FAZ

Welcome to the Hotel (ier) Hendrix

By Yeoh Siew Hoon  TravelWeeklyEast

Who: Ian Michael Coughlan, general manager, Peninsula Hotel Bangkok

Why: Bringing a new style to the five star hotel business – striking a balance between luxury and informality without being too “hip” about it.

Enter his office and the first painting you see is of Jimi Hendrix, in full pyschedelic regalia (see picture). Not quite what you might expect to see in the office of a general manager of a five star hotel belonging to a “traditional” brand.

But then Ian Michael Coughlan is rather unexpected. Okay, he still wears the double breasted suit but underneath beats the heart of someone who doesn’t want to be put in the box of a “traditional hotelier”.

Ask him why the portrait of a rock guitarist who lived a fast life and died young and Coughlan, 36, says, “He was prolific, inventive, artistic and unconventional. He did the opposite of everything that was expected. Plus, of course, he played the guitar brilliantly, and he was left handed.”

Coughlan believes in the hotel business, one has to be unconventional, artistic and independent thinking as well.

Yes, he admits the hotel industry is conservative and traditional especially the five star segment. “But even this segment has experienced a lot of changes. Attitudes have changed, the quality of the hotel experience has to be different.

“People want to feel more relaxed regardless of the standard of the hotel. They have less time, more pressure in their lives. The kind of guests that stay in five star hotels have changed a lot – luxury hotels have become more accessible to ‘normal’ people.”

At the Peninsula Bangkok, positioned as a city resort, the approach is definitely relaxed even though its facilities are of a high standard. “Peninsula hotels will always be classical but we have tried to introduce modernity through interaction between guests and staff. We encourage a less formal approach to guests without being overly-friendly, and the way to do this is to give staff confidence.”

Some might say this is a challenge in Bangkok in a country where English is not widely spoken and where often a big smile is thought ample compensation for things going wrong.

Says Coughlan, “Every culture and workforce has very positive work traits and some that need to be finetuned. Given certain cultural behaviour in Thailand, spontaneity in dealing with problems is not something that comes easily to people.

“So that has to become a trained behaviour. That’s why we focus on communication skills, primarily English language and interaction training – that’s the greatest challenge of any operator here.

“We want to move away from servility to confidence in dealing with guests and break through cultural barriers.”

One can detect the Ritz-Carlton approach to human resources in his style – he worked with the group in the US. “When you’ve been brought up by parents who immerse you in their values, you pick up these values and then you establish your own values.”

Peninsula practices a much more family approach to human resources, he says. “They are the last company to lay off staff and the first company to break out of corporate norms to help people.”

The Peninsula Bangkok is also relaxed in its dress code. “We want people to feel luxury and comfort. We don’t want to dictate to guests how they should dress.”

While some might say this “comfort and luxury” approach is not new, having been embraced by the new hip, modern hotels, he believes these hotels are just fads while the classical product will endure. “The best example is Felix (Peninsula Hong Kong) – it is nine years old and it is still full every night. Peninsula has 68 years of tradition but it caters to the future.”

Asked if his hotel was trying to become the “W” of the group, he says, “Yes, probably in terms of attitude. We market our hotel as the new Thailand, the new Bangkok, the new Peninsula. We have a young management team who are in their roles for the first time – that brings high energy and ideas. What we lack in experience we make up in ‘adventurism’.

“Modern hospitality is about a more relaxed approach.

“I am not a big fan of hip hotels where staff dress more stylishly than the guests and they are often more unwelcoming than traditional five star hotels. I don’t like the haughtiness of staff who judge guests based on dress, looks, sex and nationality. But stereotypes are breaking down. You’ve got a younger workforce who are less tied to traditional roles and thinking.”

Absence of $ 340m gain drags Raffles Holdings' profit down;
Excluding gain, FY02 net profit was $ 17.9m, up from a $ 9.9m loss in 2001
 
Business Times Singapore  -  Capitaland’s  hotel subsidiary Raffles Holdings posted an expected 82 per cent fall in full-year group net profit to $ 45 million in the absence last year of the whopping $ 340 million exceptional gain it had booked in 2001 from the sale of a majority stake in the Raffles City complex.

Excluding exceptional items, the group's performance for the year ended December 2002 was ahead of 2001. This point was made at great length to analysts and journalists yesterday by Raffles Holdings' head honchos, especially its two deputy CEOs Leong Wai Leng and Jennie Chua.

Ms Leong said that earnings before interest, tax, depreciation and amortisation (Ebitda) for the group before net exceptional gains for FY2002 was $ 86.2 million, up $ 11.8 million, or 16 per cent, from 2001.

Similarly, Raffles Holdings's net profit attributable to shareholders before exceptional items last year was $ 17.9 million - or a reversal from a loss of $ 9.9 million in 2001.

The group's overall revenue per available room (RevPAR) declined by 2.8 per cent last year to $ 144 but this was still a better performance than the drops of 4 to 6 per cent recorded by large hotel chains last year, said RH officials.

RH's RevPAR was due to a 3 to 4 per cent drop in average room rates on a group basis while the average occupancy rate rose from 65 per cent in 2001 to 66.5 per cent last year.

Said Ms Chua: 'For a year which all of us (in the hotel industry) said was very very difficult, I think we are little bit pleased. Out of a score of 10, I would rank it 8.53.'

For Q4 last year, RH posted a $ 25.6 million group net profit, against a $ 96.3 million net loss in Q4 2001.

RH said performance of operations is expected to remain flat this year compared with 2002. It expects to be profitable for Q1 2003 and for the whole year.

As for FY2002, Ebitda from the group's core hotels and resorts businesses doubled to $ 54.8 million due to better operating performance and the full 12-month contribution from the Swissotel chain which RH acquired in 2001.

RH president and CEO Richard Helfer revealed that in addition to two new hotel management contracts secured so far this year, 12 new deals are being pursued, of which three have signed Memoranda of Understandings. Top priority will be for North Asia. Group turnover rose 7 per cent last year to $ 384 million. On the stock market yesterday, the counter closed half a cent lower at 35.5 cents. RH was floated in 1999 at 85 cents per share.

Fires burn a $20m hole in Australia’s tourism

The Age  -  The bushfires ravaging Victoria's high country have so far cost the tourist-dependent region about $20 million in lost revenue, the local council has estimated.  

But, with the fires still burning and damage to livestock and farmland not yet tallied, the true cost of the devastation is yet to be determined.  

"This is without a doubt one of the most significant events that has ever affected us, and the current situation is critical," said Tracey Squire, manager of economic development for the Alpine Shire.  

"While we are still assessing the actual economic impact, we believe in January alone it may well exceed $20 million. In normal instances natural disasters often occur in a short period of time, (but) as we are now in our fourth week of these fires, the extended time frame has multiplied the impact."  

In the nearby township of Bright, businesses are also feeling the pinch as visitors stay away from the region during its peak tourism period. Ronnie Beauchamp, of Alpine Region Tourism, said bushfire damage had so far mostly been limited to parks and public land.  

"The majority of our commercial product, such as wineries, attractions and villages, remain as beautiful and appealing as ever," Mrs Beauchamp said. "Our biggest challenge will be overcoming the perception that everything is burnt - this is not the case."  

The Victorian Farmers Federation said it was too early to put a dollar figure on the losses incurred by local livestock farmers, who had already been contending with crippling drought conditions.  

"Fire and livestock is a very dangerous mixture - even if the livestock aren't killed by the fires very often their feet get burnt off," said Simon Ramsay, the federation's pastoral group president. "It's very hard for farmers at the moment. Drought is a thing that sneaks up on you but you manage your way through it, whereas with bushfires you just have no time to do very much at all.  

"There are fairly substantial acreages that have been burnt. While some farmers have had a reasonably good season, everyone is particularly short of feed and as a result it has become very expensive."  

Murray Toland, a sheep and cattle grazier who has lived on more than 700 hectares at Cobungra, 20 kilometres west of Omeo, for the past 32 years, watched fire rip through 90 per cent of his property and destroy 250 sheep.  

"Its ferocity was indescribable - something I have never seen before," he said.

Even before the fires, most of Mr Toland's property had run out of water, and his feed stocks were dangerously low. Now he will have to sell his 100 cattle, even if emergency hay arrives in Omeo.  

Federation officials went to the region on Friday to assess the damage, ensure there was enough fodder for animals, and to decide upon a course of action.  

"There has been so much damage to houses, farmhouses and public infrastructure, so much of it has been destroyed, and the farmers have been hit particularly hard because they had been protecting and saving what little patches of feed they had," said Geoff Crick, chairman of the federation's economics committee.  

"But now a lot of that has been destroyed and can't be recovered. And if the farmers were unlucky enough to lose their houses too, they won't have a lot left."

PATA conference to focus on Global tourism recovery

/Antara/  - The 52nd conference of the Pacific Area Travel Association (PATA), scheduled for April 13-17 on the resort island of Bali, is likely to focus on restoring the global tourism industry in the wake of the September 11 tragedy and the Bali bombings.

Chairman of the event's organizing committee, Setyanto P Santosa, yesterday said as an organization which had representatives in more than 70 countries, PATA played an increasingly important role, particularly after global tourism suffered a blow due to the terrorist attacks.

To handle the impact of the Bali bombings of October 12, 2002, PATA had since formed a task force made up of senior tourism officials from various countries, including PATA vice president Peter Semone, he said.

He said the Bali conference would be addressed by a number of world-class speakers, including former US president Jimmy Carter, Singapore representative in the UN Prof Tommy Koh, and vice president of the National Geographic Traveller Dawn Drew.

Around 1,500 tourism players and travel agents from all over the world are expected to take part in the conference themed "Culture and Tourism: From Heritage to Legacy".

Meetings & Conventions News

eTurbo.com  -  On Jan. 23, Carroll Armstrong, president and CEO of the Baltimore Area Convention & Visitors Association, announced his resignation. According to the BACVA, Armstrong will leave his post Feb. 1 and become a special consultant to the chairman of the board of BACVA. Armstrong, who has held the position since 1996 and is expected to help in the search for his successor, has been under pressure from Baltimore mayor Martin O'Malley, who is dissatisfied with the BACVA's performance. Sales figures for the period July to Sept. 2002 show that booked hotel room nights fell approximately 75 percent, to 40,333 from 158,750 in the same quarter of 2001. Also, the recent $150 million expansion of the Baltimore Convention Center has failed to live up to its promise. On Jan. 27, Marshall Murdaugh was named as interim CEO, starting Feb. 1. He has previously served at the helm of several CVBs, including Atlantic City (1994-2000), New York City (1988-1994), Memphis (1984-1988) and the Virginia Tourism Office (1970-1983).

Starwood Hotels & Resorts is up against a Feb. 1 deadline for its stalled headquarters hotel project in Boston. Starwood and its local developers must sign a ground lease and arrive at a finance package on phase one of the project by the deadline or risk forfeiting development rights and losing a nonrefundable $15 million deposit. "They are near to securing commitments," said Jim Rooney, director of development for the Massachusetts Convention Center Authority. The MCCA, which operates the Hynes Convention Center and the Boston Convention and Exhibition Center (now under construction), owns the land where Starwood would build. 

The deal for a 1,120- room hotel, signed back in February 2000, has already been given a one-year extension due to a lack of financing. That delay has pushed back a possible opening date for the property to mid-2005, one year after Boston's new convention center is scheduled to debut. An alternate construction plan has been approved, where phase one would complete 800 rooms; the additional 320 rooms would be added later. As for the talks, says Rooney, "It's a chicken-and-egg discussion. The meeting planners say 'I'd love to come to Boston when you have more hotel rooms,' and the financiers want me to prove that the business is there now." Starwood declined to comment on the status of the project.

Atlanta-based developer Stormont Hospitality has announced it has obtained private financing to build a 450-room headquarters hotel in Irving, Texas, where the city is in the process of building a 350,000-square- foot convention center. The property will be a Westin; both projects are aiming for a fall 2005 opening. The Lyon Convention Center in Lyon, France, has broken ground on an extension, slated for completion in 2006. The project will add a 3,000-seat amphitheater, 48,600 square feet of exhibit space and a four-star hotel. Currently, the facility has a forum that seats 2,000; two auditoriums that seat 300 and 900, respectively; 16 meeting rooms; and 43,200 square feet of exhibit space.

The Sagamore Resort, on Lake George in northern New York, is beginning a multiyear $20 million renovation. This year, $4 million will upgrade meeting space, another $4 million will go toward guest rooms and the Golf Pro Shop. Next year, the 1883 resort plans to spend another $5.5 million on bathrooms and fireplaces in rooms and outdoor landscaping. In 2004, the 25,000- square foot conference center will be renovated.

SOURCE Meetings & Conventions' Midweek News

Cautious Optimism for Caribbean Tourism in 2003

eTurbo.com - The Caribbean Tourism Organization is cautiously optimistic about the outlook for the industry's performance in 2003. Secretary-General, Jean Holder, says the region expects modest increases in the winter season, based on reports reaching the CTO so far. While prospects for the Caribbean in the US market continue to be good, there is still some concern over the recovery of the long haul market. Since September 11, Europeans are staying closer to home so travel within Europe is up. This has affected Caribbean business out of Europe significantly. While some recovery in the long haul market is expected for winter 2003, of note is that some of the UK business (23% of the overall European market) is likely to be diverted to South Africa due to the World Cup. The uncertainty surrounding developments in the Middle East is also cause for concern. A war there would not only increase the atmosphere of uncertainty for all travellers, but would raise the price of oil (now US$33.00 a barrel) and an airline fuel bill (now US $40 billion) to even higher levels. This would push a number of already struggling airlines over the edge. The CTO expects that given no war in 2003, Caribbean tourism will reach 2000 levels this year and resume real growth in 2004.

2002 Caribbean Tourism Performance Most of the positive growth for the region took place in the US and UK markets during the last quarter of 2002 and this has carried over to 2003. Preliminary estimates from reporting destinations (20 of 31 CTO member countries) indicate that up to October 2002, arrivals were down by approximately 6%. This was due to a difficult Winter 2002 season when the region was down approximately 10%. Each successive month after May 2002 registered significant improvements with both the US and UK market rebounding in the summer months. The Caribbean's proximity to the US market and its reputation for peace and tranquillity in a world of uncertainty and instability, were definite assets. All this was reinforced by increased government support and creative marketing efforts, which included increased expenditure at both the national and regional levels. For a number of reasons many more air seats also became available and at competitive prices. On the other hand, the tendency of consumers to travel nearer home, gave great momentum to interregional travel, which meant for example that many Europeans and Asians travelled to each others' countries or within their own countries, instead of travelling the Atlantic. Middle Eastern travel to the United States, for example, has been noticeably reduced. Europe, which had begun to perform poorly in 2000 due to weak economies and weak currencies, was even more severely impacted by the terrorist events of 9/11/2001 which struck a blow at long haul travel. There were other contributors, including the fact that Europe is very much a tour operator/charter driven market and while many of the schedule services were maintained, the region lost much of the charter traffic which always constitutes a major share of European business.

2002 International Tourism Performance Initial reports from the World Tourism Organization (WTO) indicate that contrary to many of the gloomy predictions, international tourist arrivals in 2002 not only grew by more than 22 million over 2001, which was a very difficult year, but by 19 million over 2000. It should be noted that 2000 was a bumper year in which many extravagant world events like the Olympics and the World Cup had pushed travel up over 1999 by some 7 per cent. The 2002 results, which saw international arrivals break the 700 million mark for the first time ever, once more underscore the resilience of the tourism sector, even in the most difficult global environment of political and economic uncertainty. The World Tourism Organization Report however estimates that the Americas was the only region in the world to close 2002 in the red, with the Caribbean being down at the end of 2002 by 3 per cent or more. Secretary General of CTO, Jean Holder, states however that Caribbean tourism business declined by some 16 per cent during the last quarter of 2001 as a direct result of the terrorist events of 9/11/2001 and after a very difficult start in the first half of 2002, being 3 to 4 per cent down by the end of the year must be seen as a major recovery.

About the Caribbean Tourism Organization The Caribbean Tourism Organization is the region's tourism development agency comprising 31 member governments and a myriad of private sector companies with headquarters in Barbados and marketing operations in New York, London and Toronto. The CTO's primary objective is to provide to and through its members, the services and information needed for the development of sustainable tourism for the economic and social benefit of the Caribbean people. The organisation provides specialized support and technical assistance to member countries in the areas of marketing, human resource development, research and statistics and sustainable tourism development. For more information, please contact CTO Headquarters at One Financial Place, Lower Collymore Rock, Barbados; tel: (246) 427-5242; fax: (246) 429-3065; e- mail; ctobar@caribsurf.com. CTO's New York office can be reached at 80 Broad Street, 32nd Floor, New York, NY 10004, USA; Tel: (212) 635-9530; Fax: (212) 635- 9511; Email: get2cto@dorsai.org. CTO's London office can be reached at 42 Westminister Palace Gardens, Artillery row, London SW1P 1RR; Tel: 171-222-4335; Fax: 171-222-4325; Email: cto@carib-tourism.com; CTO Canada can be reached at Taurus House, 512 Duplex Avenue, Toronto, Ontario, Canada M4R 2E3; Tel: 416-485-8724; Fax: 416-485-8256; Email: assoc@thermrgroup.ca. Visit CTO on the web at www.doitcaribbean.com  and www.onecaribbean.org .

Cambodia gets French hotel school  

The French hotel school Paul Dubrule Hotel and Tourism School (Ecole dHotellerie et de Tourisme Paul Dubrule) has officially opened in Siem Reap, offering young Cambodians opportunities in the countrys growing travel and tourism industries.  

The school offers ninemonth programmes in five specific areas of instruction: cooking and cuisine, restaurant and bar services, front office and reception, housekeeping and laundry, and travel agency services.

Students have access to eight classrooms, a mockup front office and lobby area, and four mockup guestrooms. There are laundry and housekeeping facilities, in addition to conference and meeting rooms with complete audiovisual aids.

Early this year the school will open its training restaurant, serving lunch, light refreshments and afternoon tea to the public. Revenue from the restaurant will be used to finance existing programmes at the school.

Graduates are expected to be in demand once they complete their training. The school will offer recruitment services to both enrolled students and prospective employers.

Employers have the opportunity to advertise available positions and to recruit from within the school. All students will follow the schools careerpreparation programme to gain valuable knowledge in how to prepare and apply for work within the industry.

Participating hotels in Siem Reap have also been selected for practical training and will offer two twoweek internships during the programme to provide handson experience.

Students are provided with uniforms and can enjoy daily lunch in the student cafeteria. Scholarships are available to the majority of students and are financed by private donations from individuals or companies. 

Hilton asks if discount Web sites friend or foe

(Reuters) - Hilton Hotels Corp.(NYSE:HLT - News) may quit giving loyalty program reward credit for rooms booked through Expedia and other Web sites, aiming to steer its best customers to its own Internet channel, an executive said.

The entire lodging industry is rushing to improve Web sites, following the success of fast-growing online sites such as Expedia, Orbitz and Travelocity. Internet booking is cheaper for hotels than phone reservations and easier to customize.

For their part, hoteliers have been trying to decide whether to treat the upstarts as competitors or a new way to market. Hilton, whose brands include Hilton, Embassy Suites, DoubleTree and Hampton, is aiming to nip future competition in the bud.

"Would 10 years from now someone make a choice between staying at a Hilton hotel or an Expedia hotel?" Jeffrey Diskin, president of the Hilton "HHonors" loyalty program asked in a recent interview.

"The question is, do we want to help them get there?"

TEST PLANNED

So this quarter Hilton plans to start a trial offering bonuses like free movies and room upgrades to loyalty program customers who previously used a discount Web site and book their next room at hilton.com, Diskin said.

Before Hilton launches the test, it may quit giving loyalty program credit for rooms booked on such sites, which would mark a change from current policy.

So far the Web channels account for less than 4 percent of all Hilton rooms booked and only 1 percent or 1.5 percent of rooms booked by loyalty program members, but the Web sites have been reporting double and triple-digit revenue growth.

At the moment they operate in a special category, more like a travel agent that helps a company sell its product than a wholesaler buying blocks of room nights and then selling them to the public in competition with the hotel.

Web sites like Travelocity sell rooms from Hilton's inventory, pocketing whatever markup they can get from preferential pricing offered by the hotelier. Some, like Expedia, also work as a travel agent, taking a commission for hotels booked.

Expedia's director of lodging planning, Jenne Pierce said her company had no intention of becoming a hotel operator. "The only way it works is if we cooperate," she said.

Few hotels participating in the discount room booking gave loyalty points while most hotel chains using Expedia as a travel agent did give points, she said. She added that chains had not been making policy changes recently.

Hilton is considering ending points for both types of bookings on rival sites, reasoning it should treat Web sites like wholesalers. "We don't want to by accident give control of our business over to wholesalers," Diskin said.

Hilton is trying to figure out what attracts its customers to alternate sites -- is it low price, one-stop-shopping for hotel, air and other travel needs, or something else?

Low price is key, argues priceline.com, the name-your-price site that auctions rooms to customers who are not told where they are staying until after they pay and do not get loyalty points.

"The reward is the price you get," said spokesman Brian Ek. (Reporting by Peter Henderson, editing by David Gregorio; Reuters Messaging: peter.henderson.reuters.com@reuters.net; +1 213 955 6750 peter.henderson@reuters.com)

To join the Forum for free, Click Here