Six Continents will exile Prosser to keep Osmond out

Telegraph  -  How much should shareholders pay for the financial acumen of whizz-kid entrepreneurs? The answer to that question will probably determine the fate of Six Continents, the hotels and pubs group that faces a hostile bid from Hugh Osmond tomorrow.

Osmond has a pretty impressive record of creating wealth, and vast dollops of it have accrued to himself. But if he and his team succeed in their latest adventure, they could reap between £200m and £300m.

That might be hunky-dory if 6C's shareholders also secure chunky capital gains on their holdings. And I am told, in advance of seeing the fine print, that Osmond would secure that kind of bonanza pay day only if he created around £1bn of additional value out of 6C's assets.

Osmond's approach would be to sell off around £5bn of 6C's properties and bring in an outside hotel group - yet to be chosen - to manage its InterContinental, Holiday Inn and Crowne Plaza chains. Meanwhile, he would manage the licensed premises (where he has a demonstrably impressive track record).

So how would that translate into hard cash for him and 6C's shareholders? The maths works like this.

Osmond is assuming, on the basis of brokers' estimates, that a mainstream break-up bid for cash would value 6C at around 625p to 650p per share, or roughly £7.5bn in debt and equity - and that would be his starting point in any assessment of whether he pushes up the intrinsic worth of the business.

If he cannot improve the value of the business above this level, he makes nothing. But he takes 20 per cent of every pound added to that number.

That's a pretty rich return - though it is the standard turn taken by venture capital firms when they buy companies.

The difference in this case - which should not bother shareholders in theory, but may well do in practice - is that 6C would not be taken off the stock market by Osmond, in the way that a traditional venture capitalist would. Osmond would simply swap shares in his takeover vehicle, Capital Management and Investment, for 6C's paper.

Anyway, if he creates £1bn of extra value, that delivers £200m to him. But - and this is not a trivial point, so it's worth repeating - he earns a big zilch if there is no wealth created above that 625p-to-650p per share level.

As it happens, I think he expects to generate around £1.5bn out of 6C, which would deliver a fabulous £300m to him and his team.

So the task for 6C's incumbent managers is simple. They have to prove that they are capable of delivering the same kind of return as Osmond but at a lower price. In other words, this battle is all about the credibility of the two competing teams.

It is going to be closely fought; 6C's alternative is to break itself up into two quoted companies, a hotels group and a pub company. And the point is that institutional shareholders have been pushing for this demerger for a good year, so are not yet ready to give up on the incumbent management.

But when 6C executives went to see their big shareholders last week, they received one message loud and clear. They want the early retirement of Sir Ian Prosser - which is slightly odd, since he was due to go at the end of the year anyway.

Their wish will be granted, probably as early as this week. Why? Well, bankers and brokers advising 6C have sharp memories of Granada's takeover of Forte six years ago. They believe Forte would have seen off Granada if Sir Rocco Forte had fallen on his sword, and they do not intend to repeat that perceived error.

Will the ritual sacrifice of Prosser appease the blood lust of institutions sufficiently for them to spurn Osmond? Possibly. Should it appease them? Pathetically, I am still reserving judgment

However it occurs to me that if Osmond's financial engineering actually makes sense. then 6C's incumbent management should simply steal the plans and do it for themselves. I think that approach is called learning from best practice.

Osmond:  'We do not pretend to be hotel managers'

Hugh Osmond plans a daring £5.4bn bid for leisure giant Six Continents. In an exclusive interview with Damian Reece, he says he can unlock wealth that the company's existing management cannot find

Hugh Osmond revels in his enfant terrible reputation, acquired three years ago when he humiliated Allied Domecq and Whitbread - the blue chips of the brewing industry - by smashing up their friendly pubs deal with his hostile £2.75bn cash bid.

A couple of grandees, Sir Christopher Hogg and Sir Michael Angus, the respective chairmen of Allied and Whitbread, sloped off with sore heads.

Now the hugely wealthy pubs and pizzas financier has initiated an even bloodier brawl, with a planned £5.4bn bid for Six Continents, which owns the Holiday Inn and Inter-Continental hotel chains and some 2,000 pubs and restaurants.

But this time Osmond's own expertise and skills are on the line, because when the bid comes he will be offering shares in his takeover vehicle, Capital Management & Investment, as well as cash. And that means his own track record will be under intense scrutiny: Six Continents' shareholders will only take his paper if they believe he can deliver the profits he promises.

So we asked him why he can do better than 6C's existing directors. Disarmingly, the former medical student admits to knowing nothing about running hotels.

"We do not pretend to be hotel managers," says Osmond, sitting in the offices of his lawyers Slaughter & May, located opposite Whitbread's historic but defunct Chiswell Street brewery in the City, a reminder of his past victory.

"What we will do is contract out the hotel operations to the best third party operators for each type of hotel chain we own. We will maximise profits and reduce costs. The upside is huge.

"Given that the performance of all the best international hotel operators is three times better than that of the present Six Continents management, that should not be too difficult," he claims - although 6C's legion of advisers is already crunching through pages of numbers to prove him wrong.

He plans to boost shareholder returns further by selling off Six Continents' property portfolio and handing the cash back to investors. More cash will be raised by issuing bonds secured against the cash flow from the company's Holiday Inn franchise in North America and its pub estate in the UK.

So that's the theory. But does his own history suggest he can deliver?

"Look at the Allied Domecq pubs deal," says Osmond. "We paid £2.75bn compared to the £2.4bn which those two FTSE100 companies [Allied and Whitbread] originally said was the best deal around. Show me any fund manager who would not want an extra 14.5 per cent return."

Of the 1,500 Allied Domecq pubs he bought, he actually sold 550 to Six Continents, then called Bass (so he knows quite a lot about his opponent's assets). And he can't resist a dig at the purchaser.

"They [Six Continents] claimed to have bought the pick of the bunch for a very good price. But they have since been shown to be making no worthwhile return on those assets at all [something his target will also dispute in the coming weeks]. If they were the cherries, I would have hated to have picked the lemons," says Osmond.

But we are jumping the gun here. An examination of his skills must start with his early incarnation as the capo di capi of the UK's pizzeria owners.

Osmond and his then business partner, Luke Johnson (a columnist for The Sunday Telegraph), acquired Pizza Express through a quoted shell company called Star Computer at the beginning of 1993. It was funded by issuing about 35m shares in Star, valuing the restaurant chain at between £15m and £20m.

Anyone who subscribed to that share issue did very well. From a chain of 68 restaurants, making £1.5m in operating profits from £16.3m of sales, the business grew to a stock market value at its peak of more than £700m in 1999, equal to 977.5p a share.

It had a chain of more than 300 restaurants. Turnover peaked at £213m and profits at £40m. But the Pizza Express story had a sting in the tail. The shares fell last year from 921p to 247p after profit warnings and poor trading. The company is now the subject of its own takeover tussle, which includes a bid from Johnson (who, by the way, is no longer one of Osmond's buddies).

Osmond was long gone before the profit warnings. He stepped down as an executive director in July 1997 and severed all connection by resigning as a non-executive at the beginning of 2001, taking a £150m personal fortune with him.

However, while building Pizza Express, Osmond and Johnson bought into My Kinda Town, another restaurant chain, for £15.7m. It was floated in 1994. They sold two years later to Capital Radio for £51m. The acquisition turned sour for Capital Radio, which sold the business in 1999 at a £35m loss.

Anyway, by the time Osmond had resigned as an executive director of Pizza Express, he had already started building his tenanted pubs group.

In 1996 he put most of his fortune into the £200m acquisition of the 843-strong Wellington pub company from Nomura. By now parted from Johnson, he had help from Roger Myers, another leisure entrepreneur, and Morgan Stanley.

Soon afterwards, he had his first encounter with Six Continents, buying 1,500 of its tenanted pubs for £563.4m with financing from Bankers Trust. This became Punch Taverns.

Next came Osmond's master stroke. He persuaded Texas Pacific, the private equity firm, to acquire a majority stake in Punch in 1999, valuing the business at more than £800m.

With this new backing and an eye on a stock market flotation, Osmond went on a spending spree, paying £68m for the quoted Inn Business group and £2.75bn for Allied Domecq's pubs.

Osmond completed his exit from Punch, selling his equity to Texas Pacific, in plenty of time before the company's flotation last year. The shares were floated at 240p each. They are now 155p - and Texas Pacific is nursing losses on its 17.46 per cent of the company.

So what's the judgment on his wealth-creating abilities? Well, he has done brilliantly for himself. And he helped create a huge amount of value for the early shareholders in Pizza Express.

The lesson of the other deals is to invest when he invests and sell out when he sells. Anyone who does the opposite - such as the late arriving Pizza Express investors or Capital Radio or Texas Pacific or subscribers to the Punch Taverns float - may find that much of the upside has already been extracted.

So if 6C shareholders accept his shares in the ensuing takeover battle, they know when to bail out.

Osmond stands to make £200m from Six Continents takeover

Telegraph  -  Hugh Osmond will take 20 per cent of any gains he generates from Six Continents' assets if his takeover bid for the hotels and pubs conglomerate is successful.

This could see him and his team earn more than £200m over the coming two years and is bound to be attacked by 6C's management.

Osmond is planning to launch an all-share offer worth £5.4bn for Six Continents when the stock market opens tomorrow. He has also raised credit of between £1.2bn and £1.4bn so that Six Continents' shareholders can elect to take cash instead of paper for about a quarter of their shares.

It is understood that HBOS will provide much of the loan, with further support coming from CSFB and Lehman Brothers.

Meanwhile, Six Continents is expected to shore up its bid defences by succumbing to shareholder pressure for the early retirement of Sir Ian Prosser, its longstanding chairman. His departure may be announced this week.

"When we met with shareholders last week, they made it clear they wanted Ian to go," said a banker. "I have no doubt that he will stand down if he sees it is in the interests of the company."

Prosser's departure would mark the end of an era for 6C, since he more or less created the group after becoming chief executive in 1987 (when it was called Bass) and then executive chairman in 2000.

For most of his tenure, he was regarded as one of the most successful heads in the leisure industry. However, over the past two years, a caucus of large investors - led by Hermes, which manages BT's pension fund - has mounted an effective campaign, alleging that 6C's recent deals have been bad for shareholders.

Although 6C has consistently rejected that analysis, last year it finally agreed to break its business into two separately quoted companies, a hotels group and a pub company, to be called Mitchells & Butlers. It is now struggling to push through this demerger, in the face of a hostile bid from Osmond.

Six Continents has taken the unusual step of hiring a telephone marketing firm, Salisbury, to lobby its small shareholders to vote on the demerger proposals at the extraordinary meeting on March 12, in order to thwart Osmond.

"I was called at 10.50 yesterday morning by a chap with a Spanish accent asking me if I was aware of the Six Continents' demerger," said Guy Adams, an investor with the gargantuan stake of 433 shares, equal to 0.0000005 per cent of the company's issued share capital.

Adams was then asked which way he intended to vote. "I told him my instinct was to back what the board told me to. He then said: 'Well done, that's very good of you'."

Rebellion over share options at Six Continents

The Independent  -  Britain's largest shareholder group is urging members to reject Six Continents' executive share option schemes, potentially threatening the company's plans to demerge its hotels and pubs business.

The National Association of Pension Funds (NAPF) believes the schemes' performance targets are too low, payouts too high and that they lack transparency.

The NAPF is urging members to take action at Six Continents' extraordinary general meeting on 12 March, called to approve the demerger and return £700m to shareholders.

But this could play into the hands of Hugh Osmond, the pubs entrepreneur stalking Six Continents, which owns the Holiday Inn and All Bar One chains. Mr Osmond is expected to table a formal offer early this week. Mainly in shares, the bid will be made through his company, Capital Management & Investment, and will value Six Continents at around £5.7bn.

The offer and the "no" vote from the NAPF will put pressure on Six Continents' chairman, Sir Ian Prosser, to adjourn the EGM and buy more time to see off Mr Osmond.

Six Continents' executives plan a new round of shareholder meetings once Mr Osmond has made his bid. If three-quarters of them express an interest in Mr Osmond's offer, then Sir Ian will almost certainly cancel the EGM.

A spokesman for Six Continents refused to comment on a possible offer. On the share option schemes, he said: "We believe they are fair and contain sufficient performance criteria to stretch and incentivise employees to grow the business."

International Occupancy and Rate Report
December 2002 Summary Report

Year-end 2002 results from the Asia Pacific edition of the HotelBenchmark Survey by Deloitte & Touche revealed that of the 22 cities tracked, just over half reported positive growth in revPAR for 2002.

Star performers for the year included Auckland, Jakarta, Ho Chi Minh City and Shanghai - all reporting double-digit revPAR growth. Conversely Bali and Osaka did not fair so well - reporting revPAR declines of 12.5 percent and 13.7 percent respectively. In both cases this was predominantly influenced by declines of occupancy of around 10 percent in each.

Preliminary tourism figures for 2002 from the World Tourism Organisation (WTO) showed Asia and the Pacific stealing the number two spot from the Americas in terms of international tourist arrivals. After the Middle East, the region saw the largest increase in international visitor numbers of 7.9 percent of the five regions tracked by the WTO. China - currently the world's fifth top tourism destination, but tipped to become the number one by 2020, saw visitor numbers increase in 2002 by 11 percent compared to the prior year. Clearly China's accession to the World Trade Organisation at the end of 2001 has had a role to play here.

Not surprisingly particularly given the events of October 12, overall tourist arrivals to Indonesia declined by 2.2 percent in 2002 from the previous year (to 5.03 million). Despite tough trading conditions at present for Bali hoteliers it is hoped that the tragedy will not have a long-term impact on the island. Events such as the 52nd PATA Annual conference in April and The Council of Australian Tour Operators conference in June as well as the launch of the islands first international airline, Air Paradise in February are all anticipated to help boost visitor numbers in 2003.

Looking to the new year, preliminary January 2003 figures indicate that hotel performance is moving in the same direction - with Auckland, Ho Chi Minh City and Shanghai all reporting strong revPAR growth compared to the same period in 2002. Bali however continues to suffer, reporting double-digit revPAR declines.

Note - all analysis is in US dollars.

The HotelBenchmark Survey contains the largest independent source of hotel performance data outside of North America and tracks the performance of over 6,000 hotels. The Asia Pacific edition collects occupancy and average room rate data from over 1,100 hotels representing just over 330,000 rooms every month. For further information or details on how to join the survey please visit  < www.HotelBenchmark.com > or contact Pooja Madhok on +44 20 7304 095.

December performance

Rolling 12 months to end of December 2002

(*) Caribbean & Latin America data is one month in arrears

Contributing hotels include both independent and group operated units and the sample is typically representative of quality hotel supply. To ensure direct comparability of results, only hotels that have been able to provide two full years of trading data have been included in this survey. The exception however, is that new hotel openings are now included in the results. 

The HotelBenchmark Survey by Deloitte & Touche is the leading survey of its kind, containing data from over 6,000 hotels across all areas of the world outside of North America. The results below reflect a sample of the 320 markets on which we report on a monthly basis, providing depth of coverage and sample sizes, which are unsurpassed in the majority of regions. To learn more, visit our web site at www.HotelBenchmark.com or contact us at HotelBenchmark@deloitte.co.uk.

This report contains proprietary information of Deloitte & Touche, and any reproduction of this report, in whole or part, must be attributed to the 'HotelBenchmark Survey by Deloitte & Touche' and display the following copyright notice ‘©Deloitte & Touche 2002. All rights reserved.’ Failure to do so may result in legal action. 

Whilst every effort has been made to ensure the accuracy of the information contained in this report, this cannot be guaranteed and neither Deloitte & Touche nor any related entity shall have any liability to any person or entity who relies on the information contained in this report. Any such reliance is solely at the users risk.

Our favorite Hotel?

By Harry Nobles & Cheryl Griggs

We hear this question frequently.  We hear it from clients, from colleagues, and from guests.  We are always pleased to be asked for several reasons.  First, it gives us the opportunity to reminisce and remember enjoyable experiences; it also causes us to reflect on the things that make a hotel memorable.  It is also a chance to share our thoughts with others, something we very much enjoy.

During  my AAA tenure and our many years of travel, jointly and individually, for business and pleasure, we have seen a lot of hotels.  We have visited, inspected, and rated hotels of all types and all sizes throughout the U.S. and in several foreign We will try to reach a decision with a stroll down memory lane.

There is the wonderful small inn in Japan, situated on a cliff overlooking the river far below.  Beautiful, intimate, with a pastoral setting and an excellent staff.  Another small inn in Thailand merits a mention.  Its secluded hilltop location with a view of the Andaman Sea to the west and the Gulf of Thailand to the east, and luxurious natural landscaping all evoke very pleasant memories.  A simple, wood-dominated decor in the six rooms enhances the  sense of peaceful isolation.

A plush resort on the tip of a sun drenched peninsular in Mexico with a panoramic view of both the Pacific and the Sea of Cortez ranks very high on our list.  At the other end of the spectrum is a large resort in the Canadian Rockies that offers a breathtaking view of remote mountain splendor.

Also on the “favorite” list is a sprawling hotel complex in the heart of Bangkok.  Surrounded by spacious grounds, lush tropical landscaping, and temple-like towers, one is mentally transported to a jungle environment.

We must not omit the classic hotels and resorts that abound all over the U.S.   These include the large urban properties ranging from the historic to the ultra modern and world class ski and beach resorts with extensive recreation facilities.  We have also visited many excellent smaller country inns and B&B’s, historic and modern, and some merit inclusion on our list.  Some are famous while others are obscure; some are luxurious and some are elegantly simple. 

Despite the very wide variety of locations, types, sizes, and styles of hotels we considered in the quest for our favorite, there is one common denominator:

people.  Every hotel on our favorite list is characterized by a very special atmosphere or ambience.  Ambience is not created by location, architecture, or any other physical attribute.  Although physical things can add to the effect, people alone create ambience.

One of our favorite places, albeit an unlikely example,  is an 8-room roadside motel in West Texas.  This ultimate “mom and pop” operation has large but simply furnished rooms, a gravel parking lot, and registration in the owner’s living room

The 8 rooms are spotlessly and personally cleaned every day by the owners; there are no employees. 

There are no phones in the rooms.  Each  guest is asked two questions at check in:  “What time do you want to wake up, and how do you like your coffee”.  Your wake-up call is the owner knocking at your door with hot coffee.  When I asked the owners why only 8 rooms, the told me they built only as many as they were sure they could personally handle at their standard of  housekeeping, maintenance, and service.  They have succeed in creating a very special place and are firmly positioned on our list.

So, what is our favorite hotel?  The jury is still out on that but you can be sure the final winner will be an immaculate facility run by genuinely hospitable people providing impeccable personalized service surrounded by breathtaking natural vistas, and giving guests everything they need for a truly special experience.

Harry Nobles & Cheryl Griggs

www.optimumrating.com     

UK: Hotel shares hurt after string of profit warnings

Times Online  -  Shares in the hotel sector came under renewed pressure yesterday after the latest in a string of profit warnings from Jarvis Hotels and the first loss since 1995 at Queens Moat Houses (QMH).

Shares of Jarvis Hotels fell 5½p to 94p after the company admitted that, despite a resilient sales performance, a further deterioration in UK commercial business meant its trading profits “could fall marginally below last year’s figure”.

The company said that, although average room occupancy was up, this had been achieved at the expense of room rate. Analysts cut their pre-tax profit forecast for the year to March 29 from £16 million to about £14 million.

The uncertain economic and political environment cited by Jarvis was also reflected in 2002 figures from QMH. Its pre-tax loss before exceptionals of £3.7 million compared with a profit last time of £3.5 million, while underlying turnover fell by 3.1 per cent to £324.4 million.

Like Jarvis, it was successful in replacing lost corporate customers with leisure business, although the lower rates achieved had an impact on profit margins. In the UK, comparable room occupancy rose from 72.4 per cent to 73.3 per cent, but the room rate fell by 3.5 per cent to £57.23, and the rooms yield was down by 2.4 per cent to £41.94. Its German and Dutch divisions both suffered from poor economic conditions.

QMH, which operates 89 hotels, also announced the successful conclusion of talks with Six Continents (6C) over the renewal of a franchise agreement for its German hotels. Under the new deal, the number of hotels carrying 6C’s Holiday Inn brand will rise from 11 to 21, with its three other German hotels likely to be sold.

However, Andrew Coppel, chief executive of QMH, said that a review of the group’s UK branding strategy had concluded that the Moat House Hotels brand would be retained.

The gloomy news from Jarvis and QMH had a knock-on effect on other hotel stocks, with Millennium & Copthorne Hotels down 7½p to 195p, and Hanover International off 3½p to 100p. QMH closed down ¾p at 11¾p. Shares of Macdonald Hotels, however. which issued a profit warning earlier this week, were unchanged at 181p.  

Meridien to sell off hotels to raise Eu300m

Telegraph  -  Meridien Hotels, the chain owned by Nomura International, is planning to generate €300m (£205m) through the sale of European property assets to bolster its finances.

The Telegraph revealed in January that the company was renegotiating a £1.25bn sale and leaseback with the Royal Bank of Scotland secured against its UK hotels. Senior managers have been axed and a new team appointed to "sort out" the chain.

Meridien is now seeking to sell a string of European hotels to raise much-needed cash to support the business and invest in the properties.

A spokesman confirmed that Meridien had appointed Jones Lang LaSalle to sell seven European properties. It intends to lease some of the properties back or simply agree a management contract to run the hotels for the owners.

The properties include the Ritz in Madrid, the Eden in Rome and the Apollo hotel in Amsterdam.

Guy Hands, the ex-Nomura banker behind the £1.9bn Meridien acquisition in 2001 who still manages Nomura's investments through Terra Firma Capital, said: "In London we are in the 50 per cent to 60 per cent occupancy range, which is pretty good, but the market is just horrible.

"What worries us is a war with Iraq that went on for a long time, which could see occupancy rates in London drop below 40 per cent - and that would be devastating for everyone, not just Meridien."

Hongkong and Shanghai Hotels profits rise more than 9 times in 2002
 
AFP  -  Hong Kong's oldest hotel group Hongkong and Shanghai Hotels said Thursday its 2002 net profit rose more than nine times from the year before to 308 million dollars (39.5 million US), thanks to strong performances by its hotels in Asia.

The company, which runs the luxury Peninsula chain, said net profit for 2002 rose to 308 million dollars from 33 million dollars a year ago, reversing an impairment loss of 238 million dollars in Palace Hotel.

Hongkong and Shanghai Hotels said sales rose 0.39 percent from last year to 2.59 billion dollars, while operating profit rose 9.08 percent to 637 million dollars.

Analysts had said they expected the company to post a net profit of 209-278 million dollars, according to the Multex-Global Estimates.

"The group's hotels in Asia performed strongly in 2002, with all hotels other than the Peninsula Manila achieving increases in both turnover and operating profit," said Hongkong and Shanghai Hotels chief executive officer Clement Kwok.

"In the US, the operating results were somewhat mixed," he said.

The company declared a final dividend of eight cents, against five cents a year earlier.

Kwok said the office rental market in Hong Kong remained pressured as evidenced by the weak performance of the St. John's Building in the financial district of Central.

However business had held up well at the Peak Tower and Peak Tramways, the Landmark in Ho Chin Minh city and the Thai Country Club, he said.

Occupancy at the Peninsula Hong Kong was 62 percent in 2002, compared with 56 percent in 2001.

The Kowloon Hotel recorded an occupancy rate of 92 percent, against 90 percent previously.

Incorporated in 1866, the group was one of the first stocks to be listed on the Hong Kong stock exchange.

HK's Visitor Arrivals Breaking Record in January

eTurbo.com   -  Visitor arrivals to Hong Kong in January 2003 totaled 1.546 million, the highest January figure and a 31 percent growth over the first month of 2002.

According to figures released here Thursday by the Hong Kong Tourism Board (HKTB), visitors from the Chinese mainland led the way with 750,929 arrivals, a year-on-year increase of 65.1 percent. The average hotel occupancy rate in January was 82 percent, a one percentage point increase on the 81 percent recorded during the same period last year. Business traffic from the short-haul markets was stimulated by major trade shows such as the Hong Kong Toys & Games Fair and Hong Kong Fashion Week.

Despite the encouraging increase in January, HKTB Executive Director Clara Chong cautioned that it was too early to assume that such strong performance could be maintained. "We do expect to see good growth continuing into February, not least because of the Lunar New Year holiday, when provisional figures indicate that total arrivals were some 30 percent up over the first seven days of the holiday," she noted.

Chong observed, "Beyond February, however, the situation is a good deal less certain," adding that "If war breaks out, it will inevitably have an impact on Hong Kong tourism, especially on longer-haul visitors and on business travel from all markets.

Hilton Sells Four Homewood Suites Properties 

(BUSINESS WIRE) -- Hilton Hotels Corporation (NYSE:HLT) announced today that it has sold four Homewood Suites by Hilton hotel properties in two separate transactions for a total consideration of approximately $40 million. The proceeds will be used by Hilton to reduce debt.

In the first transaction, the company sold Homewood Suites by Hilton hotels in Albuquerque, New Mexico (151 rooms), Colorado Springs, Colorado (127 rooms), and Baton Rouge, Louisiana (115 rooms) to Apple Hospitality Five, an affiliate of Apple Suites, Inc. The total price for these three properties is approximately $32 million. Hilton will retain long-term management and franchise agreements. This transaction brings to 8 the number of Homewood Suites by Hilton properties purchased from Hilton by Apple Suites or an affiliate over the last three years. All of the properties are being managed by Hilton.

In the second transaction, the company sold the 114-room Homewood Suites by Hilton hotel in Scottsdale, Arizona to Woodbridge Hospitality LLC d/b/a Khangura Developments for $7.5 million. Hilton will retain a long-term franchise agreement and the property will be managed by American Hospitality LLC.

Hilton has now sold 16 of the 19 company-owned Homewood Suites by Hilton hotels it acquired as part of the 1999 purchase of Promus Hotel Corporation, while retaining either management or franchise agreements. There are a total of 122 Homewood Suites by Hilton properties located throughout the country.

"These transactions are in keeping with our strategy of being a franchiser or manager, rather than an owner, in the limited service segment of the industry, as well as our focus on continuing to reduce our debt," said Mariel A. Joliet, senior vice president and treasurer of Hilton Hotels Corporation. "Homewood Suites by Hilton is one of the most powerful brands in the extended stay category, and we are delighted to grow our relationship with Apple Suites and begin a new one with Woodbridge Hospitality."

Hilton Hotels Corporation is recognized internationally as a preeminent hospitality company. The company develops, owns, manages or franchises more than 2,000 hotels, resorts and vacation ownership properties. Its properties include many of the world's best known and most highly regarded hotel brands including Hilton(R), Conrad(TM), Doubletree(R), Embassy Suites Hotels(R), Hampton Inn(R), Hampton Inn & Suites(R), Hilton Garden Inn(R), Hilton Grand Vacations Company(R) and Homewood Suites by Hilton(R)

Starwood celebrates fifth anniversary of ITT and Westin Hotels acquisitions

Five years ago, a small hotel company called Starwood Lodging became a global giant when it acquired behemoth ITT Corporation just a few months after acquiring Westin Hotels & Resorts.

Overnight, Starwood Lodging catapulted from a minor player with a hodge podge of hotels to a Fortune 500 company with more than 700 hotels worldwide including famous brands Sheraton, Westin, The Luxury Collection and Four Points by Sheraton plus some of the world's most illustrious properties such as The St. Regis, The Gritti Palace, and the Hotel Cala di Volpe. And so, Starwood Hotels & Resorts Worldwide, Inc. (NYSE:HOT) was born.

In just five years, Starwood has made its mark on the hotel industry. Today it is the world's largest hotel company as measured by EBITDA and has pioneered a number of hotel industry firsts as well as launched two new lauded hotel brands in its short history.

"I founded Starwood to be an innovative, people focused, opportunistic company that accepts and embraces change but even I am surprised and quite proud of all we've accomplished in five years," said Barry Sternlicht, Starwood's founder and Chairman and CEO of Starwood. "I am particularily thrilled that we've launched two of the most acclaimed hotel brands in the world, as well as continue to markedly improve each of our established brands. We are a young company with soul, fresh ideas and a global footprint, and I can't wait to see what we accomplish in the next five years!"

Some Starwood highlights from the past five years include: -- The debut of W Hotels, regarded by many as the most successful new brand in hotel history. The first W opened in December of 1998. Today there are 20 hotels open or under construction and the company expects to have 50 within the next five years. W Hotels, which combines the style and attitude of boutique hotels with the service and reliability of established business hotels, is a favorite of celebrities, athletes, and business travelers alike.

 Since its launch, the W brand and its hotels have won numerous awards, and a recent study by Marketing Metrix of frequent travelers found that W is the hotel brand with the highest customer loyalty, beating out even venerable brands Ritz Carlton and Four Seasons. 

-- The launch of the St. Regis brand, inspired by the world famous St. Regis Hotel in New York. The world's newest luxury brand, the St. Regis has gone from one hotel in 1998 to more than a dozen today, and many of the brand's hotels have quickly climbed to the top of traveler's choice awards in magazines like Conde Nast Traveler and Travel + Leisure. 

-- The creation of Starwood Preferred Guest, the company's loyalty program, which caused a commotion when it debuted in 1999 with its breakthrough standard of no blackout dates or capacity controls, meaning travelers can redeem their frequent stay points anytime, anywhere - a hotel industry first. Popular from the start, Starwood Preferred Guest has won the prestigious Freddie Awards' "Program of the Year" title for the last three years running. In 2002, Starwood Preferred Guest swept an unprecedented 13 of 16 awards at the Freddies.

 -- The purchase of Starwood Vacation Ownership -- formerly Vistana (NASDQ listed VSTN) -- the company's vacation ownership company, has always been and is expected to remain an important engine of growth and competitive advantage for the company. -- The debut of Westin's Heavenly Bed, an all-white, downy, multi-layered bed that put to rest the conventional wisdom that hotels were best served cutting corners on the beds. An instant hit, Westin's Heavenly Bed resulted in increased guest satisfaction scores, average daily rates and market share at Westin hotels, and has been widely imitated but never duplicated, ever since. The Heavenly Bed and other new products including the Heavenly Bath, as well as a new design scheme for the brand, have catapulted Westin from the Upscale hotel category to the Upper-Upscale tier, and the brand has been named the number one Upper Upscale brand by readers of Business Travel News in the magazine's most recent poll.

-- Since the acquisition of ITT, Starwood and it's partners have invested several hundred million dollars renovating the Sheraton portfolio, and recently introduced, building on the success of W and Westin, the Sheraton Sweet Sleeper Beds. Stricter enforcement of Sheraton brand standards have resulted in significant increases in guest satisfaction and the departure of dozens of hotels that were unable or unwilling to meet the brand's quality controls. In addition, in 2002, the brand was the first upscale hotel brand to offer a radical proposition - a satisfaction guarantee, called the Sheraton Service Promise. 

-- During the last five years, Starwood has sold $7.3 billion in assets including exiting the Caesar's gaming business. -- Since 1998, Starwood has boasted more hotels on Conde Nast Traveler's coveted Gold List of the "best places to stay" than any hotel company in the world. -- With the acquisitions of ITT and Westin, Starwood is the world's most global hotel company, with more upscale hotels on every continent except North America.

"But perhaps the accomplishment I am most proud of is the culture we have built in Starwood in five years," said Sternlicht. "Great companies are built on great people and I am gratified that in our 2002 management surveys, 96% of our associates said they were proud to be part of Starwood, 95% said they would stay with us for several years and 90% would recommend Starwood to their friends as an excellent place to work. We have made great strides with our diversity initiatives, attracting and retaining our best talent, and our company and hotels around the globe continue to enthusiastically give back to our communities."

Mandarin Oriental Hotel Group To Open
Niche Hotel in Hong Kong 

Mandarin Oriental Hotel Group has announced that it will manage a new, luxurious hotel planned for development in the heart of Hong Kong’s fashion, entertainment and shopping district. The 118-room property will be housed in The Landmark, one of Hong Kong’s most successful commercial complexes. 

The new property, owned by Hongkong Land, will be called The Landmark Mandarin Oriental and is due to open in mid 2005. A deluxe, intimate hotel with a contemporary design and stylish oriental flair, the property will provide exceptional facilities and Mandarin Oriental’s renowned service and quality. Chic and elegant guestrooms and suites are being designed in generous proportions at over 538 square feet, and will feature highly sophisticated entertainment systems. Mandarin Oriental’s signature spa concept will be an integral part of the development with a 17,760-square-foot, fully personalised spa. 

The new hotel will complement the Group’s flagship property, Mandarin Oriental, Hong Kong, with its classic, Chinese-influenced elegance. One of Hong Kong’s best-loved institutions, Mandarin Oriental, Hong Kong is celebrating 40 years of award-winning service in 2003, and remains one of the Group’s best performing hotels. The property continues to be recognized as one of the world’s leading luxury hotels by the readers of influential publications.

“We are delighted at the prospect of operating two luxurious hotels in our home city of Hong Kong. The attributes of both hotels will complement one another, and the new property will serve an under-developed niche in this market. We look forward to working with Hongkong Land on creating a new level of excellence in hotel design,” said Edouard Ettedgui, Group Chief Executive of Mandarin Oriental Hotel Group.

The Landmark complex, also owned by Hongkong Land, is home to the flagship boutiques of many famous international fashion names. Connected by a footbridge network to other retail centers and most of Hong Kong’s Financial District, it is a short covered walk from the Airport Express station with its fast and frequent connections to Hong Kong International Airport. 

Mandarin Oriental is the award-winning owner and operator of some of the world’s most prestigious hotels and resorts.  In total, the Group operates 18 luxury hotels in key business and leisure destinations and in addition to this new property, it has a further three hotels under development, including New York (opening late 2003), Washington D.C. (opening 2004) and Tokyo (opening 2006).  Mandarin Oriental now operates some 7,000 rooms in eleven countries with nine hotels in Asia, six in The Americas and three in Europe.

www.mandarinoriental.com

Tishman Hotel Corp Names Industry Leader Bill Mccreary President

Tishman Hotel Corporation (THC) has appointed Bill McCreary as its new President, it was announced today by John A. Vickers, Chairman & CEO of THC. Possessing 32 years of experience in the hospitality and hotel management business, Mr. McCreary will oversee all of the organization¹s business activities and operations, new business efforts, and management contracts, which comprise approximately 10,000 rooms across the U.S., in the Caribbean, and in eastern Europe.

Among the well-known hotels that THC manages are The Westin Rio Mar Beach Resort & Golf Club in Puerto Rico; The Radisson Deauville Resort Miami Beach; the Four Points Sheraton at Los Angeles International Airport; and boutique hotels The Shoreham, The Mansfield, The Franklin, and The Roger Williams in Manhattan. Tishman also asset manages such prestigious properties as The Sheraton Chicago Hotel & Towers, The Westin New York at Times Square, and the Walt Disney World Swan & Dolphin Resort.

"Tishman is a pace-setter in hotel development, asset management, and property management," said Mr. McCreary. "I couldn¹t be more pleased than to receive the opportunity to join this dynamic organization."

A 15-year History with Tishman Hotels

Mr. McCreary has been involved with Tishman hotels since 1989, when as General Manager, he opened the Walt Disney World Swan Resort in central Florida. The 758-room property is owned by Tishman Realty and partners, and is operated by Westin. For several years after that, he was Senior Vice President at the Headquarters of Westin Hotels & Resorts, where he was responsible for all Westin hotels in the eastern half of the United States and led the company¹s implementation of its Total Quality Management Program.

In 1993, Mr. McCreary joined Sheraton Hotels & Resorts and became General Manager of the 1,509-room Walt Disney World Dolphin. Subsequently, when Sheraton and Westin became brands of Starwood Hotels & Resorts, he was appointed General Manager of both the Dolphin and Swan, consisting of 2,267 rooms and 330,000 sq. ft. of convention and meeting space.

During his career, Mr. McCreary has managed hotels, and opened hotels and expansions in San Francisco, Atlanta, Los Angeles, Tulsa, Hawaii, and Singapore. He began his career at the famous St. Francis Hotel in San Francisco.

Hotels under his leadership have won every major industry award. In 1993 and 1997, the Walt Disney World Dolphin was named Sheraton Hotel of the Year. He was named Hotelier of the Year for 1999 by the Central Florida Hotel & Lodging Association, was an inaugural inductee in Florida State University¹s School of Hospitality Hall of Fame, and was named 2002 Hotelier of the Year by the Florida Hotel & Motel Association.

Mr. McCreary served in the United States Army, rising to the rank of First Lieutenant, and was an Airborne Ranger with the First Cavalry Division Airmobile in Vietnam. His 30 military awards, commendations, and recognitions include the Silver Star medal for gallantry in action and three Bronze Star medals.

Educated at Linfield College in Oregon, he holds a B.A. in biology, a diploma with honors from the Educational Institute of the American Hotel & Motel Association, and is a Certified Hotel Administrator.

Tishman Hotel Corporation Background

Tishman Hotel Corporation (THC) is a leading U.S.-based Hotel Management firm, which also provides Investment Banking, Development, and Hospitality Advisory services. THC manages approximately 10,000 hotel rooms nationwide, in the Caribbean and Europe, and in conjunction with its affiliates, has provided services to more than 160 hotels totaling over 80,000 hotel rooms. "Hotel Business" magazine ranked THC as the #4 independent hotel management company in the nation in 2002.

Properties owned by Tishman affiliates include The Walt Disney World Swan and Dolphin Hotels in Orlando; The Hilton in the Walt Disney World Resort in Florida; the Sheraton Chicago Hotel & Towers; The Westin Chicago River North; and The Westin New York at Times Square, which opened in October, 2002.

Properties managed by THC include The Westin Rio Mar Beach Resort & Golf Club in Puerto Rico; The Goodwin Hotel in Hartford, Conn.; The Four Points Sheraton @ Los Angeles International Airport; The Radisson Deauville Resort Miami Beach, Florida; The Shoreham, The Mansfield, The Franklin, The Roger Williams, and The Clarion Fifth Avenue Hotel in New York; Doubletree Club Hotel Los Angeles International Airport and the Ramada Plaza Hotel LAX - El Segundo, in Hawthorne, Calif.; The Crown Plaza Harrisburg in Harrisburg, Pa; the Radisson O'Hare near Chicago's International Airport; and the Courtyard by Marriott Warsaw International Airport Hotel in Poland, scheduled to open later this year.

THC is an affiliate of Tishman Realty & Construction Co., Inc., one of the world's premier real estate managers, developers, owners, builders, and advisors, founded in 1898 and headquartered in New York. For more information, please visit www.tishmanhotels.com.

Shanghai Launches Three-Year Tourism Program

eTurbo.com -  Shanghai has launched a three- year program to promote local tourism industry. The municipality is aiming to receive three million overseas visitors this year, bringing in 2.6 billion US dollars in foreign exchange. The city also aims to host 95 million domestic tourists, drawing 99.8 billion yuan (12.06 billion US dollars) in income.

Shanghai plans to welcome more than four million overseas tourists, earning 3.3 billion US dollars in foreign exchange, and 100 million domestic tourists by 2005. The eastern metropolis has designated the next five to 10 years a "golden period" for developing tourism. Under the plan, Shanghai will build itself into a tourism destination for doing business, holding conferences and exhibitions, shopping, and glamor and leisure entertainment.

The city also aims to attract tourists with its advanced cultural and sport attractions, industry, agriculture, science and technology. Moreover, it is expecting to host 70 million visitors during the World Expo in 2010. Shanghai boasts a series of advantages in fulfilling its targets.

The city has 41 international and 548 domestic travel agencies and 310 star-level hotels. The city's tourism enterprises have opened more than 20 representative offices in 13 countries and regions. Eight of the world's leading hotel management companies have opened branches in Shanghai. Last year, Shanghai hosted 87.5 million domestic tourists and more than 2.7 million overseas tourists.

HAWAII (HVCB) 2002 Momentum Carried Over To Strong January

The Hawaii Visitors and Convention Bureau (HVCB) began its 100th year of tourism marketing by expressing confidence about 2003, as January visitor counts to Hawaii surged. The State Department of Business, Economic Development, and Tourism (DBEDT) today released its January 2003 visitor figures, showing an overall increase in total visitor days of 12 percent compared to January 2002. In addition, visitor arrivals rose by 11.6 percent, with domestic visitors increasing by 8.6 percent and international visitors growing impressively by 17.4 percent.

Tony Vericella, HVCB President and CEO, was encouraged by the strong showing of January's visitor counts. "The resurgence of visitor arrivals to Hawaii reflects the effectiveness of the industry's marketing efforts post 9/11. It is encouraging to see that momentum carried over into the new year. The marketing and promotional programs supported by HTA and implemented by HVCB and its Island Chapters will continue to produce positive results for Hawaii." Vericella said that it is difficult to gauge how much of an impact the impending war in the Middle East will have on Hawaii's tourism industry. "As the industry proceeds through the present period of economic and political uncertainty, the momentum observed in the January numbers is especially heartening."

Hawaii received a boost during the last week of January from the NFL Pro Bowl, played on February 2. The Hawaii Tourism Authority estimates that the event drew 18,000 visitors to the state. Vericella noted that January is a particularly effective month to communicate Hawaii's allure because of several high-profile televised sporting events during this period. In addition to countless regional and national mentions promoting the Pro Bowl, January is also host to four nationally (and in some cases internationally) televised golf tournaments, the Mercedes Championship and ConAgra Foods Champions Skins Game on Maui; the Sony Open on Oahu; and the MasterCard Championship on Hawaii's Big Island.

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