Bullish Whitbread to step up expansion

The Independent  -   Whitbread said yesterday it would step up the pace of rolling out brands such as Travel Inn and David Lloyd Leisure as it unveiled a strong rise in underlying profits.

The leisure group rose above the current war-inspired gloom in the hotels market to paint a buoyant picture of recent trading across most of its businesses. Marriott, its four-star hotels group, was the one exception with a 4 per cent decline in like-for-like sales in the past two months.

David Thomas, the chief executive, said: "It hasn't been the best environment to trade in, with the build up to war in Iraq, the war itself and the occasional Sars [severe acute respiratory syndrome] threat thrown in. [During the war] there was almost a cessation of business activity and inbound US tourism – the only people flying West to East had uniforms on."

Mr Thomas said the group's improved performance during the two years since selling off its brewing and pubs businesses had given it the confidence to expand most of its brands by "50 per cent over the medium term". He added: "There's a track record now, which is providing us with the confidence to put our foot down on the accelerator to grow brands like Brewsters, Travel Inn, Costa Coffee and David Lloyd Leisure even more rapidly."

Asked whether Whitbread was looking at the parcel of some 1,500 managed pubs put up for sale by Scottish & Newcastle earlier this week, he said: "Organic growth is the name of the name, if we can pick up assets at the right price that drive shareholder value, then why not? The challenge is for us to cherry pick at the right price but that's not something we need to do."

Whitbread plans to add up to 2,000 new rooms a year to Travel Inn, its budget hotel chain; a 590-room outlet opened at London's Heathrow airport this week. The chain was one of the group's star-performing brands last year, with like-for-like sales rising 6 per cent.

In the year to 1 March, Whitbread reported a 14 per cent rise in underlying profits to £214m on sales that fell from £2bn to £1.79bn. Pre-tax profits were £203m against £7m a year earlier (reflecting a hefty write-down at its Pelican restaurant group).

The group said it was close to exchanging contracts on 34 of the 51 Beefeater sites it was seeking to sell. Mr Thomas said a new format for the tired restaurant brand was "exceeding expectations" at six trial sites. He plans to revamp the remaining 150-odd units over the next few years – largely by changing the décor and improving the traditional steak-based menu as well as the bar area. "It's [the décor] no longer black, white and red, so people don't just think 'God, I was here 20 years ago'," Mr Thomas said.

Czech Hoteliers swim upstream  

The Prague Tribune  -  While the Czech Republic is struggling with a slump in foreign visitors, accommodation capacities are still growing. There are still some niches in the market, but in the tough fight for clients, hoteliers are finding an improved promotional campaign is key.

AT THE END of January, the World Tourism Organization (WTO), announced the results of the travel industry for 2002. Forecasts of a crisis didn't materialize as the number of international border arrivals recorded a growth of 3.1% compared with 2001, with central and eastern Europe seeing an increase of 3.9%. However, this growth did not relate to all regions, as Poland and the Czech Republic recorded a decline of over 5%. According to the Czech Travel & Tourism Center, 4.6 million foreign tourists visited the Czech Republic last year, which is 400,000 less than in 2001. Another drop is expected for this year. There are differing opinions as to why less tourists are coming to the Czech Republic - some insist that it is a consequence of such global problems as the economic recession and the political situation in the Middle East (which is affecting all destinations, not only this country), while others say that Prague, and thus the whole country, undervalued its promotion abroad and lacks any coherent marketing strategy for the future.

Not resting on any laurels

After the iron curtain fell, the Czech Republic became the gateway to an unknown and mysterious eastern Europe, which was seen as a chance to taste forbidden fruit without having to exert much effort. However, after 13 years this euphoria has faded away and it has become necessary to do something to promote the country. "Prague has not done anything on a regular basis to promote itself abroad. There is no strategy for how to present the city," complains Martin Ykema, general director of Novotel, part of the Accor Hotels chain. He adds that along with the economic recession, last year's floods and the recent war, Prague's poor accessibility can be seen as another detrimental factor. "Flying to Prague is more expensive than to other destinations," Ykema points out. Likewise, the basic highway network is not yet finished, and those considering train travel are discouraged by the poor quality of the railways

However, most hoteliers agree that Prague has huge potential. "Prague is a well concealed secret; a fascinating city that is worth a visit. But people have to learn about it," says René Beauchamp, general director of the five-star Four Seasons hotel, which was hit heavily by last year's floods, and which will open its doors again on 28 June after extensive reconstruction. According to Josef Santin, general director of the Diplomat hotel, it is necessary to penetrate the public conciousness.

"You may have an excellent product, but if nobody knows about it then it means nothing. Today there are many beautiful tourist destinations, yet people choose places they have learned something about," says Santin.

Recently local hoteliers, together with the American Chamber of Commerce, initiated a meeting with Prague's Lord Mayor Pavel Bém to propose the preparation of a strategic plan to increase promotion of Prague abroad. "We have to compete with other cities such as Budapest and Warsaw and not with each other (hoteliers)," notes Ykema. However, some hoteliers are skeptical about cooperation with City Hall. "I am not convinced that the magistrate will really do anything. They know that they need tourists, but for now we are only exchanging ideas. When talk swings to money, things will change," Santin avers. His worries are probably justified. Councillor Igor Němec, who is in charge of the travel industry for City Hall, is of the opinion that Prague's presentation abroad is sufficient.

"Prague is the seventh most visited city in Europe. Vienna is in tenth position," Němec points out. He notes that Prague is presented mainly at travel industry trade fairs. "In the first three months of this year, we went to trade fairs in Lyon and Bratislava, and we won first prize for the most impressive exhibit at both of them," he boasts. He was not informed about the hoteliers' meeting with Bém. Allegedly, Prague is not planning any special action. "Prague's budget for the travel industry is only 20 million crowns," he adds.

Changing strategies

In the meantime, everyone must fend for themselves in order to compensate for losses. At the present time, the average occupancy in hotels is around 50%, while the usual figure would be about 70%. "Some hotels started slashing prices, but this is very unhealthy, and their behavior is often close to unethical," says Ykema. After decreasing prices, it is very hard to increase them, and such a situation hurts the whole market. "Statistics prove that slashing prices has a negative influence on new investors, for example," he adds. It is also a fact that such hotels take guests away from others. "Hotels focused on tourists have decreased their prices, and therefore we are losing customers because they go for cheaper offers," complains Regina Sieberová, general director of the Sieber Hotel, which focuses mainly on business clientele.

In order to balance the given situation, Sieber Hotel turned its marketing activities towards Czech companies with headquarters outside of Prague and guests from Europe who don't have to travel too far.
Most hotels chose this path due to recent events that have discouraged people from traveling overseas. For the Hilton hotel, whose priority is usually North America, intensifying its marketing in European countries was a must. Hotels oriented toward conference tourism or business travelers have chosen a strategy of special offers. The Diplomat created packages of conference services not only for foreign, but also domestic companies. "It is a lot easier to differentiate the prices in this area without creating a dangerous precedent by reducing them. We also strengthened our sales team and tried to bring an offer that was precisely targeted," Santin explains.

It is possible to attract local clients by offering additional services: restaurants, fitness centers and other activities. Klaus Pilz, general director of the Crowne Plaza hotel (formerly the International hotel) in the Prague residential area of Podbaba, is planning to open a garden next to the restaurant in which there will be a barbecue. "We also have a playground for children, so people who don't want to cook at home and want to spend a pleasant afternoon outside can come here on the weekends," says Pilz, adding that twice a month the hotel organizes classical music concerts in its congress hall that are open to the public. The Four Seasons' Beauchamp also assumes that his hotel's local advertisement will mainly be focused on its Allegro restaurant, which was declared one of the best in Prague a year ago.

Luxury attracts

Regardless of the difficulties of the travel industry, last year the capacity of hotels reached almost a half million beds and this year over 10,000 more should be added, states the Czech Travel & Tourism Center in its regular iNFO-bulletin. However, most of the newcomers are narrowly specialized on a specific type of clientele. They include so-called design and boutique hotels or small luxury hotels (see sidebar on page 42) that are filling a niche in the market. Residences for mid- and long-term stays are a very specific segment that is not yet saturated.

Early this year, the local scene was enriched by Hotel Juliš, which focuses on short- and mid-term stays. It is operated by the Swedish firm City Apartments, which has its background in Scandinavian countries. "We want to focus above all on corporate clients, but we have started with traditional hotel guests prior to establishing a customer base," explains Jan Doškář, hotel manager. He points out that their biggest advantage is locality and the prices for accomodation, which are half the price of similar residential facilities. But those often offer real apartments made up of several rooms, which is not the case with Hotel Juliš.

In the coming months, other newcomers will shuffle the deck with lodging capacities - the luxury boutique hotel Aria (see sidebar on page 40), part of the American network HK Hotels, will have 52 rooms and the five-star Grand hotel Boscolo, part of Italian network Boscolo Hotels, will have 148 rooms and conference capacity for 400 people. They are both located in the center of the city and will focus on more demanding clients. The Orco Group is also stepping in with a luxurious project. In the spring of next year, it intends to begin operations in a five-star residence named Pachtův Palác, with the ambition to compete with the current number one, Four Seasons.

Most hoteliers claim this development helps to weed out the competition. "There is still room for competition here, which will contribute to the improvement of Prague's image abroad, and everyone will profit from it," insists Beauchamp. He says that Prague was long known as a destination for backpackers, but today it is necessary to promote the possibilities for sophisticated dining and shopping. Santin has a similar opinion: "These hotels will attract completely different people to Prague, which is beneficial."

Kerzner Announces First Quarter Results 

Kerzner International Limited (NYSE:KZL - News) today reported recurring net income for the first quarter of 2003 of $32.0 million as compared to $31.8 million for the same period last year. On this basis, net income per share for the quarter was $1.12, in line with the same period last year.

Butch Kerzner, President of the Company, commented, "I am very pleased to report that the Company was able to maintain its recurring EPS. Atlantis continued to outperform the industry despite a downturn in the travel market that was exacerbated in the quarter by world events. Paradise Island's gross revenues exceeded the same period last year. We maintained revenue per available room ("RevPAR") at Atlantis indicating that the property continues to demonstrate resilience against the backdrop of a difficult travel market."

The Company recorded net income in the quarter of $39.1 million, compared to net income of $29.6 million for the same period last year resulting in net income per share of $1.36 compared to $1.04 for the same period last year.

Paradise Island

The Company's Paradise Island operations achieved gross revenues of $144.6 million and EBITDA of $47.3 million in the quarter as compared to $143.8 million and $51.2 million, respectively, in the same period last year. Results in the last two weeks of the quarter were affected by travel concerns arising from the war in Iraq, as Atlantis's occupancy for the month of March was 90% as compared to 93% in the same period last year. Prior to the beginning of the war, Atlantis was on pace to achieve similar occupancy levels to those achieved in the same period last year.

Despite the decrease in occupancy in the second half of March due to the war, Atlantis's RevPAR at approximately $239 was similar to the same period last year. Atlantis achieved an average occupancy of 83% at a $289 average daily room rate ("ADR"), which compares to an average occupancy of 85% and ADR of $284 in 2002. Bookings trends have improved over the last few weeks and Atlantis benefited from strong demand in April as RevPAR for the month is expected to finish the month ahead of the same period last year.

In the Atlantis Casino slot win for the quarter increased by 4%. Table drop was 5% lower in the quarter than the same period last year as the current quarter faced a difficult comparison due primarily to the shift in the Easter holiday from March to April in 2003.

During the quarter, the Company recognized $2.8 million in income from the final settlement of a business interruption claim relating to Hurricane Michelle and also realized a gain of $2.5 million on the replacement of damaged assets, representing the recovery of amounts in excess of the net book value of assets damaged by the storm. These items are excluded from recurring net income and EBITDA.

Connecticut

Mohegan Sun reported slot revenues for the quarter of $180.7 million, an increase of 10% compared to the same period last year. Slot win per unit per day was $324 for the quarter, a 10% increase compared to the same period last year. In the quarter, Mohegan Sun continued to increase its share of the Connecticut slots market from 46% in the same period last year to over 49%.

Trading Cove Associates ("TCA"), an entity 50%-owned by the Company, receives payments from the Mohegan Tribal Gaming Authority ("MTGA") of 5% of gross operating revenues of the expanded Mohegan Sun operation. The Company recorded income from TCA of $8.1 million in the quarter, a 29% increase over the same period last year. MTGA's gross operating revenues include the results of the Mohegan Sun Hotel, which was opened in July 2002.

One&Only

The One&Only Ocean Club, the Company's luxury resort hotel on Paradise Island, performed very strongly and we believe it continues to outperform other luxury resorts in its category. RevPAR in the quarter was approximately $683, an increase of 12% over the same period last year, with an average occupancy of 78% and an ADR of $881.

Paul O'Neil, CEO of the Company's Paradise Island business commented, "One&Only Ocean Club's performance is outstanding, particularly in the current travel environment. The resort continues to gain recognition, having recently been named the best luxury hotel in the Atlantic/Caribbean region in the May/June issue of Departures magazine published exclusively for American Express Platinum and Centurion cardholders."

In the quarter, the Company earned fees of $2.8 million from its non-Paradise Island luxury resort operations as compared to $2.2 million in the same period last year. The Company's luxury resorts in Mauritius and the Maldives performed well as all achieved increases in RevPAR over the same period last year. The Company also benefited from the successful reopening of the One&Only Le Touessrok in December 2002, which had been closed for nearly all of 2002. The war in Iraq caused some slowdown at our Mauritius resorts in the second half of March, but had a more significant affect on the One&Only Royal Mirage Dubai.

The Company closed Palmilla, its 50% owned luxury resort in Los Cabos, Mexico, at the end of the quarter in order to commence the previously announced $75 million expansion project that will increase the room count at the resort from 115 rooms to 174 rooms and will significantly upgrade the amenities and public areas offered by the resort. The expansion is expected to be completed by the end of this year and will be financed through local project financing, which will be supported by a $38.0 million guarantee by the Company.

Casino License Acquisition in United Kingdom

In the quarter, the Company agreed to acquire for $2.0 million a gaming license, inclusive of an undeveloped property located in the town centre of Northampton, England. The transfer of the license is subject to the approval by the British Gaming Board and the Northampton Gaming Licensing Council. The Company is in the process of seeking these approvals and intends to develop a new 30,000 square foot gaming facility.

Butch Kerzner commented, "We are very pleased to take this initial step in Northampton, and we anticipate that this will be just the beginning in establishing a significant business presence in the United Kingdom as deregulation begins to be implemented. We are very excited about the Northampton opportunity and look forward to working with the Northampton Borough Council in establishing a great facility that will be an asset to the town centre."

Kerzner Interactive

As previously announced, the Company discontinued the operations of its online gaming subsidiary, Kerzner Interactive, during the quarter, which resulted in the recognition of income from discontinued operations of $2.2 million. This amount includes $4.5 million of income from the termination of the option agreement with Station Casinos, Inc., which was reduced by net losses incurred while winding down the operations of this business, including the write-down of net assets in the quarter.

Liquidity

At the end of the quarter, the Company held $46.3 million in cash and cash equivalents, including $2.3 million in restricted cash. Total interest-bearing debt at the end of the quarter was $447.6 million, which was comprised primarily of $47.0 million drawn under the Company's $300 million Revolving Credit Facility and $400.0 million of 8 7/8% Senior Subordinated Notes due 2011. In the quarter, the Company repaid total interest bearing debt of $25.1 million, substantially all of which was borrowed under the Revolving Credit Facility. Since the quarter end, a further $15.0 million of the Revolving Credit Facility has been repaid.

Shareholders' equity as of March 31, 2003 was $772.5 million and the Company had 28.1 million Ordinary Shares outstanding.

About the Company

Kerzner International Limited is a leading developer and operator of premier casinos, resorts and luxury hotels. The Company's flagship destination is Atlantis, a 2,317-room, ocean-themed resort located on Paradise Island, The Bahamas. Atlantis is a unique destination casino resort featuring three interconnected hotel towers built around a 7-acre lagoon and a 34-acre marine environment that includes the world's largest open-air marine habitat. The Company also developed and receives certain income from Mohegan Sun in Uncasville, Connecticut. Following the completion of a $1 billion expansion, the Native American-themed Mohegan Sun has become one of the premier casino resort destinations in the United States. In its luxury resort hotel business, the Company operates luxury resorts primarily under the One&Only brand. The Company manages nine resort hotels in The Bahamas, Mauritius, Dubai, the Maldives and Mexico and has entered into an agreement to develop and manage a tenth property in the Maldives. For more information concerning the Company and its operating subsidiaries visit www.kerzner.com

World Travel & Tourism Council (WTTC) Launches Security Action Plan 

The World Travel & Tourism Council (WTTC) today announced that it has developed an Action Plan, together with leading security experts Objective Team, to limit potential damage wrought by terrorism - and ultimately to defeat it.

At a Security Forum, hosted by WTTC Member organization Accor, at the Sofitel St James in London, Jean-Claude Baumgarten, WTTC President said: "The Action Plan will help Travel & Tourism in two main ways; it contains initiatives to counter the threat of terrorism and its implementation will put minds at ease. The resilience of the travelling public should not be underestimated. Experience shows that once an immediate threat has lifted, people's enthusiasm to travel rapidly returns."

The Executive Summary outlines the key principles and recommendations set out in the WTTC Security Action Plan, which is available on the WTTC web site www.wttc.org. For a copy of the Executive Summary, please contact Ufi Ibrahim*.

WTTC advocates a twin-track approach to the adoption and application of this action plan:

Promoting, to all sectors of the Travel & Tourism industry and to governments, a coherent strategy of high-level messages and associated operating measures, designed to alleviate vulnerability.
Convincing the general public and industry employees of the reality that Travel & Tourism must co-exist with the risk of terrorism - provided that risk is mitigated.

The Plan stresses that there is no room for commercial rivalry. Security is a strictly non-competitive issue and requires stakeholders to work together, sharing crucial information freely with each other.

Four cornerstones of WTTC's Security Action Plan are:

Co-ordinate all policy, actions and communications. - This will help to engender a spirit of co-operation, as well as integrating security into all policy and operational areas. In addition, a new approach to Travel Advisories must be developed as a matter of urgency. The present situation in which 'blanket' threat levels are applied to whole regions of the globe is not only harmful to the Travel & Tourism industry but also highly counter-productive for the longer-term campaign to project a positive image in affected areas - and may encourage terrorists to believe their actions are having the impact they desire.

Secure operating environments - The Public Sector must be encouraged to provide clear direction on the nature of a potential threat and the security measures required to defeat it. Governments should also ensure that comprehensive security plans are developed to help protect the public and all industry employees. Security equipment and IT - such as that used for biometric identification - must be deployed and used as part of an integrated plan.

Deny terrorists freedom of action - Denying freedom of action to the terrorist is closely linked with the process of addressing the underlying grievances - or perceptions of grievance - within local communities. Governments should attach long-term priority to tackling such issues where Travel & Tourism is a factor.
Access and work with the best intelligence - The Travel & Tourism industry must exploit to the full its in-built capacity for the collection of 'human Intelligence'- information from staff and others on the ground.

Industry leaders, especially security managers, must establish close consultative links with government agencies so relevant intelligence can be disseminated in the timeliest manner possible.

Jean-Claude Baumgarten concluded: "The Travel & Tourism industry is uniquely placed to help remove the causes of global terrorism as it is one of the conduits by which prosperity can flow from wealthier to poorer communities, helping to address the imbalance between the "haves" and the "have nots". The more misunderstanding, intolerance and disparity of income can be reduced, the less rationale there will be for the terrorist."

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

Four Seasons Hotels and Resorts to preview regional expansion at Arabian Travel Market

Mena Report  -   Canada’s Four Seasons Hotels and Resorts will preview its plans for a further four hotels in the Middle East during the forthcoming Arabian Travel Market. The hotel group has, in less than three years, opened four properties in the region.

The company’s first opening in the region was in May 2000 with the debut of Four Seasons Hotel Cairo at The First Residence. Four Seasons Resort Sharm El Sheikh opened next, in May 2002. With the December 2002 opening of Four Seasons Hotel Amman, the company made its first move into the Jordanian market. Four Seasons Hotel Riyadh, opened at the end of February of this year, marking the company’s first Gulf property.

Four Seasons Hotels and Resorts, exhibiting at Arabian Travel Market in the Global Village will be represented by a team of top level management from throughout the Middle East region. — (menareport.com)  

Taiwan: Hotel industry faces record low occupancy rates, seeks bailout

China Post  -  In face of the SARS epidemic, roughly 84 percent of the hotels in Taiwan reported lower than 30 percent occupancy rates, while 96 percent of hotels have seen loses, accordingly to a survey.

The survey, conducted by Pan Asia Human Resources Corp. and Legislator Chiu Yung-jen, polled 2,452 hotels in Taiwan on their status quo against the severe acute respiratory syndrome (SARS). Roughly 79 percent of hotels in the survey viewed the impact of the SARS epidemic as very severe.

The survey also showed that 79.01 percent of hotels regarded their business as deteriorating after the quarantine measure imposed in the Ho Ping Hospital.

The occupancy rates in hotels have slumped. Roughly 44 percent of hotels have seen their occupancy rates drop 50 to 60 percent. In total, 84.23 percent of hotels reported lower-than-30-percent occupancy rates, indicating the plight of the hotels on the island.

In an attempt to stem loses, 46.77 percent of respondents indicated that they have asked employees to take unpaid leave, 30.56 percent have encouraged staff to take their annual leave during this period, 20.64 percent have experienced salary cuts, and 7.71 percent have stopped offering salaries and have promised to repay when the condition improves.

People in the hotel industry are calling for government bailouts. 87.60 percent of hotels regarded supports from the government as extremely insufficient.

Pan Asia Human Resources, running a job-hunting site, www.9999.com.tw, indicated that after the outbreak of the SARS epidemic, many travel agencies have stopped hiring new employees. The job vacancies on the Pan Asia web site have dropped from 1,978 prior to the outbreak to the current 492, marking a 75.13 percent decrease.