WTTC reports on the potential impact of an Iraq war on travel & tourism

The uncertainty created by the potential conflict in Iraq has led the World Travel & Tourism Council to produce two sets of  research to more fully explain the potential outcomes. WTTC has identified a base case scenario in which there is a diplomatic solution or victory after a short, contained war. Secondly, the more devastating impact of a prolonged war scenario was analyzed.

The WTTC research, produced for 161 countries worldwide, demonstrated the importance of Travel & Tourism to the world economy when the direct and indirect economic impacts of the industry are assessed. Under the base case scenario it is estimated that, in 2003, the Travel & Tourism industry will in 2003 account for:

• 195 million of the world`s jobs or 7.6 per cent of total employment
• US$3,527 billion of economic value (gross domestic product) or 10.2 per cent of total GDP

The demand in 2003 associated with Travel & Tourism can be further broken down as representing:

• 11.2 per cent of all exports (US$1,010 billion),
• 9.6 per cent of all capital investment (US$686 billion)
• 3.9 per cent of all government expenditures (US$224 billion)

Travel & Tourism is forecast to see real growth (accounting for the effects of inflation) of 1.1 per cent.

A prolonged war in Iraq (war scenario) would destroy more than three million jobs in the global Travel & Tourism industry and eliminate more than US$30,000 million of economic value in 2003, the latest research from the World Travel & Tourism Council shows.

"In the event this worst case scenario takes place, we will look for immediate and decisive action from governments to protect and secure this vital world industry," said WTTC President Jean-Claude Baumgarten.

In particular, Baumgarten called for strong and proactive public-private partnerships to develop emergency contingency plans that would help mitigate the impact of events. Key interventions might range from tax breaks to increased levels of investment by governments in security, tourism promotion and infrastructure.

Developed and developing countries alike stand to suffer significant loss of economic value and employment on par with the damage caused by the terrorist events of September 11, 2001. Richard Miller, vice president for research and economics at the WTTC, said: "The industry should brace itself for a possible repeat of post-September 11 losses if the conflict is not resolved peacefully or quickly."

The impact of a prolonged war will not, however, have a uniform impact on all countries. The world`s largest economy, the USA, will suffer a massive shock with an estimated loss of 450,000 jobs and a decrease in the economic value of the travel and tourism industry of 3.7 per cent.

Within the European Union close to 260,000 jobs would be lost and the Travel & Tourism industry would see its GDP slide by 0.7per cent (about US$270m of economic value).

The figures are based on the Tourism Satellite Accounting research prepared for the WTTC by Oxford Economic Forecasting. TSA research quantifies all aspects of Travel & Tourism demand, from personal consumption to business purchases, capital investment, government spending and exports. It then translates this information into economic concepts of production, such as gross domestic product and employment, which can be compared with other industries and the economy as a whole to provide credible statistical information that will assist in policy and business decision processes.

The World Travel & Tourism Council is the forum for global business leaders in Travel & Tourism comprising the presidents, chairs and CEOs of 100 of the world`s foremost companies. It is the only body representing the private sector in all parts of the Travel & Tourism industry worldwide.

War scenario impact for 2003 on the 10 largest Travel & Tourism economies (change from situation with diplomatic solution or contained war)

The impact of conflict in Iraq:   the same as in 1991?

10 years ago, France posted a drop in its RevPAR across 14 consecutive months. 1991 closed with a 10% drop in the RevPAR to stabilise itself the following year and post another major drop in 1993 (-11.4%). The French hotel industry only began to recover from the repercussions of the Gulf War and the economic slump starting in 1996. Will these same causes have the same effects in 2003? Is it time to prepare for 5 years of dearth for Europe’s hotel industry

Three points in common, three reasons not to be optimistic!

·         First point in common: Europe’s economy at the end of 2003 will undoubtedly be closer to the 1.0% growth posted by the French economy at the end of 1991 than to the 2.5% forecasted by the French government in its budget law or the 3% forecasted by the European Commission.

·         Second point in common: the risk of seeing oil prices skyrocket is high. It will be remembered that in 1991, the price of oil reached its ceiling at $40.

·         Third point in common: the hotel industry continues, as in 1991, on the road towards maturity. Of course, a few markets are already well advanced in the cycle (France and the United Kingdom) while others a bit more behind. Overall, across the European Union, the market is in a structuring phase. It may be observed, for example, that the European chain supply is mostly positioned on mid- and upscale segments, which is not favourable to strong resistance for the sector. In 1991, like more recently, 3* and 4* hotels were sometimes hit hard because of a fairly clear deficit of international clientele (in particular Japanese and American). An eventual conflict in Iraq should have the same consequences with a drop in demand on the mid- and upscale segments that would lead to a drop in occupancy rates and RevPARs.

Why the European Hospitality Industry will do better than in 1991

Nonetheless, taking a closer look with respect to 1991, the situation has evolved considerably. The existing differences lead to the belief that the sector will resist well. The best proof of this is the resistance demonstrated by Europe’s hotel industry after the events of September 2001, the most significant crisis since 1991. The French example illustrates this perfectly.

Aligning the changes in occupancy rates and average daily rates in the months that followed 1991 and 2001 shows:

·         The two situations present strong similarities. Globally the occupancy rate and the average daily rate return to an uptrend one year after the crisis and than it stabilises after 18 months.

·         But there are also major differences. The drop in the occupancy rate is much less pronounced in 2001/2002 than it was during the Gulf War. Furthermore, prices generally remained firm in 2001/2002. They did not collapse like in 1991.

Source: MKG Consulting Database – Copyright 03-03

During the Gulf War, hoteliers undersold their rooms, the average room rate decreases by 3,7% in 1991 compared to 1990. In 2001 / 2002, straight from the beginning they opted for relative rate stability and did note give in to the panic. Therefore, the average room rate rose by 3,1% in 2002 compared to 2001. Furthermore, since 1991, budget chain hotels developed significantly. Their excellent resistance to the event in September 2001 allowed groups positioned on these segments to post perfectly solid results. Thus, in case of a major crisis, contrary to what could be observed in 1991, occupancy rates should certainly drop, while average daily rates should change only slightly.

Three possible scenarios in 2003

If there is any conflict, its intensity and duration nonetheless remain to be seen. Three scenarios may be drawn up.

·         The first is based on a hypothesis of a “blitz war” (a few weeks maximum). In this case, the hotel industry could be fairly clearly impacted during the conflict, but this time of the year (the first trimester) is not crucial for hoteliers. If in the three months following the conflict there has been no major terrorist attack, then the second semester 2003 should see strong growth in the occupancy rate and average daily rates. The year could close with fairly significant growth in the RevPAR.

·         The second, based on an intermediary hypothesis (a conflict that last a few months and / or a resumption of more or less important attacks), could penalise the hotel industry for a few additional months without necessarily challenging the long-term trend. The year could thus close with performances fairly similar to 2002.

·         The final scenario, “catastrophe”, marked by a sinking of the conflict and a fairly significant renewal of terrorist attacks, could penalise the hotel industry for the whole of 2003, with a recovery that could begin only from 2004.

Today, experts in geopolitics seem to agree that a “rapid scenario” is the most likely. It is to be hoped that this hypothesis is confirmed so that the confidence of households and corporations alike may head in a positive direction, leaving a recovery for the economy and the hotel industry in their wake.

MKG Consulting has the largest hotel database in the world, outside the United States, with the best coverage of all the hotel segments. MKG Consulting's database includes more than 40 000 hotels, representing more than 2,2 millions rooms. The business results of the MKG Consulting's database are based on a sample of 8,000 corporate operated chains in Europe, representing 850,000 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. These results come from figures provided by hotel chains present all around the world, for which MKG Consulting provides official statistics. For more information about MKG Consulting, please consult our website: www.mkg-consulting.com

For further information,
Please contact Georges Panayotis on +33 (0)1 56 56 87 90
georges.panayotis@mkg-consulting.com

Reit faces choice on Orb hotels

TheDeal.com  -  London-based Reit Asset Management must decide Monday whether to proceed with the purchase of 37 Thistle-branded hotels that Orb Estates plc has put for sale.

Reit is reportedly willing to pay about £700 million ($1.1 billion) for the hotels, although independent estimates have valued them at about £830 million.

Reit has has performed due diligence at the hotels during a four-week exclusivity period. During this period, Orb has been allowed to market the hotels to other buyers but has not been able to accept alternative bids.

This period, however, expires Monday, March 17, and Reit must either make a final bid for the hotel portfolio or face competition from other bidders that reportedly include the New York-based private equity firm The Blackstone Group. Blackstone declined to comment.

Amid the tussle for Orb's hotel portfolio, Thistle Hotels plc itself is trying to fend off a hostile bid from Singapore investment company BIL International. BIL, which Malaysian businessman Quek Leng Chan controls, is offering 30% less per share for Thistle then the hotel operator's initial public offer price seven years ago. BIL is Thistle's largest shareholder, with 46% of the company.

A source at Reit said Friday that terms for a sale of the hotels to Reit have been agreed but that the signing of a contract remains subject to the satisfactory completion of due diligence. The source declined to comment on how much Reit would pay for the hotels.

"Next week is going to be a crunch time for the sale of these hotels," said another source close to the talks. "If Reit hasn't done a deal with Orb, by then we will see other bidders coming forward to put their money on the table."

Orb bought the hotels from Thistle Hotels for £600 million in March 2002 in a sale and leaseback agreement. Now, however, Jersey, England-based Orb is reportedly under pressure to pay down debt.

Orb declined to comment, but it has put other assets up for sale, including its Seafield logistics company and Poole Pottery businesses.

Meanwhile, sources close to Thistle have said the company is looking at several options to prevent BIL from taking control, including selling off some of the company's more attractive hotels and trying to find a white knight bidder that would trump BIL's offer.

Neither Orb nor Reit are using outside financial advisers for their talks. Thistle's financial advisers are Merrill Lynch & Co. and Deutsche Bank AG. HSBC Investment Bank is advising BIL.

Hilton Sets Date for 1st Quarter Earnings Release and Conference Call

(BUSINESS WIRE)--March 13, 2003--Hilton Hotels Corporation (NYSE:HLT) has scheduled Wednesday, April 23, 2003 for the release of the company's first quarter financial results and conference call.

The results will be issued prior to the opening of the market on April 23, with a conference call to follow that day at 12 p.m. Eastern time (9 a.m. Pacific). The dial in numbers are 800-299-0433 (domestic)/617-801-9712 (international), passcode #7129648.

Forward-looking statements and other material information concerning anticipated future events and expectations may be discussed on this conference call.

The conference call will also be webcast simultaneously via Hilton's investor relations website. Investors wishing to access the call on the web should log on to www.hiltonworldwide.com, click the investor relations tab and click on the quarterly conference call link.

A replay of the call will be available by telephone until April 30 at 8 p.m. Eastern (5 p.m. Pacific). To access, dial 888-286-8010 (domestic)/617-801-6888 (international), passcode #7129648. Additionally, a replay will be available indefinitely on Hiltonworldwide.com

ITB 2003: Positive commercial results despite difficult economic situation

TravelDailyNews - ITB 2003: "Here at our ITB Berlin the industry`s message was clear: despite a weak bookings situation we will not  bury our heads in the sand but intend to utilise this crisis as an opportunity for restructuring. In this way the ITB fulfils its role even more emphatically, providing the industry with a fresh impetus, and it has strengthened its position as a worldwide leader in its field." This was how Dr. Christian Goke, Chief Operating Officer of Messe Berlin summed at the fair. During this five-day event there were many positive indicators for the tour operators, airlines, hotels and 181 destination countries. Interest in travel remains as keen as ever and while in Berlin the international tourism industry was already preparing its strategies for the period following the current crisis.

As emphasised during the ITB 2003 by the World Tourism Organization (WTO), Madrid, contrary to expectations, travel over the past year was successful in many respects. Forecasts for the coming years are also positive despite difficult economic conditions in several regions of the world and the generally tense geopolitical situation. According to the Secretary General of the World Tourism Organization (WTO), Francesco Frangialli: "In these uncertain times the ITB Berlin provides just what the international tourism community needs: direct contacts between supply and demand at a high professional level, an exchange of expertise in order to face the future in tourism, accompanied by the exchange of ideas, experience and projects".

The positive progress achieved by the ITB Berlin confirmed its position as an outstanding marketing instrument for the international tourism industry. Throughout the fair many destinations succeeded in establishing new business contacts. As a vacation land, Germany was even more in demand in 2003 than in the previous year. The public and trade visitors also displayed a particularly keen interest in destinations in the Asia-Pacific region and in Southern Europe. Current trends favour the market segments of cultural travel, wellness, river and ocean cruises, and tourism to experience nature. Ursula Schorcher, who heads the German National Tourism Board DZT and also chairs the Advisory Board of the ITB Berlin, confirmed that "the ITB 2003 provides a positive impetus. The introduction of the `Deutschland Boulevard` has brought German suppliers closer together, ensuring that their presentations at the fair are more concentrated and more in line with the needs of the customers, and we will be able to build on this basis in future in order to introduce further improvements".

9,971 exhibitors (2002: 9,678) from 181 countries and territories, representing every sector of the international tourism industry, took part in the ITB 2003. The ITB 2003 attracted over 129,943 visitors (2002: 122,980). Trade visitor numbers remained steady at 67,000, and they came from 180 countries, while more members of the public were recorded.

The number of media representatives held steady too: the ITB Berlin was attended by 6,500 journalists from 79 countries.

Business deals were signed by almost half of all the exhibitors

As revealed by the survey conducted by an independent market research organisation, 48 per cent of exhibitors reported signing numerous contracts. More than three quarters of them are satisfied with the commercial results of their participation. Eighty per cent expect follow-up business to be at least satisfactory, while 46 per cent are anticipating good to very good business after the fair

Exhibitors were more restrained in their expectations regarding the economic development of the tourism industry, with 47 per cent expecting the situation at the beginning of 2004 to be better than it is at present.

Already 89 per cent of exhibitors have announced their provisional intention of attending the ITB 2004.

With 616 exhibitors the USA was once more the second largest foreign delegation and was again represented by its "SeeAmerica Pavilion". One of the new features here was the display of photographs on the subject "SeeAmerica Byways", featuring views of some of the most attractive destinations. A SeeAmerica Byways press conference was also held, at which the Travel Industry Association of America (TIA) introduced its latest advertising campaigns, which included new routes and travel offers from destinations in the USA. The mood on the USA stand regarding the future development of tourism was confident and exhibitors expressed their satisfaction with the attendance levels.

The largest of all the foreign exhibitors was Spain, with 855 companies. Most of these exhibitors were more satisfied with the ITB 2003 than they had been at its predecessor last year. There was significantly more public interest, especially on the stands of Valencia, Gran Canaria and the Balearic Islands. Among all the Spanish destinations Catalonia was the clear favourite, and by the weekend its exhibitors had established numerous business contacts with companies in Germany and also in Eastern Europe.

The Chinese stand received a large number of visitors, members of the public and trade visitors alike, proving that China continues to be a popular destination for German and European travellers.

Positive assessment of their commercial results by 90 per cent of trade visitors Further improvement in the quality of the contacts

Questioned about the commercial results of their visit to the fair, over 90 per cent of trade visitors gave a positive assessment. During the course of the ITB Berlin 18 per cent of them were able to sign contracts and two thirds established new commercial contacts. Approximately half of all trade visitors expect to enter into further negotiations after the ITB Berlin.

Trade visitors were less upbeat about the current situation in the industry. Almost two thirds consider it to be negative. In the medium term, however, the majority of them believe that a more favourable economic situation will develop. Three quarters of all trade visitors are satisfied with the altered timing of the ITB Berlin.

The most popular segments of the market

The International Tourism Exchange ITB Berlin 2003 provided its trade visitors with a forum, aimed at specific target groups, for studying changes on the market.

The section devoted to "Culture Tourism" continues to grow in strength and this year attracted over 200 exhibitors from 14 countries. Kai Geiger, General Manager of ART CITIES and the initiator of the display dealing with this area of the market, commented: "There is considerable demand for cultural attractions and many people are searching for new cultural and artistic experiences, and this was very evident in the discussions between exhibitors and trade visitors. As in previous years we were aware of the keen interest that exists among members of the public and trade visitors".

With 54 exhibitors from 7 countries, a supporting programme containing over 50 papers, and the renewed success of the international specialist congress "Progress in Tourism Research", with the presentation of the prestigious Tourism Studies Prize, this year the ITB Tourism Studies Centre became even more firmly established as a source of information and contacts for the entire industry. The exhibitors` programmes were highly topical and very professional in character, and were much in demand among newcomers to the tourism industry and among the industry as a whole. With many events that provided opportunities for networking this is becoming an established meeting place for everyone involved in or interested in tourism. As Professor Christoph Becker of the University of Trier explained: "We held many in-depth discussions about future tertiary education projects", and Dr. Lech Zielinski, Head of International Co-operation at the Pommeranian Academy in Poland announced: "We will definitely be attending next year".

The ITB Young Travel Centre was taking place for the fifth time this year. Exhibitors in this section were very satisfied with the colourful hall, ideally located near the new South Entrance. It featured exhibitors from every area of the young travel sector. One of the new items was the "work experience pavilion". The public flocked to this display in large numbers during the first three days, and afterwards, during the trade visitors` days, the negotiations and contacts were of a very high standard. Peter Kruyt, Director General of FIYTO (Federation of International Youth Travel Organizations), emphasised that the number and quality of the business contacts had improved this year.

The response by trade visitors and the public to the Nature Experience Hall was extremely positive. The 50 exhibitors from 10 countries presented their programmes and concepts for experiencing nature and natural attractions in Germany, Europe and overseas, and members of the public used this opportunity to request environmental information and obtain suggestions for upcoming holidays.

Exhibitors in this section reported many valuable business contacts. Tour operators were particularly interested in areas in Russia and Guyana with a particular appeal to eco-tourists. Arrangements were also made to hold more in-depth discussions with buyers representing the larger European tour operators and hotel groups in the near future.

Viabono, VISIT and GreenGlobe 21, all well-known environmental organisations, were positive in their assessments of their attendance at the fair, which enabled them to convince many tourism companies and regions about the benefits of being able to clearly define environmental quality standards, thereby attracting new members.

"The Nature Experience Hall should become even more firmly established at the ITB Berlin in future,", said Christine Garbe, representing this segment of the market "to increase the importance of environmental travel within the industry."

Messe Berlin ensured that the public and the travel trade are more aware of the travel guide market by staging the "ITB Book World 2003", which included the presentation of the "Travel Guide Award ITB 2003" for the first time. Leading names in this field such as DUMONT and Polyglott Apa-Guide were again represented at the ITB Berlin. "Outside the book fairs in Frankfurt and Leipzig no other event does more for travel books and maps than the ITB Berlin", according to Rolf Nuthen, Deputy General Manager of the Publishers` Committee of the German book trade`s association Borsenverein des Deutschen Buchhandels, and he promised even greater involvement by this association in planning the ITB Book World 2004. The publisher Peter Rump, Reise Know-How Verlag, and his Sales and Marketing Director Uli Hornemann "thoroughly welcomed" the revamped ITB Book World 2003, and through the Publishers Committee they will endeavour to persuade more member companies to attend in future.

The ITB Travel Technology section featured 86 companies from 9 countries with their reservation and information systems and a wide range of online programmes. Christoph von Zabiensky, Divisional Director Sales for Start Amadeus, commented: "We are happy to be back at the ITB and received very positive feedback from our clients. This applied to our leading national and international products, to the stand itself and our product shows. And if our clients give us this assurance and are satisfied, then so are we."

"Starting Sunday this was a highly successful fair. Most of our contacts actually led to the signing of new contracts during the fair", explained Anne Rosener, General Manager, SABRE Germany.

"The integration of the Travel Technology Congress represents a genuine improvement" said Anna-Renate Budde, Director Marketing and Communications, Siemens Business Services, and a member of the Travel Technology Exhibitors` Committee.

"Close proximity to the hotels is vital for us" explained Hogatex spokeswoman Eva Markowitz.

There was a good response to the ITB Travel Technology Congress, now at a new location at the heart of the Travel Technology section of the fair. Forty speakers and presenters, the leading managers from major national and international companies, focused their attention on key topics such as online reservation systems, legal and security issues, the hotel industry, increased productivity through the application of technology, and multi-channel sales. There was particular interest in the opening session at which the Chairman of the Board of Thomas Cook, Stefan Pichler, presented some innovative strategies. Although the demand for niche products is growing and the internet is giving customers even greater flexibility, there is still a future for package tours, but these must firstly be adapted to meet new requirements.

Jeff Katz, Chairman of the Board and President of Orbitz, outlined the future development of the online market in the USA and in Europe. Each month 40 million Americans visit tourism websites and in 2002 online bookings in the USA rose to 34 per cent. The main reasons he gave for this rapid rate of growth are the lower rates, clearer price structures and 24-hour availability. Jeff Katz predicts that the online reservation wave will soon hit Western Europe, although in a less pronounced form. A turnover of 15 billion Euros is expected by 2006.

A source of information for the travelling public

More than half of the public who attended the ITB 2003 came in search of travel information and to plan their holidays and 43 per cent were looking for detailed information about specific destinations. The ITB Berlin was used by 43 per cent as a source of inspiration for new destinations.

Visitors were primarily interested in vacation and recreational travel, and in tourism for a cultural purposes. The most popular holiday regions were given as Deutschland

(55 %) and Southern Europe (50 %), followed by Northern Europe (19 %) and Eastern Europe (17 %).

Supporting programme of the ITB 2003

The supporting programme of the ITB 2003 included 123 press conferences, 253 Tourism Experts` Forums, 33 receptions, 27 presentations and 7 awards ceremonies.

The International Tourism Exchange 2003 was attended by 85 ministers, deputy ministers and under-secretaries as well as 94 ambassadors and charges d`affaires. In addition 24 German ministers and under-secretaries attended the ITB 2003.

The International Tourism Exchange ITB Berlin 2004 will take place from 12 to 16 March on the Berlin Exhibition Grounds.

HORECA prepares 150 exhibitors for the Levant's largest Hospitality Forum

Weeks ahead of the 10^th and largest edition of the annual HORECA show taking place April 1-4, 150 exhibitors from numerous industries gathered at BIEL to receive briefings on technical details of participation and tips on organizing their stands for optimum attraction.

In an open discussion with key HORECA spokespeople, exhibitors from hotel, resort, night club, food & beverage, franchise, finance, catering, equipment supply, restaurant and other profiles exchanged queries and ideas.

Marc Asmar from Young Urban Professionals (YUP), an organization for aspiring fresh entrepreneurs, gave a presentation entitled “Attract, Entertain and Maintain: Tips on promoting your stand.”  Asmar grouped, in order of importance, the different aspects that remind a visitor of a stand.

39% was given to the interest in products, 25% for demonstration, 14% for stand design, 10% went to stand personnel, 8% for informative material provided and 4% for previous information given on company. 

One of the main objectives that Asmar highlighted for the exhibitor was the vital need to provide the visitor with rich information.  “Many exhibitors hand out booklets, brochures or fliers in the dozens.  These will only be disposed of later if the customer is not really briefed on the product,” he said

Hospitality Services director, Joumana Dammous-Salame, believes such a large scale preparatory conference serves firstly a “general purpose.”  She added that “it primarily provides a push for exhibitors who have not yet started their preparations.  The conference’s other aim is to help these people get well organized and to explore all opportunities of a trade exhibition.  They also receive expert knowledge on how they may make use of the show as a marketing and sales tool.”

HORECA 2003 will feature the most spectacular pavilions yet in the history of the forum. The United Arab Emirates, Armenia, Holland, Cyprus and Turkey are some of the many foreign exhibitors who   will join HORECA once again with bigger and better stands.

Arabian Travel Market on course for biggest show to date regional uncertainties fail to impact mid east travel and tourism expo 

Reed Travel Exhibitions (RTE), which organises Arabian Travel Market, says this year`s event is "well on track to be the biggest show to date." 

"It is safe to say that, to date, the uncertainty in the region has not affected Arabian Travel Market," said Matt Thompson, Group Exhibition Director, Overseas Events, RTE.

RTE says that with three months to go before the 2003 Arabian Travel Market, which will be held at the Airport Expo, Dubai, United Arab Emirates from May 6-9, the show is already already 5% square metres larger than last year`s record-breaking event.

"Much of this space growth is taken by tourism boards which are increasing the size of their stands to meet demand from the private sector," explained Thompson. "Moreover, we are welcoming a number of fresh exhibitors to the show with new national pavilions from Saudi Arabia and Canada and the return of a Ugandan national pavilion after a break of seven years."

Visitor expectations also remain unhindered by regional uncertainties, according to Thompson.

"We recently started our visitor promotional campaign and the early indication is that our pre-registration figures are on track to match those of last year," he said.

Thompson stressed that Arabian Travel Market, now in its 10th year, was proceeding very much as "business as usual. Everything is going to plan," he said. "Of course, we are monitoring events in the region very closely, and, like everyone, we sincerely hope that tensions do not escalate. However, if they do, I believe that we will have some fallout from the show, which is understandable. But I do not believe that it will have a truly detrimental effect on the event.

"At the moment Arabian Travel Market is in a very healthy position and booking trends over the last few weeks have been very positive."

To date, exhibitors from 47 countries have registered for Arabian Travel Market 2003, including destinations, tour operators, hotel groups, national tourist boards, travel technology providers, airlines, industry associations, yachting and cruise operators and tourism consultants.

Marriott opened 31,000 rooms in 2002, despite tough market conditions

Despite an extremely difficult trading environment, Marriott International says that its rooms opening were stronger than  had been expected in 2002, and an additional 31,000 new rooms in almost 190 hotels and timeshare resorts were added to the portfolio. This brings the group`s room count in all its brands to 463,429 in 2,557 hotels and timeshare resorts.

Speaking at ITB, Ed Fuller, president and managing director of international lodging for Marriott International said Marriott`s aggressive growth would continue to be a priority. In 2003 and 2004 between 25,000 and 30,000 rooms are scheduled to open each year. At the start of 2003, the group had over 50,000 rooms either under construction, awaiting conversion, or approved for development. Conversions were a particularly important VII source of new rooms in 2002 - accounting for 21 per cent of room additions - and are expected to continue to be so in the next few years.

In terms of operational performance Marriott fared better outside North America in 2002. Within North America, Marriott`s full-service brands (Marriott Hotels, Resorts and Suites, The Ritz Carlton, and Renaissance Hotels, Resorts and Suites) experienced a revpar decrease of 4.8 per cent, driven almost entirely by a 4.7 per cent decline in average daily rate. The group`s select-service and extended-stay brands (including Courtyard, Fairfield Inn, Residence Inn, TownePlace Suites and SpringHill Suites) posted a higher decrease in revpar of 7.8 per cent - again largely a result of lower average daily rates.

In other markets, revpar in Marriott lodgings increased by 2.0 per cent on a constant dollar basis, with demand strengthening in Asia and in the UK, in particular. The group`s timeshare business reported a growth in contract sales in 2002 of 5.0 per cent. Prospects for 2003 - without factoring in the impact of any possible war with Iraq - are likely to be flat, says Marriott, with revpar remaining much at 2002 levels.

Among the new openings scheduled for 2003 and 2004, there is a particularly strong showing for China, with three new properties earmarked for Shanghai alone - the 237 Marriott Executive Apartments, the 362-room JW Marriott, and recently-announced 375-room Renaissance Shanghai Pudong Hotel - Marriott`s second Renaissance property in the city. Marriott has over 20 hotels in China already with more than 8,000 rooms; as well as the Shanghai hotels, a Marriott is under construction in Dalian along with a 83-unit Marriott Executive Apartments, and a renaissance is being built in Wuhan. At the start of 2003 a Novotel in Hangzhou was converted to Ramada.

In Europe, new properties are due to open in Armenia (Marriott), Berlin (Marriott), Georgia (Courtyard), Warsaw (two conversions to Ramadas and a Courtyard at the airport), Verona (Ramada) and Geneva (Ramada), London (Marriott Kensington and Marriott Hotel and Executive Apartments, West India Quay) and Swansea (Ramada).

Expanding coverage of the Middle East includes a Renaissance in Cairo, a Marriott Hotel and Resort in Aqaba and a Courtyard in Kuwait. But, as always with Marriott, most development will be in North America.

Discussing the various distribution channels, Roger Dow, senior vice president for global sales, highlighted the enormous growth in internet sales which in 2002 accounted for 9 per cent of all Marriott`s bookings. Internet sales amounted to $1.1 billion, nearly twice the $750 million that marriott.com attracted in 2001. However, travel agents still account for nearly 40 per cent of Marriott`s transient room nights, and global distribution systems account for some 19 per cent of Marriott`s total reservations sales worldwide. Marriott took US$3.1 billion of bookings through these systems in 2002, he said.

Marriott sees 2003 as a transition year for the company - and indeed for the industry. Travel decisions will continue to be made short-term and business will likely remain regionally focused. The challenge is to get through these tough times, said Ed Fuller, and be ready for better days. 

IATA International Traffic Statistics January 2003

AsiaTravelTips.com  -  IATA's provisional figures for January 2003 show all major regions posting positive results with most carriers following this pattern.

January 2003 saw total scheduled international passenger traffic (in RPK terms) increase by 10.97% on January 2002. This is less than the 13.02% recorded in December with the slightly higher base rate for these year-on-year comparisons again being a contributor. In contrast, overall capacity (expressed as ASKs) improved from 8.45% last month to 10.22%.

All regions had positive RPK growth in January with Middle Eastern carriers leading the way at 24.83%. Conversely, North American results fell from 11.20% in December to 6.37% contributing to the overall fall.

The freight market’s good performance continues with total international traffic (in FTK terms) up 11.73% year-on-year from 10.05% last month. All major regions show a strong upturn with Far East airlines the highest at  15.48%. In particular, European carriers have encouraging results with FTKs improving to 10.55% from 3.27% in the previous month.

INTL TRAFFIC AND CAPACITY – Jan-2003 (Percent Change over 2002) 

   * figures are provisional – represent total reporting plus estimates for missing data

RPK – Revenue Passenger-Kilometres
ASK – Available Seat Kilometres
FTK – Freight Tonne-Kilometres
ATK – Available Tonne-Kilometres
Region refers to area of carrier registration

“Global traffic figure are back to their levels of January 2001. Air transport lost two years of growth,” said Giovanni Bisignani, Director General and CEO of IATA. “and this long-awaited recovery is obviously clouded by the crisis looming over Iraq.” 

Big hotel chains are striking back against Web sites

AP  -  A few weeks before the beginning of spring break, Gary Lobo started worrying about business at his Clarion Hotel Maingate, near Walt Disney World in Orlando, Fla. With war jitters and the sputtering economy, advance bookings for March were down 20 percent compared with last year.

So Mr. Lobo, the hotel's general manager, called the travel Web sites Hotels.com and Expedia.com, and told them he needed to move rooms fast. He authorized the sites to double the number of rooms they sold for him per night and lowered his rates. Within hours, Mr. Lobo's fax machine was whirring with reservations, and soon he had filled a third of his rooms for March.

But executives at Choice Hotels International, the owner of the Clarion brand name, view such aggressive Internet sales tactics as a threat to the industry. Starting at the end of this month, Choice will require hotel owners to give their best rates to customers who book on the chain's own Web sites, such as Clarionhotel.com or Choicehotels.com, instead of on third-party Web sites.

Choice's moves are part of a bigger battle the major hotel chains are waging against the growing power of the two dominant travel Web sites, Expedia.com and Hotels.com. Besides Choice, three other major lodging companies have vowed they will undercut Expedia.com and Hotels.com's prices on their own Web sites. And five of the largest hotel chains, including Marriott International Inc., Hilton Hotels Corp. and Hyatt Corp., have banded together to create their own Web site, Travelweb.com, which is aimed directly at the online travel brokers.

Only 9 percent of all hotel rooms are booked through the third-party Web sites. But the sites are growing rapidly, both in market share and number, even as reservations decline amid the worst slump to hit the hotel industry in a decade. The chains saw the Internet compress ticket prices for airlines and badly want to avoid that fate.

"If we are not careful, these wholesalers will become ... so big and powerful that we will have to work with them," Eric Pearson, a vice president at Six Continents PLC, told a conference of about 1,800 hotel owners last fall. "And you will have to pay a premium to be on their shelves." Six Continents owns the Holiday Inn, InterContinental and Crowne Plaza brands.

Executives at the Web sites say they are helping the hotel industry by bringing them new customers. "Whenever you have disruptive technology, some resist it," says Erik Blachford, incoming chief executive of Expedia Inc.

Last year, when overall hotel bookings were flat, those on middleman Web sites were up 53 percent from 2001, with $3.1 billion of rooms sold, according to the travel-research firm PhoCusWright. Hotels.com and Expedia together accounted for about 60 percent of last year's online hotel bookings. Both are majority-owned by Barry Diller's USA Interactive, which is reaping some of the richest rewards of any business in either the travel or the Internet industries.

With profit margins as high as 30 percent, "Expedia and Hotels.com are cash machines," says Paul Keung, an analyst at CIBC World Markets. Shares in Expedia nearly doubled last year while shares in Hotels.com rose 20 percent. The lodging sector, by contrast, saw its shares slide 8.5 percent last year, according to CIBC World Markets.

The emergence of powerful middlemen has been a shock to the hotel industry, which traditionally sold most of its rooms directly to consumers. Unlike the airline industry, which sold about 75 percent of its tickets through travel agents before the Internet, hotels have historically made less than 30 percent of their bookings through intermediaries.

The pricing pressure couldn't come at a worse time for the $104 billion hotel industry. Occupancy and room rates have been falling since mid-2001. The Sept. 11 terrorist attacks made matters much worse. The industry profit benchmark of revenue per available room fell 2.5 percent last year, according to Smith Travel Research. Last month, Marriott's chief financial officer, Arne M. Sorenson, called 2002 the "weakest lodging environment since the Great Depression."

When the top airlines confronted this pricing squeeze two years ago, they struck back by joining together to form their own Web site, Orbitz. It has steadily won a larger and larger share of the Internet audience away from the more-established online competitors such as Expedia and Travelocity, the No. 3 online travel agent. Orbitz now commands a 13 percent market share of online travel sales. Industry leader Expedia has 36 percent, followed by Travelocity, with 24 percent, according to PhoCusWright. Many airlines also provide discounts for travelers who buy tickets on their Web sites instead of on third-party sites.

Last year, the hotels joined to create their own version of Orbitz. Marriott, Hilton, Hyatt, Six Continents and Starwood Hotels & Resorts Worldwide Inc. formed Travelweb LLC. Later this month, the group will go live with its hotel-booking site, Travelweb.com.

Meanwhile, Six Continents, Hilton Group PLC, which operates Hiltons outside of the U.S., and Accor have formed WorldRes Europe, a similar initiative in Europe that they hope will gain ground before Hotels.com and Expedia take over the market there.

In November, two large hotel operators in Las Vegas -- Mandalay Resort Group and Park Place Entertainment Corp. -- joined up to create LasVegas.com, a sort of mini-Travelweb that they hope will compete with Hotels.com and Expedia. The Web site sells rooms from all Las Vegas properties, not just those of Mandalay and Park Place.

"We're taking the third-party Web sites head on," says Frank Han, a senior vice president at Park Place Entertainment, which owns Bally's, Caesars Palace, Flamingo and Paris. Mandalay, whose properties include the Luxor, Excalibur, and Circus Circus, says it has withdrawn about 50 percent of its inventory from Hotels.com and Expedia since launching its own site. "We need to take back our room product, and we need to sell it the way we want to sell it and maximize our revenues," says John Marz, senior vice president of marketing at Mandalay.

Last year, Six Continents, Starwood and Cendant Corp. -- which owns Ramada Inn, Howard Johnson and seven other lodging brands -- launched a price war with the online brokers. They promised to beat by 10 percent any price that a customer found on a travel Web site. Choice joined the movement this month. Starting in May, Six Continents will charge a $75 penalty to any franchisee that receives a valid guest complaint about finding on third-party sites a cheaper rate than the company's branded Web sites offer.

In their battle against the middlemen, many chains face an obstacle: They often don't control the hotels. They own brand names, such as Comfort Suites or Hampton Inn, and a local franchisee owns the hotels. The hotel owners ultimately make decisions on how to sell their rooms and at what rate.

That makes it difficult for the chains to stop hotel owners from using online brokers. And many hotel owners believe they can sell rooms faster on the travel sites than they can on the hotel chains' branded sites.

"If I need to move a lot of rooms quickly, I can't call Clarion's central reservations" and get as speedy results, says Mr. Lobo in Orlando.

So hotel chains are scrambling to persuade hotel owners of the perils of doing business with the online travel brokers. Six Continents recently held a training session in Secaucus, N.J., to show hotel managers how prices are driven down by online brokers.

During the session, Lily Lukyanovsky, a director of sales at a Holiday Inn in Secaucus, said she recognized the importance of keeping most rooms on the branded Web sites. But she also felt pressure to undercut her competitors on sites like Hotels.com. "I see both sides of the coin," she said.

And consumers love the sites, believing the online brokers are going to get them a better deal. On a recent trip to Las Vegas, Edgar auf dem Graben, a 43-year-old pharmaceutical manager from a Chicago suburb, booked four rooms at the Imperial Palace for $39 a night through Expedia. If he had booked them on the hotel's own Web site, he would have paid $89 a night.

The two top online brokers both began as 800-numbers. Hotels.com got its start in 1991 in a beach hut in Belize when law-school buddies David Litman and Robert Diener were vacationing together. They had recently sold a business they had built together offering discounted airline tickets, and they were trying to cook up something new.

"We liked the hotel business because it's a fragmented business and the information about hotels is very dispersed," recalls Mr. Litman.

At first, they advertised an 800-number for hotel reservations and made money on the commissions hotels paid for each room sold. But they soon discovered a problem: It was difficult to collect those commissions from the hotels that didn't have an automatic process for paying. So they switched toward a wholesale model, in which they asked hotels to reserve a block of rooms for them, to resell at a higher rate.

Others were trying similar ventures. In 1990, a University of Southern California undergraduate named Tim Poster started a small company called Las Vegas Reservation System that advertised an 800-number to book rooms in Las Vegas.

The arrival of the Internet changed everything. When Hotels.com's Web site went live in 1995, the tiny Dallas firm was suddenly getting bookings from all over the world. Within a year, 6 percent of its bookings were coming from the Internet. When Las Vegas Reservations System's Web site, Travelscape, went online in 1998, it sold 12 rooms the first day. Within a few days, it was selling 50 rooms daily. "The business just took off," says Tom Breitling, a co-founder of the site, which Expedia later bought. "From that day forward, we were playing catch-up" technologically, trying to cope with the volume of online business.

Expedia began in 1996 as an online travel-booking system created by Microsoft Corp. In 1999, Microsoft capitalized on the dot-com boom and sold 18 percent of its stake in Expedia in an initial public offering. By 2002, though, Microsoft was shuttering many of its Internet initiatives, and the software giant sold its approximately 65 percent stake in Expedia to Mr. Diller for $1.3 billion. Expedia is a full-service travel agent selling air, hotel and cars, while Hotels.com only offers hotel rooms. Mr. Diller says he encourages the sites to compete with each other. But the two work different segments of the market: Expedia tends to focus on more-upscale brands, while Hotels.com concentrates mainly on lower-priced properties.

Hotels.com turned its first profit in 1998, earning $1.7 million on sales of $66.5 million. Since then revenues have soared to $945.4 million last year, while net income has increased to $72.1 million. Expedia's revenues have risen to $590.6 million in 2002 from $13.9 million in 1998. It turned its first profit in 2001, and posted net income of $66.3 million last year.

CIBC analyst Mr. Keung estimates that free cash flow -- a measure of profits preferred on Wall Street -- at the two Web sites increased by more than 75 percent last year, while the hotel companies saw their free cash flow fall by 15 percent on average last year.

The profit potential of the online brokers has attracted rivals. In October, Sabre Holdings Corp.'s Travelocity launched its own wholesale hotel offering, promising to give hotel operators a bigger piece of the profits and to pay them faster. Orbitz, the airline-owned Web site, is also starting its own wholesale hotel sales program. Although it has been selling some discounted rooms through an agreement with Travelweb's hotels, this month it launched a much broader program to sell both chain and independent hotel rooms on its site.

Ehotelier.com is a proud sponsor of The Center for Hospitality Research