|
|
.
|
Newsletter -August 1, 2002
MeriStar
Hotels & Resorts' and Interstate Hotels' Shareholders Approve Merger
BUSINESS WIRE)--July 30, 2002--MeriStar Hotels & Resorts (NYSE: MMH) and
Interstate Hotels Corporation (Nasdaq: IHCO) today announced that MeriStar and
Interstate stockholders have approved a proposed merger of the two companies
at stockholder meetings held earlier today in Washington and Pittsburgh.
The completion of the merger is scheduled for
Wednesday, July 31. The combined company will be named Interstate Hotels &
Resorts, Inc. and will be the nation's largest independent hotel management
company, operating more than 86,000 rooms in more than 400 hotels,
representing over 30 franchise brands in North America and Europe.
MeriStar stockholders also approved a one-for-five reverse stock spilt to be
implemented immediately following the merger completion. Following the
implementation of a one-for-five reverse stock split, the 4.6 merger exchange
ratio will result in Interstate stockholders receiving 0.92 of a share of the
combined company's stock for each share of their existing Interstate stock.
MeriStar stockholders will receive one share of the combined company's stock
for every five of their MeriStar shares. Assuming a July 31, 2002 merger
completion, Interstate Hotels & Resorts stock will begin trading on the
New York Stock Exchange on August 1, 2002, under the symbol "IHR."
At the July 30, 2002 meeting, MeriStar stockholders approved all other
proposals.
MeriStar Hotels & Resorts operates 267 hospitality properties with more
than 56,000 rooms in 42 states, the District of Columbia, and Canada,
including 55 properties managed by Flagstone Hospitality Management, a
subsidiary of MeriStar Hotels & Resorts. BridgeStreet Corporate Housing
Worldwide, a MeriStar subsidiary, is one of the world's largest corporate
housing providers, offering upscale, fully furnished corporate housing
throughout the United States, Canada, the United Kingdom, France and 39
additional countries through its network partners. For more information about
MeriStar Hotels & Resorts, visit the company's Web site: www.meristar.com.
Interstate Hotels Corporation operates approximately 135 hotels with more than
28,000 rooms in 37 states, the District of Columbia, Canada and Russia. For
more information, visit www.interstatehotels.com.
This press release contains "forward-looking statements," within the
meaning of the Private Securities Litigation Reform Act of 1995, about
MeriStar, including those statements regarding future operating results and
the timing and composition of revenues, among others, and statements
containing words such as "expects," "believes" or
"will," which indicate that those statements are forward-looking.
Except for historical information, the matters discussed in this press release
are forward-looking statements that are subject to certain risks and
uncertainties that could cause the actual results to differ materially,
including the fulfillment of conditions precedent for the merger, the current
slowdown of the national economy, economic conditions generally and the real
estate market specifically, the impact of the events of September 11, 2001,
legislative and regulatory changes, availability of debt and equity capital,
interest rates, competition, supply and demand for lodging facilities in our
current and proposed market areas and the potential de-listing of MeriStar
Hotels & Resorts by the NYSE. Additional risks are discussed in the
MeriStar's filings with the Securities and Exchange Commission, including its
registration statement on Form S-4 relating to the proposed merger and
MeriStar's annual report on Form 10-K.
Accor
First-Half 2002 Sales Hold Steady at EUR 3,585 Million; Reported Sales Down
0.4%; Up 1.0% Excluding Currency Effect
(in EUR millions) 2001 2002 %
change % change (excl.
(reported)
currency effect)
Hotels
2,480 2,479 0.0% +
0.1 %
Services 241 247 +2.5% +
16.1 %
Other activities 879 859 -2.3% -
0.7 %
Total
3,600 3,585 -0.4% +
1.0 %
Consolidated sales were down by a slight 0.4% at June 30, 2002. Excluding the
currency effect, sales were up by 1.0% for the period.
The reported decline of 0.4% broke down as follows:
-- Like-for-like -
0.6%
-- Business
expansion +
3.7%
-- Currency
effect -
1.4%
-- Asset
disposals -
2.1%
Hotels: stable
Hotel sales were stable, reflecting a 3.3% gain from business expansion and a
1.8% decrease due to asset disposals. On a comparable basis, sales improved
slightly in the second quarter, declining by 1.2%, as opposed to a 1.9%
contraction in the first three months.
Services: up 2.5% (16.1% excluding currency effect)
Sales of Services enjoyed sustained growth, rising 16.1% at constant exchange
rates. The negative 13.6% currency effect was due mainly to devaluations in
Latin America, which had almost no impact on earnings because of higher
interest rates and the fact that operating expenses are denominated in the
local currency.
Other travel and tourist activities: down 2.3%
-- Travel
agencies -
10.5% (- 11.0% on a comparable basis)
-- Casinos +
2.0% (+ 0.7% on a comparable basis)
-- Restaurants -
2.3% (+ 3.5% on a comparable basis)
-- Onboard
train services + 3.4% (+ 2.5%
on a comparable basis)
Full-year outlook
-- Hotels
In light of business trend in Europe at June 30 (revenue per available room,
or RevPAR, down 3.5% in Business and Leisure and up 2.9% in Economy), Accor is
maintaining its RevPAR forecast for the second half in Business and Leisure
Hotels Europe and increasing its forecast in Economy Hotels Europe. For the
full year, RevPAR in Europe is expected to increase by 1.8% in the Business
and Leisure segment (compared with an initial forecast of 2.4%) and 3.6% in
the Economy segment (unchanged).
In Economy Hotels US, the recovery has been slower
than expected, with RevPAR at June 30 down 4.5%, the same decline as recorded
in the first three months. For the full year, Accor is forecasting a 1.5%
decrease, versus the 0.3% gain initially announced.
-- Services
Sales of Services at June 30 were higher than expected, which has enabled
Accor to increase its full-year issue volume target to 11.5% on a comparable
basis, versus the 10.2% previously forecast.
With 147,000 associates in 140 countries, Accor is the European
leader and one of the world's largest groups in travel, tourism and corporate
services, with two major international activities:
-- hotels: more than 3,700 hotels (415,000 rooms) in
90 countries, casinos,
travel
agencies, and restaurants;
-- services to corporate clients and public
institutions: each day, 13
million people in 31 countries use a broad range of services (food
vouchers, people care and services, incentive,
loyalty programs, events)
engineere and managed by Accor.
Further information on Accor is
available on Internet at http://www.accor.com
Hilton
Earnings Down on Business Travel
Hilton
Hotels Corporation (NYSE:HLT) today reported financial results for the second
quarter and six months ended June 30, 2002.
The
second quarter was highlighted by strong operating margins, strength in the
company's timeshare business; high occupancy levels at most of Hilton's owned
city center properties; market share increases for all brands in the Hilton
family, and a decline in interest expense. These factors contributed to the
company achieving solid earnings-per-share in a challenging environment.
Adversely
impacting the quarter was a general decline in average daily room rates due to
sluggish demand from independent business travelers, and a charge related to
the Kalia Tower in Hawaii.
Hilton
reported second quarter net income of $ 76 million, versus$ 86 million in the
2001 quarter. Diluted net income per share was$ .20, compared with $ .23 in
the second quarter 2001. Pro forma diluted EPS in the second quarter 2001
(including $ .03 per share from the new accounting rules pertaining to
non-amortization of goodwill and certain intangible assets) was $ .26.
The following three items combined to adversely impact
the company's second quarter pre-tax income by approximately $ 4 million, or
approximately $ .01 per share:
--
Results for the 2002 second quarter include a charge of $ 10 million for
estimated remediation efforts relating to mold found at the newly constructed
Kalia Tower at the Hilton Hawaiian Village. This charge includes an estimated
impairment loss for certain fixed assets as well as estimates of investigatory
and remediation costs. Actual costs incurred in future periods may vary from
the estimates, given the inherent uncertainties in evaluating these types of
situations. It is expected that the guestroom closure at the Kalia Tower will
have no significant impact on 2002 EBITDA at the Hilton Hawaiian Village for
the balance of the year.
--
In June 2002, Hilton Grand Vacations, the company's timeshare business,
completed the sale of approximately $ 52 million of timeshare notes receivable
(out of a total portfolio of approximately $ 190 million) to a subsidiary of
GE Capital. The transaction resulted in a gain of approximately $ 2 million in
the second quarter.
--
In April 2002, Hilton collected on a note receivable that had been partially
reserved in the fourth quarter of 2001 due to the borrower's failure to make
certain required payments. Corporate expense in the second quarter includes a
benefit of approximately $ 4 million related to the reversal of this bad debt
reserve.
The
company reported second quarter total revenue of $ 1.035 billion, down 5
percent from the 2001 period. Total company earnings before interest, taxes,
depreciation, amortization and non-cash items (EBITDA) were $ 303 million,
compared with $ 345 million in the 2001 quarter. Revenue and EBITDA declined 3
percent and 9 percent, respectively, in the second quarter when excluding the
impact of the following items: asset sales completed in 2001 (primarily the
CNL and Red Lion transactions); the purchase of the Hilton Waikoloa Village in
2002, and the cash portion of the remediation costs at the Kalia Tower.
Total
company EBITDA margin for the quarter was 38.7 percent (EBITDA as a percentage
of revenue before "other revenue from managed and franchised
properties.")
Owned
Hotel Results
Across
all brands, EBITDA from the company's owned hotels totaled$ 202 million in the
second quarter, with comparable EBITDA down 5.9 percent. Revenue per available
room (RevPAR) from comparable owned properties declined 6.1 percent in the
quarter; occupancy at these hotels showed an increase of 0.6 points to 76.0
percent, while average daily rate (ADR) declined 6.8 percent to $ 151.54.
EBITDA margins at these hotels, as a result of continued cost containment
measures, were strong at 35.6 percent, a decline of 1.1 points from the 2001
quarter.
While
the 2002 second quarter benefited from the positive impact of the
Easter/Passover holiday falling in this year's first quarter, comparisons to
the 2002 first quarter nonetheless continue to confirm the sequential
quarterly improvement the company has anticipated for this year. In the first
quarter 2002, RevPAR at comparable owned hotels declined 15.3 percent, versus
the 6.1 percent decline in the second quarter.
Markets
showing especially strong and/or improving occupancy levels during the quarter
included New York, Chicago, Washington, D.C., New Orleans, Boston, Honolulu,
Phoenix and Minneapolis. The Hilton Washington, Capital Hilton and Hilton
Chicago were particular standouts, with each of these properties showing
RevPAR gains in the quarter as a result of strong group business. The
company's hotels in the San Francisco/San Jose market continue to exhibit
softness owing to a combination of demand pressure and the introduction of new
competitive supply.
Owned-or-Operated
Hotel Results
Comparable
RevPAR at the company's U.S. owned-or-operated hotels decreased 7.5 percent in
the quarter on an occupancy decline of 0.9 points to 72.6 percent and a 6.2
percent decline in ADR to $ 128.28. Within the Hilton full-service brand,
comparable owned-or-operated RevPAR declined 6.7 percent, with occupancy down
0.7 points to 74.5 percent, and ADR declining 5.9 percent to $ 152.42.
As
with the owned hotels, comparisons to the 2002 first quarter continue to show
sequential quarterly improvement. In the first quarter, comparable U.S.
owned-or-operated RevPAR declined 13.7 percent, versus the 7.5 percent
decrease in the second quarter; RevPAR at the comparable owned-or-operated
Hilton brand declined 13.2 percent, versus the 6.7 percent decrease in the
second quarter.
System-wide
RevPAR; Management/Franchise Fees
System-wide
RevPAR at each of the Hilton brands (including franchise properties) declined
by the following percentages in the second quarter: Hampton Inn, 0.6 percent;
Hilton Garden Inn, 3.0 percent; Homewood Suites by Hilton, 4.0 percent;
Embassy Suites, 5.6 percent; Hilton, 6.0 percent, and Doubletree, 8.6 percent.
Management
and franchise fees for the quarter totaled $ 87 million, an 11 percent decline
from the 2001 period, due primarily to a decline in both base and incentive
fees resulting from lower RevPAR.
Brand
Development/Market Share
Year-to-date
May 2002 (the latest period for which data is available), each of the
company's hotel brands has increased market share, with most commanding
significant RevPAR premiums over their respective competitive sets. With 100
representing a brand's RevPAR "fair share" of the market, the Hilton
brands (according to data from Smith Travel Research) performed as follows for
the first five months of 2002: Embassy Suites, 121.1 (+2.3 pts.); Hampton Inn,
119.0 (+5.7 pts.); Homewood Suites by Hilton, 118.6 (+6.9 pts.); Hilton, 109.8
(+3.4 pts.); Hilton Garden Inn, 109.0 (+3.0 pts.), and Doubletree, 98.0 (+0.2
pts.).
Effective
cross-selling among the Hilton family of brands, along with the benefits of
the Hilton HHonors loyalty program, continues to contribute to the strong
performance of the company's brands. Through the first six months of 2002,
cross-selling through Hilton Reservations Worldwide generated approximately $
152 million in system-wide booked revenue, a 29 percent increase over the same
period a year ago. HHonors members comprise a combined 37 percent of the
occupancy at all of the company's hotel brands.
During
the second quarter, the company added 38 hotels and 5,105 rooms to its system
as follows: Hampton Inn, 17 hotels and 1,445 rooms; Hilton Garden Inn, 13
hotels and 1,638 rooms; Homewood Suites by Hilton, 4 hotels and 412 rooms;
Hilton, 2 hotels and 1,160 rooms; Embassy Suites, 1 hotel and 242 rooms;
Doubletree, 1 hotel and 160 rooms; Hilton Grand Vacations, 48 rooms.
Sixteen
hotels and 2,423 rooms were removed from the system during the quarter,
including 11 properties and approximately 1,600 rooms as part of the sale of
the company's Harrison Conference Centers.
At
June 30, 2002, the company's system totaled 2,037 properties and 333,897
rooms.
The
company's current development pipeline has approximately 370 hotels either
approved, in design or under construction. Hampton Inn represents
approximately half of the franchise pipeline, with Hilton Garden Inn
accounting for another 25 percent. There are currently 11 Doubletree hotels
either in design, under construction or being converted from other brands. One
Doubletree conversion opened in the second quarter, the 160-room Doubletree
Biltmore Hotel in Asheville, North Carolina.
Additionally
during the second quarter: the 624-room Netherland Plaza Hotel in Cincinnati,
Ohio converted to a Hilton property; a new 242-suite Embassy Suites hotel --
managed by Hilton -- opened in Sacramento, California; the company completed
and opened the new 327-room tower adjoining the Hilton Portland (Oregon), and
ground was broken on the Hilton Omaha, that city's new convention hotel
scheduled to open in 2004 which will be managed by Hilton.
Hilton
Grand Vacations
The
company's vacation ownership business, Hilton Grand Vacations Company, had
another successful quarter, with EBITDA increasing approximately 15 percent to
$ 25 million primarily on the strength of robust sales at its property
adjacent to the Hilton Hawaiian Village on Waikiki Beach (currently
approximately 40 percent sold), and an increase in average unit sales price.
Sales
began in June at the company's three most recently announced projects: in Las
Vegas, Nevada at the north end of the Las Vegas Strip; in Orlando, Florida;
and at the new "Hilton Club" in midtown Manhattan's Hilton New York.
Sales at these new projects did not impact company results in the second
quarter.
Corporate
Finance
At
June 30, 2002, Hilton had total debt of $ 4.5 billion (net of$ 325 million of
debt allocated to Park Place Entertainment; in June, as scheduled, Park Place
repaid $ 300 million of the original $ 625 million assumed notes). As of June
30, 2002, approximately 25 percent of the company's debt was floating rate
debt. Cash and equivalents totaled approximately $ 21 million at June 30,
2002. The company's average basic and diluted shares outstanding for the
second quarter were 374 million and 403 million, respectively.
Consolidated
interest expense declined 12 percent in the second quarter due to reduced debt
balances and declining interest rates.
Hilton's
debt currently has an average life of 6.5 years, at an average cost of
approximately 6.3 percent.
In
July 2002, the company received a notice of default under its collateralized
mortgage bonds ($ 490 million outstanding principal balance) alleging that the
new exclusion for terrorist events under its "all risk" property
insurance constituted an event of default. The company does not believe that
an event of default has occurred, and is currently in discussions with the
servicer and exploring its alternatives.
At
June 30, 2002, the company had approximately $ 790 million of available
capacity under its various lines of credit. In July 2002, the company repaid
approximately $ 268 million of 7.7 percent Senior Notes, which matured July
15, 2002. These notes were repaid with borrowings under the company's
revolving credit facility. Including the impact of this repayment,
approximately 31 percent of the company's long-term debt is floating rate
debt.
In
June 2002, the company entered into a $ 125 million facility with a wholly
owned subsidiary of GE Capital for the sale of notes receivable originated by
Hilton's timeshare business. On June 27, 2002, the company completed the sale
of approximately $ 52 million of notes receivable under the facility. As
mentioned previously, this transaction resulted in a gain of approximately $ 2
million in the quarter. As of June 30, 2002, Hilton's total timeshare
receivable portfolio was approximately $ 138 million.
The
company during the quarter completed the sale of its Harrison Conference
Center chain for approximately $ 49 million in cash, and reported a $ 16
million pre-tax book loss on the transaction. However, the sale generated a
capital gain for tax purposes, which enabled the company to utilize tax loss
carryforwards generated by the sale of the Red Lion chain in 2001. The
transaction, including the impact of the tax loss carryforwards and the
reversal of book deferred tax balances no longer required, resulted in a $ 16
million book tax benefit. This net tax benefit is reflected in the tax
provision in the 2002 second quarter. Thus, on an after-tax basis, the sale of
Harrison had no impact on reported net income.
Proceeds
from the sale of timeshare notes receivable and the Harrison sale were used to
reduce outstanding debt.
The
company's effective tax rate for the 2002 second quarter was approximately
28.2 percent. Adjusting for the impact of the tax benefit on the Harrison
sale, the company's effective tax rate was approximately 37.3 percent for the
quarter.
The
company, as planned, anticipates 2002 spending of approximately $ 190 million
in 2002 on maintenance capital expenditures and technology at its owned
hotels, $ 60 million in master plan and return-on-investment projects, and $
40 million on timeshare projects. By year-end 2002, the company expects that
approximately 84 percent of its owned rooms will have been newly renovated
within the last five years.
Six-Month
Results
For
the six-month period ended June 30, 2002, Hilton reported net income of $ 110
million, compared to $ 141 million in the corresponding 2001 period. Diluted
net income per share was $ .30 versus $ .38 in the 2001 period. Pro forma
diluted EPS in the six-month period in 2001 (including $ .06 per share from
the new accounting rules pertaining to non-amortization of goodwill and
certain intangible assets) was $ .44. The 2001 period also benefited from the
recognition of previously deferred timeshare sales in Hawaii ($ .02 per share
in the first quarter). Revenue for the six-month period declined 10 percent
to$ 1.956 billion, while total company EBITDA declined 17 percent to $ 534
million. Revenue and EBITDA declined 6 percent and 13 percent, respectively,
from the 2001 period when excluding the impact of the following items: asset
sales, the Waikoloa acquisition, deferred timeshare sales, and the cash
portion of the Kalia Tower remediation.
Outlook
for Third Quarter and Full Year 2002
For
the remainder of 2002, the company expects continued strong EBITDA margins at
its comparable owned hotels and a continued strong performance from its
timeshare business, factors that are expected to help mitigate lower than
anticipated RevPAR growth at the comparable owned hotels and a modest
full-year decline in fee revenue.
For further information, contact :
Hilton Hotels Corporation
Marc Grossman, 310/205-4030
marc_grossman@hilton.com
http://www.hiltonworldwide.com
Starwood
Announces Sale of Certain CIGA Assets
(BUSINESS WIRE) --
Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT) announced that
it has signed an exclusive letter of intent to sell its assets in Sardinia,
Italy to a consortium of Italian investors for EUR 350 million, subject to
regulatory approvals and final adjustments.
The transaction is
scheduled to close during the fourth quarter of 2002. Starwood's Sardinian
assets, part of the CIGA portfolio of luxury hotels and resorts, include the
Hotel Pitrizza, Hotel Romazzino, Hotel Cala di Volpe, the Cervo Hotel and
Conference Center, and the Pevero Golf Course, as well as other real estate
assets. Starwood will continue to manage the hotels and golf course under
long-term management contracts and will receive participation in future
development should approvals be secured.
The buyer consortium is
made up of investors from Sardinia (Societa Finanziaria Industriale Rinascita
Sardegna, Istituto Turistico Italiano, Istituto Turistico Immobiliare,
Iniziative Finanziarie Immobiliari) and from the Veneto region in Northern
Italy (Forma Urbis, the De Rigo family, and 2g Properties).
Starwood Hotels & Resorts Worldwide, Inc. is one of the
leading hotel and leisure companies in the world with more than 740 properties
in more than 80 countries and 110,000 employees at its owned and managed
properties. For more information, please visit www.starwood.com
Kahala
Mandarin Oriental, Hawaii introduces new concept in Spa experience and design
with launch of Spa Suite
A highly personalised spa concept has just been launched at
Hawaii's premier beachfront resort, Kahala Mandarin Oriental.
The 364-room luxury resort this week unveiled its exotic Spa
Suite concept that focuses on the individual and offers the ultimate in
privacy and rejuvenation within each of its spacious suites.
Setting a new standard of spa luxury in Hawaii, each suite is
550 square feet and features a personal relaxation area, changing area,
private shower, signature infinity edge soaking bath and landscaped courtyard
of native Hawaiian flora.
Jan Goessing, General Manager, Kahala Mandarin Oriental,
further emphasizes what makes the Spa Suites so unique by explaining
"respect for privacy and time is paramount, so our guests are personally
escorted through a private and lush tropical garden to their very own
residential-style suite. This personal journey helps them transcend from
the hectic pace of everyday life. Seldom will they meet another spa-user
during this experience."
In keeping with a sense of place and re-inforcing the exotic
roots of Mandarin Oriental yet individuality of the Group's award-winning
properties worldwide, the resort's Spa Suites each capture Hawaii's tropical
ambiance with their plantation shutter doors, warm wood flooring, and
island-style ceiling fans. Fabrics are rich in earthy shades of
olive, mustard and walnut, accented by Asian artwork and even feature Hawaiian
handmade quilts. Each Spa Suite is bestowed with the name of a Hawaiian
flower.
Working with Kahala Mandarin Oriental behind the new concept
is internationally-renowned spa consultant, ESPA. In collaboration with the
resort, they have developed a series of innovative and restorative treatments
inspired by the elements of life, embracing Hawaiian culture and traditional
therapies. Coupled with ESPA's product line - formulated using the highest
quality organically grown plants - these unique treatments are renowned for
their healing and meditative qualities.
Two unique signature treatments have been developed.
Pi'ha Kino, the resort's full body treatment commences with a welcoming foot
ritual followed by a bath infused with aromatic oils. The body is then
prepared with skin brushing and exfoliation to enhance the effects of the full
body aromatherapy massage to follow. A gentle facial cleanse and scalp
treatment adds the finishing touch to this total body indulgence. Lokahi,
signifying one mind and one spirit, focuses on the traditions of
Lomi-Lomi massage using Kukui and Macadamia Nut oil versus an aromatherapy
application, while still following the relaxing sequences of the Pi'ha Kino.
Mandarin Oriental's award-winning spa concept continues to
receive international acclaim for its focus on well-being and for providing
guests with luxury spa experiences that draw on the Group's oriental origins.
The Group currently operates seven spas worldwide with a further three under
development, each one being unique from its design concept to the exotic array
of international therapies that it provides. Consistently, the Group's spas
are voted leaders within their field. Recently accorded the number one
positions worldwide and nationally were The Oriental Spa in Bangkok (Travel
& Leisure, USA) and The Spa at Mandarin Oriental, Miami (Celebrated
Living, USA, June 2002).
Kahala Mandarin Oriental, Hawaii is located on the island of
O'ahu, fifteen minutes from Waikiki, in the prestigious residential area known
as Kahala. The resort's timeless beauty is reminiscent of Hawaii's
gentle times of grace and elegance. Located between Diamond Head and
Koko Head craters, it is nestled amidst exotic gardens with an exclusive
800-foot ivory sand beach. The 364 spacious guest rooms offer panoramic
views of the Pacific Ocean, the Ko'olau Mountain Range and a private dolphin
lagoon. Amenities include five distinctive restaurants, swimming pool,
ocean activities, fitness center, shopping, and Dolphin Quest interaction
program with our four resident Atlantic Bottlenose dolphins. Guests also
enjoy hiking, bicycling, kayaking, scuba diving, sailing and a Keiki Club
offering children an education in the Hawaiian culture.
In 2002, the resort was accorded the prestigious title of the
"Best Rooms in the United States" by Conde Nast Traveler, USA.
Mandarin Oriental is the award-winning owner and operator of
some of the world's most prestigious hotels and resorts. In total, the
Group operates 18 luxury hotels in key business and leisure destinations, with
three additional hotels under development, including New York (opening late
2003), Washington D.C. (opening 2004) and Tokyo (opening 2006). Mandarin
Oriental now operates some 7,000 rooms in eleven countries with nine hotels in
Asia, six in The Americas and three in Europe
Orange
County Market Overview
Written By: Jennifer
Hsu HVS
International
Similar to the rest of
the nation, Orange County is feeling the effects of the recent national
economic slowdown. However, year-end 2001 data indicate that the effects have
been less severe in Orange County than in other parts of the country. In 2001,
countywide occupancy was roughly 66.0% at an average rate of $90, resulting in
a RevPAR of $60; a 1.6% decline from the RevPAR of 2000.
The RevPAR decrease was
not as sharp as in other parts of the country due to the positive effects of
the recent redevelopment of the county’s core leisure area, the city of
Anaheim. Anaheim is the hub of Orange County's visitor industry, and tourism
continues to be the city's primary economic force. The city is in the final
phases of a $4.0 billion revitalization involving four major projects;
the construction of Disney’s California Adventure, the expansion of the
Anaheim Convention Center, the beautification of the area surrounding
Disneyland and the convention center, and the expansion of Interstate 5 (I-5)
to 12 lanes, most of which were completed toward the end of 2000.
Similar to year-end trends, the year-to-date May 2002 trend for the Anaheim
– Santa Ana market indicates a moderately decreasing demand as the county
feels the effects of the national economic slowdown and supply continues to
increase.
On the supply side,
Smith Travel Research reports that as of year-end 2001, Orange County
registered approximately 50,600 hotel rooms, of which 20,400 hotel rooms are
located in Anaheim and Garden Grove, comprising 40% of the total supply. While
pockets of hotel development are occurring throughout the county, significant
additions to supply have occurred in the Anaheim market, which recorded supply
increases of 2% and 13% in 2000 and 2001, respectively. Supply in the Anaheim
market is expected to increase by another estimated 2,700 rooms within the
next three years, a 15% increase from 2001. The market’s ability to
absorb these significant increases in supply in coming years will depend
largely on the amount of growth in convention and leisure-related demand.
According to the CB
Richard Ellis Office Market Brief, Orange County has experienced strong growth
and expansion in the last five years, as more businesses moved and expanded
from Los Angeles County to Orange County. In 2001, with a surplus of office
space and a national recession, construction activity halted and vacancy rates
rose. Nevertheless, eight office projects remain under construction, adding
another 1.3 million square feet between the second and third quarters of 2002.
Overall vacancy rates in the county rose slightly from 14.9% in the first
quarter of 2001 to 15.9% in the first quarter of 2002. As such, asking rents
have decreased by roughly 9.0%, from a peak $2.30 in the first quarter of 2001
to $2.10 in the first quarter of 2002.
Due to the size of the
Anaheim Convention Center and the expansive supply of local hotel rooms,
Anaheim has established itself as a location for major national conventions.
Approximately 75% of Anaheim's conventions are national, 15% are regional, and
10% are statewide. According to the Anaheim Convention and Visitor’s Bureau,
although the convention center expansion was completed by 2001, due to the
tragic events of September 11, 2001, and the economic slump beginning in the
second quarter of 2001, growth in room nights generated by the convention
center was lower than expected and decreased by 20.8% from the 2000 levels.
Resources at the
convention and visitors bureau revealed that although only a few conventions
and events were cancelled in the last quarter of 2001, the wash factor for the
actual conventions ranged on average from 20% to 30%. Bookings at the Anaheim
Convention Center for 2002 thus far are promising, with the Anaheim/Orange
County Visitors and Convention Bureau having already booked more room nights
for 2002 than it had for 2001. The Bureau expects that by 2003, the full
effect of the added capacity and improved facilities should be felt,
generating an estimated increase in attendance of some 40%.
Tourism is also a large
source of employment and business profits in Orange County. Two of the
nation's leading visitor attractions, Disneyland and Knott's Berry Farm, are
located in the county. In 2000, Orange County experienced a banner year for
tourism. This increase was the highest in the past 10 years. However, 2001’s
slowing economy and terrorist attacks brought 6.4% fewer visitors to the
county than in the previous year. This decrease, though, should be short term,
and rebounds in visitation should be seen in the near future.
The
outlook for the area's demand is bright, considering the strong convention
bookings for 2002, the $4.0 billion revitalization of Orange County's leisure
core, and the forecast recovery of the economy in 2003.
For further information, please contact:
Jennifer Hsu
HVS
International
Fifth Holiday Inn to Open in Brazil Over
Past Two Years, and One of Seven Slated to Open by End of 2003
Six Continents Hotels (LSE:SXC) (NYSE:SXC) (ADRs), the world's most global
hotel company, continues the expansion of its Holiday Inn brand in Brazil with
the opening of the 224-room, 11-story Holiday Inn Select Bahia, located on the
Atlantic beachfront in Bahia, Brazil. The Holiday Inn Select brand,
"where business class is standard," is the fifth Holiday Inn to open
in Brazil over the past two years, and one of an additional seven Holiday Inn
properties under construction and coming on line by the end of 2003. The first
beachfront Holiday Inn property in Latin America, the Holiday Inn Select Bahia
furthers Six Continents' aggressive expansion of the brand in Latin America.
"Holiday Inn is a compelling brand for the regional traveler in Latin
America, particularly Brazil," says Alvaro Diago, Area President Latin
America, Six Continents Hotels. "We have more than doubled the number of
Holiday Inn branded hotels in the region over the past several years, and
expect continued rapid growth, with an estimated 50 Holiday Inn properties
anticipated open in Latin America by 2006, the brunt of those in Brazil.
Six Continents has a broad range of Holiday Inn
properties in Brazil, from the soon-to-open Holiday Inn Jaragua in Sao Paulo,
which is part of a major downtown re-urbanization project, to the
convention-focused Holiday Inn Anhembi, also in Sao Paulo, which at 780 rooms,
will be by far the largest Holiday Inn in the region, and one of the largest
in the world.
Six Continents is the region's leading international hotel company, with more
hotels, and more brands, in more countries than any other hotel company in
Latin America.
As technology is a major component of the Holiday Inn guest experience in
Latin America, the Holiday Inn Select Bahia features data ports for personal
computers with high-speed Internet access, and dual-line telephones with voice
mail, throughout its 200 guestrooms and 24 suites.
The guest rooms also include 29-inch televisions, room safes, irons and
ironing boards, coffee makers, mini-refrigerators and hairdryers. In addition,
the hotel offers a fitness center with state-of-the-art equipment, a business
center, two restaurants, three full-service bars, outdoor swimming pool, and a
gift shop, along with substantial convention and meeting space. The property
was designed and developed by Lebram Architecture, one of the area's most
respected corporations.
| 
