The Worldwide Ranking of Hotel Groups 2003
The World’s Top Ten international groups increase their supply by 2.6%.

An MKG exclusive: the worldwide ranking of hotel groups 2003

MKG Consulting has the largest hotel database in the world, outside the United States, with the best coverage of all the hotel segments. The MKG Consulting Database contains more than 40,000 hotels, representing over 2.2 million rooms.  The activity results in the MKG Database are based on a sample of 9,000 corporate operated hotel chains worldwide, representing 900,000 rooms. These results are provided by chain hotels throughout the world, of which MKG Consulting is the official statistical supplier. Certain results of this worldwide assessment as well as much more in-depth analyses on Europe are developed in MKG Consulting's annual "Marketing, Trends, and Strategies of the European Hotel Industry - 2003 Edition" (more than 200 pages), which is currently available.

In preview of the detailed worldwide hotel report, the ranking of the first ten world groups and the first twenty world brands

Annual worldwide ranking of hotel groups (at 01/01/2003)

Source : MKG Consulting Database – 03/03

* Supply on 31/09/2002

** The Choice hotel supply rises to 4664 hotels and 373,722 rooms. If one takes into consideration hotels "under development", the supply reaches 5138 hotels and 415,287 rooms. By hotel "under development", Choice includes hotels that have signed a franchise management contract by 31/12/02 and are sold through central reservation and the internet site of the group, but do not yet benefit from the entire range of services provided by Choice (brand computer system, etc).

Compared to 2001, which saw Hilton’s International entry into the top 10 following the purchase of Scandic and Marriott International reaching the third place, 2002 was largely marked by a stability in the classification of the top 10 international hotel groups. Cendant remains, despite a light drop, the number one group in the world. Though there has not been a major change in the ranking of the groups during the course of the year, the majority of the worldwide leaders has increased hissupply in 2002. In the face of a morose economic situation and the state of uncertainty concerning the war in Iraq, they have mostly given preference to an organic growth in their supply. Carlson Hospitality has experienced the fastest growth.Few major acquisitions opportunities were available in 2002. It is foreseeable that 2003 will be more active in the matter if one judges it by current negociations surrounding the Six Continents dossier. If the war in Iraq should drag on, certain groups may also emerge weakened, becoming tempting targets.

Annual worldwide ranking of hotel brands (at 01/01/2003)

Source : MKG Consulting Database – 03/03

Best Western remains the top hotel chain in the world, though like Holiday Inn, it saw a light drop. This may be explained by a higher standard in its network in terms of quality norms manifesting itself through a weeding-out of under performing properties. The brand of the Choice Group, Comfort Inn & Suites, confirms the dynamism of the franchised operations, notably in the United States, and became the third best hotel chain in the world. Six Continents pursue a worldwide and active development of its brand Express by Holiday, as well as Accor with its brand Mercure, that progressed by steps, through acquisitions and partnerships. The brand Mercure  was the fastest to grow in 2002. The Scandic hotels rebranded under the flag of Hilton, have notably allowed this brand to expand by 10%. Looking at losses, Hyatt has seen the flight of several contracts, not compensated by a prudent development policy.

For further information please contact,
Georges Panayotis on 00 33 (0)1 56 56 87 90
georges.panayotis@mkg-consulting.com

U.S. Hotel Profits Decline Again In 2002 

Turnaround Expected in 2003

The average U.S. hotel suffered a second consecutive year of declining profits in 2002, according to the 2003 edition of Trends in the Hotel Industry-USA, published by PKF Consulting and the Hospitality Research Group (HRG). PKF Consulting and HRG announced the availability of the latest annual Trends report today (www.hrgonline.com).

According to the Trends report, the operating profit for the average U.S. hotel dropped 9.6 percent in 2002, this after a 19.4 percent decline in profits in 2001. This marks the first consecutive year decline in hotel profitability since the years 1982 and 1983.

On the bright side for hotel owners and operators, HRG projects that U.S. lodging industry performance will improve by year-end. With leading economists forecasting an economic rebound after the Iraq War is settled, current HRG projections call for a 3.6 percent increase in hotel revenues in 2003. This increase in revenue should result in a 7.8 percent increase in profits for the average U.S. hotel for the year.

The 2002 results come from the firm's recently completed annual Trends in the Hotel Industry survey, an annual review of U.S. hotel operations conducted since 1935. This year's sample draws upon year-end 2002 financial statements from 4,000 hotels across the country. Profits are defined as income after management fees, property taxes, and insurance, but before capital reserves, debt service, rent, income taxes, depreciation, and amortization.

New Expense Cuts Hard To Find

“With all the fear over a potential war with Iraq, early into 2002 we were projecting an 11.0 percent decline in hotel profits for the year. Therefore, the 9.6 decline did not come as a surprise,” says R. Mark Woodworth, Executive Managing Director of Atlanta-based HRG. “Expecting profits to be down, hotel operators continued the strict cost control measures implemented in 2001.”

After feeling the dramatic negative effects of the September 11 terrorist attacks and recession in 2001, hotel managers cut their costs dramatically. In 2001, total operating expenses declined 5.3 percent, including a 6.6 percent cut in labor costs. “With all the expense cutting done in 2001, there was little fat left in the 2002 operating budgets of U.S. hotels,” notes Woodworth.

Because expenses were cut so much in the prior year, hotel managers were challenged to find additional cost saving measures in 2002. In response to a 4.0 percent decline in total revenue in 2002, hotel managers were only able to muster a 1.8 percent cut in expenses.

Ironically, one reason for the difficulty in finding expenses to cut was the moderate decline in occupancy. The average hotel in our 2003 Trends sample suffered a 4.7 percent decline in rooms revenue, the result of a 0.8 percent decline in occupancy and a 3.9 percent decline in average daily rate.

“For the most part, the hotels in our survey sample did not lose that many customers. The number of properties that were able to achieve an increase in guest count in 2002 was just slightly less than the number of hotels that accommodated fewer guests,” says Robert Mandelbaum, Director of Research Information Services for HRG. “Given this relative stability in occupancy, hotel managers needed to spend the associated variable expenses required to service their guests.”

The most observable example of a variable hotel expense is labor costs. Labor costs constitute 43.7 cents of every dollar spent to operate a hotel. “Historically, hotel managers have made deep cuts payroll in response to declines in revenue,” says Mandelbaum. “However, in 2002, relatively stable occupancy, combined with a desire to preserve guest service, resulted in a decline of only 0.2 percent in hotel labor costs.”

Some Expenses Go Up

Further evidence of hotel managers’ efforts to attract new customers, while satisfying their existing guests, are the increases in both maintenance and marketing expenditures.

In 2002, hotel managers spent an average of 1.2 percent more to market their hotels than they did in 2001. This figures includes all on-site marketing efforts, but does not include any fees paid to franchise organizations or referral services. “If you examine the details of the marketing expenditures in 2002, you find that sales and marketing payroll was flat compared to 2001,” says Woodworth. “Therefore, the entire 1.2 percent increase in marketing expenses went towards advertising, merchandising, and other direct promotional efforts.”

Despite declining revenues, U.S. hotels did increase the amount they spent to maintain the hotel building, furniture, fixtures, and equipment. Property operations and maintenance expenditures increased 1.7 percent in 2002. “Even in difficult market conditions, hotel owners and operators know that they need to maintain the physical product in order to retain market share and preserve asset value,” notes Mandelbaum.

Insurance Takes A Big Bite

The single largest increase in hotel operating costs during 2002 was insurance. The average U.S. hotel had to spend 33.1 percent more in 2002 in order to insure the contents and structure of their building, as well as business liability. This comes on the heels of an 18.9 percent increase in 2001. “Ever since September 11, 2001, our clients have been telling us about the staggering increases in premiums they’ve had to pay,” says Woodworth. “This is one of the biggest increases in any one individual expense item that we’ve seen in the 67 years our firm has been tracking U.S. hotel operating performance. From what we’ve heard, this trend of increasing insurance premiums appears to have carried forward into 2003.”

Energy Relief

After much concern regarding the rise in energy costs in 2001, U.S. hotels saw some relief in 2002. The average U.S. hotel spent 5.5 percent less in 2002 than they did in 2001 to provide electricity, gas, steam, fuel and/or water for their property. “We attribute the decline in utility costs to a combination of a drop in energy prices, as well as improved conservation measures by hotel managers,” says Mandelbaum. “However, we have heard from some hotel managers that their utility bills have begun to creep up during the first quarter of 2003.”

Reversal Of Fortune

While all hotel categories suffered drops in both revenue and profits in 2002, the magnitude of decline in performance did vary by property type. Of all the different hotel categories, convention hotels experienced the smallest declines in revenues (2.6 percent) and profits (5.4 percent). Limited-Service hotels, on the other hand, endured the greatest fall-off in revenues (5.7 percent) and profits (12.7 percent).

The relative performance of convention and limited-service hotels in 2002 is a complete reversal from their experience in 2001. In 2001, convention hotels experienced the greatest declines in revenues and profits, while limited-service hotels suffered the least fall off in both categories.

“The relative insulation enjoyed by limited-service hotels in 2001, as well as the hard hits experienced by convention hotels, were short lived,” says Woodworth. “In 2001, tight personal and corporate budgets forced travelers to trade down from high-priced full-service properties to more moderate priced limited-service hotels. In 2002, discounting appears to have enabled rate sensitive travelers to think about trading back up. In turn, managers at the higher priced properties were able squeeze as much profit from their stabilized top-line situation and minimize their decline in profitability.”

“While profits have fallen for all property types, the average profit margin for the properties in our sample was 27.5 percent,” says Woodworth. “This is nearly two full percentage points greater than the 25.6 percent average margin achieved by U.S. hotels from 1960 through 2001. Hotel owners and operators certainly don’t like to lose ground, but they are not losing money.”



The Importance of Benchmarking

While HRG is projecting growth in revenues and profits for the average hotel in 2003, these increases will not come automatically for each and every property. “Changes in travel patterns, budgets, insurance and utility expenses, and distribution channels will provide significant challenges in 2003,” says Woodworth. “Throughout the year, hotel owners and operators will want to know why their hotel is, or is not, benefiting from the rise in market performance. Proper top- and bottom-line benchmarking is required to answer this question.”

In response to this increased demand for revenue, expense, and profit information, HRG offers its clients Benchmarker, a service that allows hotel owners and operators to compare the financial performance of their properties against a select group of comparable properties. Hotel owners and operators interested in HRG’s Benchmarking products can contact Claude Vargo at (404) 842-1150, ext 237.

To order a copy of the 2003 edition of Trends in the Hotel Industry, call (404) 842-1150, ext 237, or visit the HRG website at www.hrgonline.com (see Publications and Data).

The Hospitality Research Group (HRG), headquartered in Atlanta, is the research affiliate of PKF Consulting, the international consulting and real estate firm specializing in the hospitality industry. HRG, along with PKF Consulting and the PKF Consulting Capital Markets Group, are wholly owned subsidiaries of Hospitality Asset Advisors International, a U.S. Corporation. HAA International has offices in New York, Boston, Philadelphia, Washington DC, Atlanta, Houston, Dallas, Los Angeles, San Francisco, and Singapore.

Le Meridien to cease to operate two hotels in Bangkok - Inter.Continental to take over?

AsiaTravelTips.com  -  The Owner of Le Royal Méridien and Le Méridien President, Bangkok, has confirmed its agreement with Le Méridien Hotels & Resorts that the two hotels would ceased to be operated by Le Méridien from 18th July 2003.

Khun Chalermbhand Srivikorn, Chairman of President Hotel and Tower Co., Ltd., said "Over the past 16 years, Le Méridien has consistently  delivered our hotels a market leading position and profitability and we thank them for their excellent stewardship. We very much value our relationship with Le Méridien and we wish them well in their new Thai operations."

Michael Sagild, Regional Managing Director of Le Méridien said "While we are sorry to be ending our long and mutually fruitful relationship with  the President Hotel and Tower, we anticipate transferring the exceptional  strength of our professional management team and reservations network, which established Le Royal Méridien as one of Bangkok's premier hotels, to another prestigious property in Bangkok within this year."

"We are very excited by the rate of our growth in Asia Pacific and are establishing long-term partnerships with financially strong ownership groups who appreciate the unique strengths and value of our brand."

Industry sources suggest that InterContinetnal Hotel s & Resorts will take over Management from Le Meridien.

According to industry source, Inter.Continental  Hotels & Resorts will take over management from Le Meridien.

March – double-digit revpar declines in the UK capital

London Mayor, Ken Livingstone recently announced that 17 May to 15 June will be a “Totally London” month, during which time the capital will present the very best it has to offer through a series of special promotions. This announcement must have come as a welcome relief to the capital’s hoteliers who, still reeling from the fall in demand following the events of September 11, are now coping with the repercussions of the conflict in Iraq. Preliminary March data from the HotelBenchmark Survey by Deloitte & Touche indicates that the capital experienced its first month of double-digit revPAR decline since June 2002 with revPAR falling 11.8% to reach £64.  This comes on the back of two months of consecutive revPAR falls in January and February when revPAR fell 0.6% and 6.8% respectively.  This fall is all the more worrying given that the comparable data for first quarter 2002 was weak, with the capital still experiencing double-digit revPAR declines as a result of the fallout in international travel post September 11 and continued challenging global economic conditions.

Preliminary March data from the HotelBenchmark Survey reveals that in March, London’s occupancy fell below 70% to reach 69.8%, a decline of 8.6% over the previous year.  A contributing factor to this decline was undoubtedly the onset of the conflict in Iraq, which started on 19^th March and caused some people to postpone or cancel their travel plans.   This is the first time since the HotelBenchmark Survey was launched in 1996, that occupancy levels in London have fallen below 70% during March, and this contrasts with the average for the last eight years when London hoteliers have typically managed to record occupancy levels for the month of around 79%.  However, it should be noted that the timing of Easter is different this year, with Easter 2003 falling in April compared to March in 2002.

That said however, March occupancy levels are still 9% lower than the 76.7% reported in March 2001, when Easter also fell in March.

Hotels with an average room rate between £160 and £200 were the capital’s worst performers in March 2003 reporting occupancy declines of 21.7% to reach only 54.3%.  Encouragingly however, the decline in average room rate was limited to 1.7%, resulting in revPAR tumbling 23%.  Hotels with an average room rate of over £200 and boutique hotels were also hit hard by the fall in demand, with occupancy levels falling 13.2% and 13% respectively, although all categories of hotels did experience occupancy declines.

Occupancy levels for the first quarter of 2003 in London are also at their lowest levels ever recorded on the survey at 69.1%, which has resulted in a first quarter revPAR decline of 5.5%.  This fall in performance is caused by virtually equal declines in both occupancy and average room rate.  During the first quarter, the average occupancy decline across all London hotels was 2.5%, whilst average room rates fell 3% to reach £92. The only category of hotel to report an improvement in performance over 2002 levels during this time has been hotels with an average room rate of under £80 and over 400 rooms.  Encouragingly, this segment has managed to increase occupancy by 1.9% during the first quarter to reach 75.1%.  This increase in demand combined with a marginal (0.1%) increase in average room rates has helped this segment advance revPAR by 2.1% at a time when all the other segments are experiencing revPAR erosion. 

Not unsurprisingly, given the overall slowdown in global travel, the hotel markets at London's two main airports - Heathrow and Gatwick - came under pressure in March with occupancy levels falling 6.4% and 6.8% respectively.  These occupancy declines are set against a backdrop of decreasing passenger arrivals as recorded by BAA, of 8.1% for Heathrow and 6.2% at Gatwick for the month.  Although March is the first month this year that Heathrow hotels have reported a decline in occupancy, the Gatwick market has been under pressure all year, in part due to increased capacity in the marketplace following the 219-room extension to the Hilton which came on stream in January.

Despite the impact that the war in Iraq and the general slowdown in international travel has had on the capital, hotels in regional UK have remained relatively unaffected, partly due to the fact that much of their business is domestic in origin. Preliminary March data reveals that hotels in regional UK have managed to curtail the revPAR decline to just 0.3%.  Occupancy levels fell 1.2% to reach 64.2% for the month but this was offset by a 0.9% improvement in average room rate to record £60 for the month. Year-to-date regional UK revPAR is down 1.3% to £38, but hoteliers have still managed to grow the average room rate, albeit marginally, which was up 0.4% over the same period in 2002.  

Commenting on the results, Julia Felton, director of travel, tourism and leisure at Deloitte & Touche said, “The first quarter results for the London hotel market are clearly very disappointing, particularly as the 2002 comparables are weak.  Ken Livingstone’s “Totally London” month will be welcome news to the capitals hoteliers who having still not recovered from the shift in travel patterns following the September 11 atrocities combined with poor economic conditions are now confronted with the conflict in Iraq and subsequent travel fears that may ensue, particularly given the leading role that the UK has taken in the conflict.  Given that Easter will influence the April results it is difficult to assess future trading conditions but anecdotal data would suggest that there will not be significant improvements in the short-term, and trading conditions will remain tough.”

Performance of the UK Hotel Industry March 2003 and year-to-date

Source: HotelBenchmark Survey by Deloitte & Touche

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 HotelBenchmark Survey – UK collects occupancy and average room rate data from over 1,350 hotels representing nearly 140,000 rooms every month, making it largest independently run survey on UK hotel performance. For further information or details on how to join the survey please visit us www.HotelBenchmark.com or contact Lorna Clarke on +44 207 438 2870.

Deloitte & Touche is the UK’s fastest growing major professional services firm.  It is based in 23 locations, has over 10,000 staff nationwide and fee income of £713.6 million in 2001/2002.  Deloitte & Touche is the UK practice of Deloitte Touche Tohmatsu, a global leader in professional services with over 98,000 people in 140 countries and fee income of $12.5 billion for the year ended 31 May 2002.

The dedicated Travel, Tourism, and Leisure practice serves owners, investors, operators and developers across the world.

Authorised by the Financial Services Authority in respect of regulated activities.  The information contained in this article is correct at the time of going to press. For further information on Deloitte & Touche, you can access our website on www.deloitte.co.uk.

For further information, please contact:

Laetitia Mowat , Media & Public Relations, Deloitte & Touche on +44 (0) 20 7303 4820
www.deloitte.co.uk

Going West - and Berlin's Swissotel is delighted

TravelWeeklyEast.com  -  Once the West ruled Berlin. Then, with the collapse of the Wall, the East started taking over.

New developments started taking shape. Investments were poured into rebuilding the eastern part with new five star hotels, fancy restaurants, hip cafes, so much so that the “happening” heart of Berlin moved from the West – the Ku’damm area – to the East.

But now, general manager of Swissotel Berlin, Gerhard Struger, believes the pendulum is swinging back towards the Ku’damm area.

As the first five star hotel to open in the West in 10 years, Swissotel is of course banking on that happening. “In the early 90s, we saw the decline of Ku’damm as everybody moved to the East, but now they are coming back.”

Opening as it did in September 2001, the same month the World Trade Centre terrorist attacks devastated tourism, the hotel has been through a difficult 18 months. “It was a difficult time to open. We didn’t have a base of clients at all so the first six to eight months were pretty tough. But now we have established ourselves in terms of service.”

The 316-room Swissotel Berlin also features contemporary architecture and a key highlight is its euro 20 million art collection. “We get the highest service rating in Berlin. We have independent agencies who test our service and benchmark it against our competitors and we do well,” said Struger.

Struger, who worked with Raffles International in Dalian and Istanbul, and was with Kempinski in Beijing, said he set out to hire “young people who have not been ruined by other hotel experiences”.

He has 158 staff whose average age is 24-25 years old.

He believes the Raffles culture has helped made a difference in service standards at his hotel.

“There is the Raffles style, the warmth and thinking is there. Obviously you can sense the difference that this is not the Raffles Hotel of Singapore but neither do we want it to be – this is a business hotel in Europe.”

Having worked in Asia, he appreciates the service differences between Europe and Asia. “The willingness to serve is something the European culture has lost. This has to be rebuilt. But I believe younger people are keen to learn. Europe was considered a safe haven for jobs, but now business life is stormier and people are prepared to do more and give more.”

With high unemployment – 18 percent in Berlin and 10 percent Germany-wide – he believes service levels will improve.

“Generally in Asia, people are more entrepreneurial and risk-taking. Here, to open a business, first a lot of money is required before you can even put up a sign. The business landscape has to change in Europe where it becomes easier to become an entrepreneur.”

The poor economy, meanwhile, means a tough business climate for hotels in Berlin. The city did 60 percent occupancy last year while his hotel achieved above 50 percent.

His top market is Germany and domestic corporate business is down. After that comes the US, UK, Italy and Switzerland, mainly due to the Swissotel links. Japan is its sixth largest market. Asia is a market that’s of interest, said Struger, especially China. “We now get a number of groups a month that come with their company and we expect more to come.”

He is also expecting a comeback of the Japanese market once the political climate calms down. The challenge facing Berlin though is that it does not have an international airport and there are no direct international flights into the city. “That poses a big challenge for us,” he said.

He is however bullish on the future of Berlin in the medium term. “Germany will come back as a major economic power of Europe and Berlin is right in the centre of Europe. The long-term prospects are bright. That’s why the competition among hotel companies to plant their flags here is so fierce. All the major brands are here and more are coming.”

102 Major Transactions Close in 2002

Written By:  Antonia G. Viens  HVS International

HVS Research Department has completed its 2002 Hotel Transactions Survey where major hotel transactions for 2002 are listed and discussed.  HVS describes a major transaction as a sale where the individual hotel sale’s price is allocated at $10 million or greater.

The number of major transactions in 2002 reached 102, comparable to the number of sales in 2001 but considerably less than the number of sales since 1995.  Below is a table which summarizes the major hotel transactions since 1990.

An overview of 2002 showed that the year started out slowly but gained economic strength toward year end.  By the end of the summer the recession, which started in early 2001, appeared to be over with 2002 ending on a positive note. While the stock market had a mixed year, other market indicators were positive.  The job market improved, house sales were strong and consumer spending stayed fairly consistent.  Major transactions also followed a similar pattern. The first quarter had only 18 major transactions. During the second quarter, the number of sales increased to 30.  The last quarter closed with a total of 33 sales of which 21 occurred in December.

The largest hotel sale of the year, based on price per room, was the Montage Resort & Spa located in Laguna Beach, California, which sold for $230 million or $730,000 per room. This 40-acre resort is located directly on the ocean and was recently renovated.  Also selling this year was the Eden Roc in Miami Beach, Florida for $96 million or $277,000 per room.  The hotel has been brought back to its historic grandeur and includes the restoration of the original terrazzo floors, the circular lobby with carved Italian marble and a grand mahogany reception desk.

Our study showed that a number of luxury hotels sold in 2002 with the intent of the property undergoing immediate and substantial renovations.  

In 2002 the lowest price per room, in the luxury category, was $24,900. In 2001, the lowest price per room in the luxury category was $106,000. The HVS Research Department conducted additional research on 10 of the luxury hotels that had per room sale prices ranging from $24,900 to $62,100.  We found that all but one of the hotel owners indicated that they were planning substantial renovations to be completed in 2003.  Our study indicated that the average capitalization rate for luxury hotel sales in 2002 was 10.20%. This average rate included a number of sales where renovations were planned.  This is up from 2001 where the average capitalization rate was 9.97%.

Please note: our capitalization rates are typically based on the trailing 12 months of hotel operations prior to the hotel sale. The majority of the capitalization rates have been adjusted to include reserves, franchise fees and management fees.  The rate is an average rate and incorporates hotels that were renovated as well as those hotels that are planned for renovation.

In the upscale and midscale categories there was not such a large divergence between 2001 and 2002 related to sale price per room. The average room price in the upscale category for 2002 was $104,500 and the average capitalization rate was 9.4%; in 2001 the average room price was $103,000 and the average capitalization rate was 10.63%.

In the midscale category in 2002 the average room price was $97,800 with the average capitalization rate being 11.30%; while in 2001 the average room price was $88,000 and the average capitalization rate was 11.32%

As in years past, CNL was a major purchaser of hotels. In 2002 CNL hotel purchases had an average per room purchase price of $136,000.  Included in the CNL purchases are the 630-room Doubletree Hotel Crystal City in Arlington, Virginia, the 350-room Residence Inn Sea World in Orlando, Florida and the high profile Hilton El Conquistador Golf & Tennis Resort in Tucson, Arizona.

Another major buyer in 2002 was the joint venture between Sunstone Hotels LLC and Westbrook Hotels LLC.  Together these two entities purchased a total of 7,254 rooms in 26 hotels. Chain affiliations in the Sunstone/Westbrook purchases included Marriott, Hilton, Hyatt, Doubletree, Embassy Suites, Radisson and Wyndham hotels.

Greater detail on the major transactions that occurred in 2002 can be obtained by subscribing to the HVS Hotel Transactions Survey.  The Survey has detailed information on gaming transactions, portfolios and individual hotel sales as well as featuring a complete listing of all the major transactions with date of sale, purchase price, price per room, buyer and seller for each transaction.

The HVS Research Department is available for individual hotel searches.  HVS Research currently publishes hotel transactions information on a quarterly and annual basis. Subscribers will be able to purchase information on hotel sales from $3 million and greater.  Also, planned for this year is the HVS CapRate Report, which will be published at year end.

For further information regarding HVS Research Services and Publications please contact Toni Viens, Director of HVS Research in Orlando at 407.566.1846 or tviens@hvsinternational.com.

The cost to order the 2002 Hotel Transactions Survey is $400. This includes the full report for 2002 and the 2003 quarterlies for spring, summer, and fall, as well as the year-end sales transactions for 2003.   To order the Survey directly, contact Joan Raffetto in New York at 516.248.8828 extension 231 or jraffetto@hvsinternational.com 

Antonia G. Viens
Director
HVS Research
1034 Waterside Drive
Celebration, FL  34747 USA
Direct Line: 1-407.566.1846
Fax: 1-407.566.1847

Hilton International secures future in Beijing

Hilton International announced that it has secured an extension of the Hilton Beijing's management contract for a further 10-year period.

The existing contract was due for renewal between Hilton International (HI) and Oriental Arts Building Company Limited (OAB), which is a sino-foreign joint venture of China Travel Service (Holdings) Corporation of China and Chinese Estates Holdings Limited of Hong Kong, in the end of the year. However, both parties are eager to move forward ahead of the forthcoming hotel renovation, planned to begin later this year, encompassing guestrooms, restaurants, banquet facilities and public areas.

David Michels, Chief Executive, Hilton Group plc, said: “The extension of our management agreement underlines the quality of our partnership with OAB and the long-term commitment that both parties have in developing the full potential of the Hilton Beijing. This reflects positively on the brand value of Hilton International and the standing of its cutting edge management systems and worldwide reservation and sales network.”

Mr. Fang, OAB Chairman, said "We are very pleased with the management expertise demonstrated by Hilton International over the past 10 years and the way in which they have strengthened the hotel's market position over the past couple of years despite the opening of a number of additional new five-star hotels in the city. We look forward to the next 10 years with great expectations and are certain that the business relationship between both parties will be further strengthened".

Hilton International is committed to global expansion and to bringing the world's most powerful hotel brand to key cities in the People’s Republic of China. It already operates five hotels in the country -- located in Beijing, Chongqing, Dalian, Nanjing and Shanghai

Iraq war and Sars take toll of Raffles

The Times -  Raffles Holdings, the company that owns the eponymous hotel famous for the Singapore sling, admitted yesterday that the Iraq war and the severe acute respiratory syndrome (Sars) outbreak had taken their toll of its first-quarter results and could have an even worse impact on second-quarter figures.

Profits for the company, which is the hotel arm of CapitaLand, the Singaporean property group, fell from S$ 4.3 million (Pounds 1.5 million) to S$ 141,000 in the first three months of the year, although the 2002 performance was boosted by a large write-back of provisions.

The group, which acquired the Swissotel chain two years ago, said turnover had risen just 2 per cent to S$ 94.62 million, while earnings before interest, tax, depreciation and amortisation grew slightly to S$ 19.8 million as an improvementin its commercial investments partially offset weakness in its hotel operation.

Raffles, which manages ten hotels in Asia, 14 in Europe, including Brown's and The Howard in London, and seven in the Americas, said that operating conditions remained difficult.

"The group expects second-quarter 2003 to be significantly affected by the effects of the Iraq war and Sars," it said.

Raffles had previously forecast a flat 2003 performance against the same period in 2002, but is now predicting a decline.

The Singapore Government revealed yesterday that visitor arrivals dropped by 15 per cent in March and 61 per cent in the first 13 days of April, causing average hotel occupancy rates to fall dramatically.

Downturn in Thai Hotel Industry Could Force Mass Layoffs

Bangkok Post  -  The troubled Thai hotel industry would have to lay off a significant number of its employees if the financial woes triggered by the Sars epidemic are not resolved in the next three to four months, an industry executive has warned.

Prakit Chinamornpong, secretary-general of the 400-member Thai Hotels Association (THA), said "quite a few" hotel jobs would be axed as a result of the downturn caused by travel fears.

He said the growing alarm of the Severe Acute Respiratory Syndrome had caused significant damage to the hotel industry, with occupancy rates dropping to a mere 30-40 percent.

Some THA hotel members were now encouraging their staff to "take vacations" while taking extra steps to save electricity and water, he said. "Some hotels now turn off the lights on some unoccupied floors."

A staff member of a large hotel chain said he was encouraged by the management to take leave without pay for the summer.

Despite the end of the war in Iraq, Mr Prakit said there was no sign that the industry would benefit substantially, but it could rebound by the end of the year if Sars was contained and there were no post-war terrorist acts.

To stay afloat, hotels and travel agents are focussing on local tourists by launching several "irresistible" campaigns.

Top hotels including The Oriental Bangkok and the Grand Hyatt Erawan have introduced special packages while more than 100 hotels nationwide are offering record-low room rates.

Charoen Wangananont, president of the Association of Domestic Travel which organised the programme, called the campaign the "second bullet" after the launch of 500-baht-per-night room rates at 10 hotels, including the Rama Gardens in Bangkok and the Imperial Phu Kaew in Phetchabun, last week to spur the domestic tourism.

He said the promotion offered a 30 percent discount from the rates offered to travel agents, making them the lowest ever given to the public. The campaign will run from May 15 to Oct 31.

Participating hotels include the Phuket Arcadia, Imperial Mae Ping, and Krabi Meritime.

"This is the worst time for the hotel industry ever. Never have such offers been made," Mr Charoen said.

However, people interested in the offers have to make reservations at the Consumer Fair, to be held from May 1-4. All Thai airlines will also offer attractive fares at the event.

In addition to more modest hotels upcountry, world-class properties such as The Oriental have joined the fray. Its "One night at The Oriental" package, from now until September, is aimed at local residents and costs 9,999 baht net for single occupancy and 12,999 baht net for double occupancy. It includes a superior room for one night with breakfast, one set dinner for two at Lord Jim's or the Barbecue terrace, one Oriental Massage for two and welcome amenities.

Meanwhile, the Grand Hyatt Erawan is wooing the local market with its "Hyattractions" campaign until June 30. The programme was unprecedented for the five-star hotel, said Pajaree Bhatayanond, the hotel's marketing communications manager.

She said that for every 1,200 baht spent at any of the Grand Hyatt Erawan's restaurants and bars, customers would receive one certificate. Ten certificates can be exchanged for a two-night stay at the hotel.

The combined effect of the war and the Sars will affect hotels' balance sheets.

William Heinecke, chairman of SET-listed Royal Garden Resort Plc, said he expected the Sars impact would be short-lived and the industry should recover soon. Besides, he said, investors in the hotel's shares were looking for a long-term investment.

Thanomsri Fongarunrung, an analyst at Merrill Lynch, said the drop in occupancy rates would surely affect the performances of listed hotels. However, she was not sure whether it would significantly affect share prices, as hotel shares were not very liquid.

In another development, the Tourism Authority of Thailand will launch a tourism festival called the "Thaksin Travel Mart" in Krabi to stimulate the market in the South.

Some 160 tourism and hotel operators from 14 southern provinces will participate, offering services to more than 500 tour agents nationwide.

In related news, AFP reported the government had shortened an obligatory home quarantine for residents returning from Sars-affected countries from 14 days to 10, but maintained other emergency measures to contain the virus.

Hotels Manage, Despite Slump

New York Times  -  The same forces that are mauling the airlines are taking a heavy toll on the hotel business.

"We're seeing an unprecedented drop in demand," said Paul Whetsell, chief executive of Interstate Hotels and Resorts, the largest independent operator of hotels in the United States and Canada "This is the worst I've seen in 30 years."

 There is a big difference between the industries, though: while the sour economy, the terrorist attacks, the war in Iraq and now severe acute respiratory syndrome, or SARS, have pushed some airlines to the brink of insolvency, hotels are, comparatively, thriving.

"Despite the fact that the business has never been in worse shape and the demand for hotels rooms has never been weaker, the industry is surprisingly financially healthy," said Michael J. Rietbrock, head of lodging at Smith Barney. PricewaterhouseCoopers projects the sector's earnings this year at $15 billion, down from $16.1 billion in 2002 but still a startling performance when measured against the airlines' expected losses of $10 billion and the hotels' own losses of $5.7 billion in 1991, in the aftermath of the Persian Gulf war.

Business travelers do not have to look far to discover the reasons for that success: an almost obsessive drive to slash costs and an equally grim determination to stop self-destructive price-cutting.

Consider Interstate Hotels and Resorts, which manages nearly 400 hotels including Hiltons, Westins, Sheratons and Hampton Inns. Mr. Whetsell says his hotels have experienced a steady erosion in room rates over the last three years and are often just two-thirds full.

In response, Mr. Whetsell says, the company has eliminated 15 percent of 38,500 jobs (many of them part time) and has trained many of the remaining employees to handle multiple tasks. For example, a front- desk person may also take phone reservations and an administrative person in the back office will help check people in during busy times. On a recent Friday at the Hilton Embassy Row in Washington, no one was working at the bar in the lobby, even though several potential customers were sitting nearby.

Mr. Whetsell, who acquired Interstate Hotels last summer and merged it with MeriStar Hotels and Resorts to add more than 100 properties to its management roster, has also reduced staff — and thus costs — by centralizing reservations and purchasing for all hotels.

Such belt-tightening has been so effective that last year, the industry's break-even occupancy rate dropped to 47 percent, down from 60 percent in the mid-1990's, a PricewaterhouseCoopers study found.

But what is effective for the hotels can be annoying to their guests. "I'm paying the same rates as last year, but I'm getting much less service in restaurants and at the front desk," said Roger Wright, an automobile insurance executive who lives in Greensboro, N.C., and who travels on business every week. "I'm a platinum member at Marriott and a diamond member at Hilton. I don't like having to wait a long time to check in."

Likewise, Edward Reagan, a consultant in suburban Philadelphia who stays in hotels 150 to 170 nights a year, has noticed fewer waiters in restaurants, fewer bellhops in lobbies and even torn curtains in the rooms. Still, he is generally pleased with the service he gets, and says Marriott, where he is an elite member, has been responsive to complaints. "They have to be," he said. "Customers vote with their feet." A silver lining, he says, is that it is easier than before to be upgraded to a suite.

Whatever the grumbling about service cutbacks, hotels have little choice. They cannot raise rates. And the war was almost the last straw in a tough year, forcing some hotel companies to abandon their already modest earnings forecasts for this year. Last month, Starwood Hotels and Resorts withdrew its earnings forecast for the first quarter and for 2003, and Hilton Hotels cut its estimated earnings for the same periods. Both blamed the war.

Nobody foresees an early rebound. The number of business trips this spring is expected to fall 2.5 percent from the spring of 2002 and 13 percent from spring 2001, according to the Travel Industry Association. Occupancies have fallen to an average 60 percent from 63 percent last year, and the average room rate to $83, from $84 in 2002, Smith Travel Research says. And hotel loan delinquencies are at their highest level since the early 1990's, according to PKF Consulting.

In response, hotels are aiming at new markets. Interstate, for example, is going after more group and government business, like trade associations and the military, though they typically pay lower rates. It is even offering local residents discount cards at its restaurants.

More important, hotels are acting to stop the widespread discounting of the last three years. "Hotels are realizing that discounting doesn't stimulate demand," said Bjorn Hanson, hotel analyst at PricewaterhouseCoopers. "It just shifts market share around."

Hotels are also trying to rein in the sale of their rooms at steep reductions on Web sites like Hotels .com and Priceline.com. "We've seen a tremendous change in the number of ways hotel rooms are sold, and with demand so low, hotels have lost their pricing power," Mr. Whetsell said. To fight back, some companies, including Hilton, Mariott and Hyatt, , banded together to start Travelweb.com, their own Web site aimed at pulling business back from online rivals.

Cendant, the largest franchiser of hotels in the United States with more than 6,000 economy and mid-level hotels, including Days Inn, Ramada, Howard Johnson and Super 8, will hold revenue management classes in 45 cities later this month to teach its franchise hotel employees how to better manage room rates. "We don't own or operate any hotels, but we have a vested interest in franchisees doing well," said Steve Rudintsky, Cendant's hotel group president, noting that Cendant earns an average of 4 percent for every room rented.

Hotels are also cutting back on property improvement projects to save money. Nationally, hotels will reduce capital spending for renovations and upgrades this year to about 2.9 percent of revenues, Mr. Hanson of PricewaterhouseCoopers said, down from 3 percent to 3.75 percent before 2001.

Accor, which operates the Sofitel, Novotel, Motel 6 and Red Roof Inn chains, says it has postponed the planned construction of Sofitel hotels in San Francisco and Dallas. Accor also says it has frozen hiring, reduced jobs by attrition and plans to hire fewer summer employees.

Hotel companies say they are being careful not to cut too drastically. "We are more focused on being in good shape for when the market rebounds," said Georges LeMener, chief executive of Accor North America. "We don't want to do something extreme now that will hurt us when there is a rebound."

Accor is keeping its marketing budget steady and is going ahead with plans to build a $23 million headquarters and training center in Dallas. And, last week, Cendant sent 100 of its corporate employees out in teams to conduct half-day seminars on improving customer service at 5,000 of its franchise hotels. "Good isn't really good enough anymore," Mr. Rudintsky said.

At Interstate, Mr. Whetsell says he is careful to walk a fine line between cost-cutting and keeping customers happy. He says Interstate's guest satisfaction scores, measured in monthly surveys by the brands it operates hotels for, have actually risen in the last six month despite the cutbacks. "People will not tolerate bad service today," he said. "We don't want our customers to walk away from us; there are so few of them."

Carlson Hotels Worldwide Announces Plans To Expand To More Than 100 Locations In Canada 

Carlson Hotels Worldwide, a major global hotel organization, announced an aggressive plan to grow the company's five hotel brands in Canada to more than 100 hotel locations during the next five years. Samuel Winterbottom, executive vice president of development for Carlson Hotels Worldwide, is leading the development initiative that will expand the presence in Canada for all of the company's hotel brands: Regent International Hotels, Radisson Hotels & Resorts, Park Plaza hotels, Country Inns & Suites By Carlson and Park Inn hotels.


"We see significant opportunity for growing our brands in Canada to serve both business and leisure travelers," said Winterbottom. "Each of our brands offers a distinctive value proposition to customers and proven business building systems for owners and investors by providing a complete range of hotel products and services including luxury, full-service and limited service."

The company currently has 32 hotels operating in Canada under three brands: Radisson Hotels & Resorts, Country Inns & Suites By Carlson and Park Plaza hotels. The five-year development plan calls for 75 more hotels, including the addition of two brands not currently represented in Canada: Regent International Hotels and Park Inn. Globally, Carlson Hotels Worldwide includes 861 hotels in 66 countries.

Radisson Hotel & Resorts (www.radisson.com and www.radissoncanada.com): As the Carlson hotel brand with the largest presence in Canada with 22 current locations, future development plans for Radisson include cities such as Edmonton, Fort McMurray and Banff, Alberta; Kamloops and Nanaimo, British Columbia; plus expanded presence is planned for Montreal, Quebec City, Toronto, and Vancouver. Radisson is one of the world's leading upscale, full-service hotel companies. The brand derives its name from the famous French Canadian explorer, Pierre Esprit Radisson.

Country Inn & Suites By Carlson (www.countryinn.com): One of the fastest growing, mid-tier lodging chains, Country Inn & Suites By Carlson is expected to build on its current nine properties in Canada by adding hotels in Edmonton; Halifax; Vancouver; Victoria; Thunder Bay; and Montreal; plus expand its current presence in Calgary; Ottawa; Toronto; Winnipeg; and Saint John. Country Inns & Suites received the highest ranking for guest satisfaction among mid-priced hotel chains with limited service in J.D. Power and Associates 2002 North American Hotel Guest Satisfaction StudySM.

Park Plaza (www.parkplaza.com): Park Plaza hotels, positioned in North America in the mid-scale to upscale segment of the full-service hotel category, has 34 hotels globally--including a hotel currently open at Vancouver airport. Park Plaza is expected to build on its presence in Canada by focusing on cities such as Edmonton; Banff; Halifax; Montreal; Quebec City; and further expansion in Vancouver.

The company's development plans also include introducing two additional hotel brands to Canada, Regent International Hotels and Park Inn hotels.

Regent International Hotels (www.regenthotels.com): One of the most respected brands in the luxury segment of the lodging industry, Regent will focus on development in cities such as Toronto, Montreal, and Vancouver.

Park Inn (www.parkinns.com): Positioned within the economy to mid-scale segment of the limited service hotel category in North America, Park Inn has its sights on several cities, including Thunder Bay; Halifax; Edmonton; Regina; Saskatoon; Winnipeg; and Kamloops.

Reach of Carlson Organization Brings Strength to Carlson Hotel Brands - The strength of Carlson Hotels Worldwide is found in its award-winning business delivery technology, which reaches consumers globally through the Internet and travel professionals in 125 countries, providing instantaneous, convenient service. The "Curtis-C" reservation system is accessible through airline reservations systems worldwide, toll-free numbers and the Internet. The hotel brands' award-winning Web sites offer an enhanced reservations process and online personalization features to help more Web users shop for a hotel, make or change a reservation or plan an event at any Carlson hotel worldwide. Hotels can offer narrative information, photos, virtual tours and streaming video of their properties, in addition to local attractions, weather, maps and driving directions.

The brands of Carlson Hotels Worldwide offer the hotel industry's only patented online relationship program for travel agents called "Look To Book," which allows them to automatically earn points toward valuable merchandise and incentive awards in return for booking Carlson hotels. This exclusive, highly successful program includes travel agents in 106 countries worldwide. It is one of the company's showcase programs for providing business support to its hotels.

For consumers, the Gold Points Reward Network allows members to earn points based on dollars spent or nights stayed at any of Carlson Hospitality's participating hotel, resort and restaurant locations in the Americas, Europe, the Middle East, Africa and at additional partner locations such as Thrifty Car RentalÒ, Radisson Seven Seas CruisesÒ, and Carlson Wagonlit Travel Ò, just to name a few. Members earn even more points when they visit www.goldpointscanada.com and shop the dozens of featured online retailers. Gold Points can be redeemed for future hotel stays, restaurant dining, exciting travel offers and hundreds of quality, brand name products.

Carlson Hospitality Worldwide is one of the major operating groups of Carlson Companies, Inc., a global leader in providing corporate solutions and consumer services in the marketing, travel and hospitality industries. In addition to having an already strong hotel presence in Canada, the Carlson reach can be found in other divisions such as Carlson Wagonlit Travel and Carlson Marketing Group.

Carlson Wagonlit Travel Canada (www.carlsonwagonlit.ca) is the second largest travel company in Canada with 850 employees serving both corporate and leisure customers in 300 wholly-owned and associate offices across the country. Major clients for CWT Canada include: 3M Canada Inc., Alcatel, BP Energy, Bristol Myers Squibb, Canada Post, Clarica, Dupont Canada Inc, General Electric, General Motors of Canada Ltd., Honeywell Ltd., Nortel Networks, Oracle, UBS Bank Canada, Royal Bank of Canada, Toronto Dominion Bank, Ontario Government. Carlson Hotels Worldwide is a preferred hotel supplier for Carlson Wagonlit Travel.

In Canada, Carlson Marketing Group is ranked by Report on Business as the fifth largest marketing communications agency (www.carlsoncanada.com). Carlson Marketing Group, a relationship marketing company, helps global Fortune 1000 clients solve their critical business issues and increase return on investment (ROI) by designing marketing strategies that build better relationships with the audiences that clients depend on for their success: employees, channel partners, and consumers. Marketing Magazine ranks CMG Canada as #1 in strategic consulting, direct marketing and market research. More than 450 people are employed in full service offices in Toronto and Montreal. The client list includes leaders in automotive, financials services, retail, pharmaceuticals and consumer products.