BIL clinches Thistle Hotels

Singapore investment group BIL International Ltd. said Thursday, May 1, it has received sufficient acceptances of its offer for Britain's Thistle Hotels plc to force the hostile bid through.

BIL, which already owns 45.6% of Thistle, said it has received acceptances on an additional 7.1% of the hotel operator's shares, giving it of a 52.7% block of shares.

Following an initially lukewarm response from Thistle shareholders, BIL Wednesday raised its offer for the hotelier by 15 pence to 130 pence per share. The increased offer values London-based Thistle at £627 million ($1 billion).

Thistle's independent directors, however, argue that BIL's offer is opportunistic and substantially undervalues the hotel group. The 130 pence per share offer is far below a net asset value per share for Thistle that the independent directors say is over 200 pence per share. The BIL offer is also well short of the 170 pence per share at which BIL sold Thistle in an initial public offering in 1996.

"Thistle shareholders clearly recognize the merit of the certain value represented by our fully priced all-cash offer, especially when viewed against Thistle's historic underperformance and poor future outlook in challenging markets," BIL chief executive Arun Amarsi said in a statement. 

Thistle set for hotels sell-off

SIX luxury landmark London hotels, worth up to £700m, could come on to the market this summer after owner Thistle Hotels was sold today for £627m. The London hotels - including the Royal Horseguards in Whitehall - were put up for sale as part of a defence strategy against a 130p-per-share bid for the group from Singapore-based shareholder BIL, which went unconditional today.

Potential buyers for the six hotels include Blackstone, the private equity group that owns the Savoy. Thistle's 18 hotels give a net asset value per share of 211p.

The group is due to delist and go private.  

Has Guy Hands lost the Midas touch?

Le Méridien setback has tarnished his image, but former golden boy is philosophic

The Independent  -  For years he was the City's golden boy, the man with the Midas touch. Every deal was a winner, every year saw another multimillion pound pay packet. Guy Hands was the whizz-kid whose use of clever financial engineering at Nomura International helped the Japanese bank snap up lowly rated assets including the William Hill betting chain and Annington Homes, the owner of thousands of former Ministry of Defence houses.

A year ago he branched out on his own, setting up Terra Firma Capital Partners. This included a deal to manage the transactions he had undertaken at Nomura while also seeking to raise fresh funds for new ventures. By then even his wife had got in on the act. Julia Hands had become chairman and chief executive of Hand Picked Hotels, a group of 15 country house hotels bought with the couple's own money.

Now though a question is being asked that would have been unthinkable only a few years ago. Has Guy Hands lost that Midas touch?

The reason is the financial crisis threatening to engulf Le Méridien, the upmarket hotels chain for which Mr Hands paid £1.9bn two years ago when still at Nomura. The 140-strong group, which includes The Grosvenor House and The Waldorf in central London, has been hit hard by the international downturn caused by 11 September, the war with Iraq and now the severe acute respiratory syndrome (Sars) virus. Nomura has now written off the £213m it invested while the stakes taken by Alchemy Partners, Royal Bank of Scotland and Abbey National have also been written down to zero.

It isn't just Méridien that is giving Mr Hands a headache. The downturn in equity markets has forced Terra Firma to cut its fundraising from €3bn (£2.1bn) to €2bn. Hand Picked Hotels has been involved in a bust-up with some of its timeshare customers. And a Hands-backed venture to supply internet services to pubs collapsed earlier this year.

And just as Mr Hands' star appears to fade, so that of rival financier Robin Saunders at WestLB continues to rise. While Mr Hands has barely struck a deal in the past year, the glamorous Ms Saunders has become the most talked about private equity operator in the City with a high-profile deal on Wembley Stadium and an indicative bid for the utility operator AWG.

But if Mr Hands is irritated he doesn't show it. His advisers point out than in the past 12 months, Terra Firma's portfolio has lost only 2 per cent of its value. It is now worth just over £2bn with many investments seeing rises of about 10 per cent in that year. Méridien may have been a disaster but Mr Hands made a 528 per cent total return on Nomura's investment in the Angel Trains leasing business, turning a £127m stake into £578m. Annington Homes has been another success story with Nomura making a multiple of its original stake.

Mr Hands' average annual return on investments he has sold out of completely is 59 per cent, though this figure is only to April 2002. Not bad for someone supposedly losing their touch.

Mr Hands is certainly philosophical about his perceived "plight". He says: "I think Warren Buffet had it about right when he said that anyone who believes they can take risk and make money without losing any is either a charlatan or a fool."

He hints that his first major failure may turn out to be no bad thing. "Some investors have found it a problem that the track record was too perfect. And you could say that you only find out how good a group is when they have to manage something difficult."

He adds: "Would I prefer it (the failure) to have been something a little quieter and smaller than Méridien? The answer is yes. But Méridien is a high-profile brand."

The Méridien business has been devastated by the slump in international business travel. Room occupancy levels stand at 55 per cent compared with more than 70 per cent a year ago. Before the Sars epidemic the group was on track to make pre-interest profits of £65m in the year to June but that figure will now be significantly lower. It compares with profits of £160m when Nomura bought it. After interest payments on debts of £1bn, the group may record a loss this year.

What will Mr Hands do? "We're working with the company to develop a proposal attractive enough to get new equity investors in," he says. Reports suggest £400m might be needed but Mr Hands will not confirm this. He does admit that existing investors are unlikely to stump up more cash unless the banks agree to share more of the pain.

Mr Hands says he does not want to sell any of the hotels. "Every time you do that you destroy a little bit of the brand," he explains. Sales and leasebacks are also unlikely, he says.

The Méridien deal was clearly dogged by bad luck, being completed just months before 11 September. But it could also be argued that the deal saw Mr Hands reach further than he had done previously. Most of Nomura's previous deals had been domestic enterprises in "old economy" sectors such as pubs, property and utilities.

Méridien, by contrast, was an international business competing with other global hotel brands. It therefore carried a greater degree of risk. The deal also included a wide range of other investors, making decision-making more difficult. But Mr Hands says he "ticked all the boxes" with the deal in order to ensure it was successful, buying a global brand and bringing in a top manager (Juergen Bartels) to run it. Mr Bartels also invested £10m of his own money. The decision to bring in other investors was a way of spreading the risk, Mr Hands says.

Hand Picked Hotels may also have suffered in the downturn but Mr Hands claims he doesn't know how it's doing. "You'd have to ask my wife about that," he says. "We have a simple rule at home in that I don't ask her about her businesses and she doesn't ask me about mine. Otherwise we'd never do anything else. We have managed to have four kids along the way."

Mr Hands is even relaxed enough to pay a compliment to Robin Saunders, who, some would say, has assumed his mantle as the most high profile banker around. "I think it's a great advantage not being linked to everything," he says. "Robin's also a great deal better looking than me."

SARS scare: Hong Kong hotels hit hard

Anybody for a free ride in a Rolls-Royce? The Peninsula Hotel, long a haunt for the rich and famous, prides itself on a fleet of 13 Rollers used to pick them up at the airport or take them around Hong Kong.

But the Rolls-Royces aren't going much of anywhere these days, like the rest of Hong Kong's luxury hospitality industry that's been hit hard by the SARS crisis.

Occupancy rates at Hong Kong's five-star hotels have plunged to between 8 per cent and 10 per cent since the SARS outbreak, according to James Lu, executive director of the Hong Kong Hotels Association.

That's prompted the Peninsula to slash prices and to offer packages that come to around 3,300 Hong Kong dollars (US$423) for two nights, one-third off the regular rate even before you figure in the gratis Rolls-Royce rides - both ways - and other goodies.

But anybody seeking luxury at a discount might be disappointed if they thought they could hobnob with movie stars and tycoons on the cheap.

The Peninsula lobby was half deserted during one recent lunch hour and afternoon tea.

"The hotel used to be packed with people before the SARS outbreak, but now it's empty," said a frequent shopper to its high-end mall.

Hong Kong is reeling from SARS, which has infected nearly 1,600 people and killed at least 157, while bringing much economic activity to a halt in this fast-paced, high-priced hub of extravagance and glamour.

The rich may be immune to recessions, as the saying goes, but merchants who peddle high-priced good to those who can afford them in Hong Kong say they're being squeezed mercilessly by the crisis.

"It's a double hit," said Kate Kelly, spokesperson of the Hongkong and Shanghai Hotels Ltd., which owns the Peninsula. "On top of visitors not coming in, we are also seeing local residents not eating out as much".

Chan Shuk-fong, assistant executive director of the Federation of Hong Kong Hotel Owners, said occupancy rates at nearly all hotels have plunged to the single digits from the normal 80 per cent to 90 per cent for March and April.

"We're hugely disappointed," Chan said. "Now even mainland tourists are not coming. We'll have no customers".

Operators can't remember anything like the damage they're seeing now, with no end in sight.

Business was already being hit by an economic slowdown and the war in Iraq before SARS exploded as a local crisis that just got worse after the World Health Organization advised people early this month to stay away from Hong Kong.

Most posh hotels are ordering staff to take unpaid leave, saying they can come back when the customers do. If they do. (AP)

More discipline needed to control events: Carder

TravelWeeeklyEast.com   - The tourism industry needs to become stronger and more disciplined in every aspect if it is to control events and not allow events to control it, as is currently happening.

Vice president of marketing for Hyatt International, Grahame Carder, said current events such as the SARS crisis had resulted in “an element of confidence and trust vanishing from the excitement of travel”.

“Whether this issue will be addressed simply by advertising, I am not sure. The communication and cooperation required to get us out of this one will be in many ways unique. We will see unusual partnerships emerging in ways we have not seen before.”

In Hong Kong, where he said the impact has been very serious, far deeper and more drastic than elsewhere in Asia, the industry might see bilateral or trilateral efforts between hotel partners, travel agents and restaurants “working together in a much more visible way”.

“The area of leadership thus becomes very critical.

“The sense of challenge in this case might be too big for individual companies to see it out on their own. It’s got to take more cooperation and partnerships to make real progress.”

Carder said he hoped a “Hong Kong Inc” approach would be taken “to re-establish confidence and trust in Hong Kong as a destination. Maybe it will need to reassess some priorities and values”.

“We have a moral obligation to our customers to give them confidence and trust in our ethics of doing business. Nathan Road, for example, should be cleaned up. It’s criminal what’s been sanctioned.

“If it’s just an advertising campaign, Hong Kong would not have gotten the message.”

Two areas pose challenges however to the industry at large in managing itself with more discipline – the “incredible fragmentation” of the industry and the rapidity of changes and communication.

“Our industry is incredibly fragmented, which is both its greatest strength and greatest weakness. Some of the greatest success stories come from the smaller enterprises or units.” said Carder.

“If you are a bigger unit, like a destination, it is extremely difficult for the government and the tourism industry to work together, yet the role tourism can play in portraying a positive image of the country is so critical.”

He however points to success stories such as Bhutan, which has a strong policy of tourism management, Thailand which “has taken the bull by the horns” and Singapore where tourism is an integral part of the society and community.

Areas such as Kerala, meanwhile, has marketed itself so creatively that “it is helping the greater level of Indian tourism”.

“Destinations seem to do better when they keep it small and structured,” said Carder.

A key challenge facing marketers today is the rapidity in communications where slipped internal e-mails to the press, for instance, can hammer share prices

“This type of thing was not there 10 years ago,” he said. “It adds a complexity to the marketing job but to manage complexity, you need to break things down simplistically. You need to be more disciplined in keeping your messages simple.”

Despite the current challenges, Carder believes the longterm fundamentals of Asia remain very good. “We need to be thankful for a good run for the past 10 to 12 years and there will be further good times. Let’s manage ourselves strategically through this.”

Singapore Visitor Arrivals from 15 - 21 April, 2003 down 71%

AsiaTravelTips.com  -  During the period 15-21 April, Singapore visitor arrivals recorded 42,300, a decline of 71% over the same period last year. Countries like Thailand, Japan, USA, Malaysia and P R China declined by more than 75% in arrivals.

Singapore Tourism Board said that countries' travel advisories or alerts and the cancellation of events contributed to the decline in visitor arrivals (65% or 285,000) over the period of 1-21 April. During this period, Thailand, Hong Kong SAR, USA, Japan and Malaysia recorded the highest percentage decline. 

New Zealand: The conclusion of the cup

After just over five months, the America’s Cup drew to a close on the 5th March 2003, with the defeat of Team New Zealand by the Swiss Alinghi Team. Whilst New Zealand may not have had success on the seas this time around, not all was lost, with hoteliers reporting strong performance during this period.

Over the last six months (October 2002 to March 2003), New Zealand has seen revPAR (revenue per available room) increase by 17 percent to NZ$104 compared to the same period the prior year. All markets, bar one, tracked on the New Zealand edition of the HotelBenchmark Survey by Deloitte & Touche, reported revPAR growth during this period, with all twelve markets managing to increase their average room rate (ARR). Stronger growth was reported on the North Island, bolstered by the performance of Auckland - the host city of the America’s Cup. The North Island saw revPAR increase by 20 percent to NZ$109, compared to a nine percent increase on the South Island to NZ$95 compared to the same period the prior year.

The last six months have seen Auckland outshine the performance of any other market tracked on the survey - overall the city has seen revPAR grow by 29 percent to reach NZ$118. Hotel performance was particularly strong in February, when the majority of final races were held. During this time revPAR reached NZ$135 - the highest level the market has achieved in the history of the survey. Wellington on the other hand, was the only market to report a revPAR decline over the last six months, despite a marginal growth in ARR this was offset entirely by falling occupancy levels. Although Wellington recorded the second highest ARR of all the cities tracked (NZ$140) it also reported the lowest occupancy levels of 74 percent.

Preliminary March 2003 data shows that despite a marginal fall in occupancy (one percent), overall revPAR across New Zealand grew by six percent to NZ$108 compared to March 2002. Whilst Auckland continued to report positive growth, all other cities (Christchurch, Queenstown, Rotorua and Wellington) all reported revPAR declines, driven in every case (except Wellington) solely by falling occupancy levels.

Latest figures from Statistics New Zealand show an overall decline in overseas visitor arrivals to the country in March 2003 of four percent compared to March 2002. Although some visitors may have been deterred from travelling in March on account of the situation with Iraq and the uncertainly surrounding SARS (severe acute respiratory syndrome), the impact of Easter, which fell last year in March, should not be forgotten. Overall however, overseas visitor arrivals to New Zealand for the 12 months to March 2003 showed a six percent increase on the prior period.

Notes:

all analysis in local currency (New Zealand dollars).

The New Zealand edition of the HotelBenchmark Survey tracks the performance of 10,000 rooms across the country on a monthly basis. For more information please contact pmadhok@deloitte.co.uk..

Internet sales estimated at 9% of German tourism turnover

FVW  -  Online distribution could have reached as much as 9% of total German leisure travel sales, according to a new survey. Munich-based Ulysses Management claimed that Internet sales soared to EUR 3 billion last year from EUR 2.1 billion in 2001.

This would represent 9% of a total market of some EUR 33.1 billion. Traditional sales outlets, mostly travel agencies, suffered last year, leaving the overall market down EUR 1.5 billion, the company?s survey of 277 decision-makers found. Ulysses defined the online market as revenues generated through the Internet by tour operators, airlines, railways, car rental firms and hotels. In 2003, online sales could rise to EUR 4 billion out of a total market of EUR 33.2 billion and then grow to EUR 5 billion out of EUR 33.5 billion in 2004, the company forecast.

New hotels add to accommodation options at Dubai World Trade Centre

AME-Info  -  With two new Accor Group hotels set to open their doors for business in mid-July as part of the Dubai World Trade Centre (DWTC) complex, the range of accommodation options available in and around the DWTC's Dubai International Convention Centre (DICC) is set to increase significantly.

“With the DWTC, the most sought after conference and exhibition venue in the region, the need to provide ideally located accommodation options within the complex is a priority. With the Novotel World Trade Centre and Ibis World Trade Centre hotels scheduled to open soon, that need will be more than fulfilled,” said DWTC Director General, Mubarak bin Fahad.

“This development further strengthens DWTC's standing as a one-stop shop for organisers of meetings, incentives, conferences, exhibitions, seminars and similar events whether regional or international in scope,” added Mr. bin Fahad. “The two new properties in combination with the Dubai International Hotel Apartments, which offers 492 fully-furnished apartments in one, two or three bedroom configurations, will provide organisers, visitors and participants with a wide selection of on-site accommodation,” remarked Mr. bin Fahad.

The 412-room Novotel World Trade Centre hotel is slotted to fill a gap that was present in the upper mid-scale range. The hotel, which is connected directly to the DWTC's Exhibition and Convention Centres, features comfortable and tastefully-decorated rooms, eight soundproof meeting rooms equipped with the latest technical equipment, a state of the art health club and a range of dining and leisure options.

The 210-room Ibis World Trade Centre hotel, which is also connected to the Exhibition and Convention Centre concourse, presents a new concept in the region, as it is the first internationally affiliated business economy hotel to be opened in the Middle East providing top quality accommodation at a fair price.

“ACCOR is proud to be the leader in introducing new accommodation concepts in the area. The expertise of the ACCOR Hotels World Trade Centre's team, coupled with the ideal location both properties enjoy, makes a perfect mix for offering international standard accommodation at competitive prices to both the business and leisure travellers,” concluded Mr. Ignace Bauwens, General Manager, ACCOR Hotels World Trade Centre – Dubai.

Small hotels bear the brunt of Bali discounting

Early signs are emerging that people may be overcoming their fears of SARS and are ready to travel to specific destinations again.

“This week I have had more bookings than cancellations, so I am hopeful that people are weighing up the risks and deciding that places such as Bali are safe from SARS,” said Michel Vivier, general manager of the four-star Novotel Benoa and Accor Asia/Pacific regional GM operations, East Indonesia.

New and reconfirmed bookings were coming mainly from intra-Asia and from Europe, he said.

The Novotel is typical of many Bali properties which have a strong Australian clientele. Prior to the Kuta bombings the Novotel sold, on average, 50 rooms a week in Australia. After October 12, that figure dropped to five rooms a week and has stayed that way in the wake of Australian travel advisories against Indonesia, the war in Iraq and SARS.

“I am hopeful that from the Australian market we will get back in July to about 30 percent of what we had at the same time last year; and by November I expect things to be back to normal,” said Vivier .

Novotel has managed to keep all its Balinese staff employed and has used the downturn to renovate. In April, it was running about 50 percent occupancy, still well below the heady days of July and August last year when occupancy peaked at 95 percent.

Vivier suggested it is the smaller hotels who are suffering most. “People only talk about the five stars, not the two stars, whose business has gone. The five stars have been selling at three star prices, and the four stars have been selling at two star prices. So for the two stars there is nowhere to go. They cannot survive.”

Most of the special deals placed in the market to restore confidence in Bali will be dropped in July but Vivier is confident that rate rebuilding can be achieved painlessly.

“Bali is too good a destination for it to stay down for long,” he said.

Ian Barrow, general manager of the Sanur Paradise Plaza Hotel and Suites, (formerly the Radisson Bali) said he was encouraged by projections indicating that occupancies would climb back to between 60-70 percent in July.

He said the hotel’s meetings business had suffered when a large international conference scheduled for May had postponed, citing SARS.

“Since October 12, everything has been last minute, including the business from Europe. We have to be flexible, that’s the only way to survive in these difficult times,” Barrow said.