Mandarin cautious despite 96pc profit lift to US$ 12m
 
SCMP  -  Luxury hotel operator Mandarin Oriental International yesterday reported a 96 per cent surge in first-half profits but warned an uncertain global economy continued to affect business.

After tax and minority interests, the first-half profit was US$ 12.2 million, helped by lower interest expenses and a US$ 5-million write-back of development costs for a hotel in Washington. The company, a unit of Jardine Matheson, made US$ 6.2 million in the first half of last year.

Excluding the write-back, net profit was US$ 7.2 million, up 16.12 per cent year on year. Net finance charges fell 11.25 per cent to US$ 14.2 million, while administrative expenses shed 29 per cent to US$ 15.4 million.

Turnover slipped 3.88 per cent to US$ 272 million.

Chairman Simon Keswick said: "Uncertainty in the global economy continues to affect business, and booking patterns remain shorter than usual.

"The combined total revenue from the group's hotels declined due to the continued weakness in average room rates but prudent cost containment, together with the favourable interest rate environment, enabled the group to achieve some improvement in underlying profit."

Analysts said an improved result for one company was insufficient to conclude the hotel industry had recovered from the devastating impact of the September 11 attacks.

Last week, rival group Hongkong and Shanghai Hotels announced a 14 per cent drop in net profit to HK$ 121 million for the first half.

Although Mandarin Oriental's two Hong Kong hotels - the Mandarin Oriental and The Excelsior - showed some improvement in occupancy rates, average room rates fell as much as 17 per cent.

Hong Kong and Macau contributed US$ 8.6 million, or 41.34 per cent, of the group's first-half operating profit.

Earnings per share were 1.43 US cents. No interim dividend was declared, against 0.5 US cent per share a year ago.

UBS Warburg analyst Eric Wong attributed the unexpectedly good result mainly to a sharp reduction in interest costs and a lower base of comparison last year.

"It is too early to revise its full-year result although its performance in Southeast Asia, excluding Hong Kong and Singapore, has picked up," Mr Wong said.

Another analyst said: "The Hong Kong luxury hotel sector is pretty tough and has not recovered yet. I don't expect the luxury hotel market to improve in the second half of the year."

Mandarin Oriental financial director John Witt said the latest result represented a strong recovery in occupancy rates from the second half of last year.

The hospitality industry suffered a sharp decline in business and leisure travellers after the September 11 terrorist attacks.

Mr Witt was confident of the prospects for the top-end market due to limited new supply of luxury hotel rooms in the next two years and a positive trend in tourist arrivals in Hong Kong.

"I think the first six months has been a very good start with our occupancy rate exceeding our expectations," he said.

Source: South China Morning Post

 

Barry Sternlicht of Starwood Hotels & Resorts Worldwide to Provide Keynote Address at the 13th Annual Hotel Investment Conference Asia Pacific (HICAP)

 

ASIA Travel Tips.com  - Barry S. Sternlicht, chairman and chief executive officer of Starwood Hotels & Resorts Worldwide, Inc. will address delegates at the 13th Annual Hotel Investment Conference Asia Pacific (HICAP) on October 17, 2002. HICAP, formerly known as the Asia Pacific Hotel Investment Conference, will be held October 16-18, 2002 in Hong Kong.

 

According to HICAP founder Rob Stiles of Sonnenblick-Goldman Company, Sternlicht was invited to provide the keynote speech because of his worldwide reputation as a dynamic and inspiring hotel leader. "Barry is one of the most respected leaders in the hotel industry today. His ideas and leadership have brought innovative, new products and programs to the hospitality community," stated Stiles. HICAP Co-Chairman Robert Hecker of Horwath Asia Pacific added, " Barry heads up one of the leading hotel and leisure companies in the world with more than 740 properties in over 80 countries. Our international delegates no doubt will benefit from his insights into the trends and issues affecting the hotel industry performance and product evolution."

 

Among his accomplishments, Sternlicht has received accolades for introducing a revolutionary new guest room design for the Sheraton brand and the creation of Westin's famous "Heavenly Bed". USA Today reported that Starwood's Preferred Guest Program to be the top loyalty program in the world, less than four months after it was inaugurated. Sternlicht also is credited with the launch of the wildly popular W Hotels brand, with hotels in major United States cities and in Sydney, Australia and under development elsewhere in Asia".

 

During the precarious time of October 2001, HICAP drew nearly 300 delegates from over 20 countries. Stiles and Hecker both anticipate a capacity crowd for this year's event. "Registrations are running about 50% above last year's pace at this time. The quality of the program, and inclusion of Barry Sternlicht to the list of speakers, is expected to lead to a sell-out this year, " according to Stiles.

Source: ASIA Travel Tips.com

Holiday Inn Hotels Celebrates 50th Anniversary

August 1, 2002 marked the 50th anniversary of America's Hotel, Holiday Inn Hotels & Resorts.

American entrepreneur Kemmons Wilson opened the first Holiday Inn hotel in 1952 in Memphis, Tennessee, after he returned from a family road trip discouraged over the lack of family and value-oriented lodging.

Over the past fifty years, Holiday Inn has retained those core ideals of family, value and entrepreneurial spirit and has grown to become the most recognized lodging brand in the world.

Holiday Inn really set the standard for the hotel industry, said Greg Price, vice president of marketing for Holiday Inn. Today, we have more than 1,600 hotels across the world, and more people stay at Holiday Inn every day than anywhere else.

At the first Holiday Inn hotel, children stayed free, and the hotel offered a swimming pool, air conditioning and restaurant at the property. Telephones, ice and free parking were standard as well. Although commonplace today, these services were revolutionary at the time and set a standard for the hotel industry and for every Holiday Inn hotel that would follow.

As a driving force in the evolution of American lodging, Holiday Inn has paved the way for many other firsts in the full-service hotel category it created. Holiday Inn was the first national hotel franchisee organization and the first hotel company to sell a franchise. In 1963, it became the first hotel company to be publicly traded. The brand was the first hotel to offer in-room air conditioning, free in-room television, a swimming pool and an on-site restaurant.

In a continuing effort to deliver a high standard in the midscale lodging category, Six Continents Hotels, the owner of the Holiday Inn brand, has allocated $250 million over the next five years to build 25 Holiday Inn hotels in a new prototype design. Groundbreaking on the first new prototype is expected to happen this fall.

Over the years, the Holiday Inn family has extended to include the Holiday Inn Select brand for business travelers and Holiday Inn SunSpree Resorts for family fun. In addition, Six Continents Hotels created new brands such as Holiday Inn Express, the fastest growing hotel brand over the last decade, as a limited-service hotel offering for value conscious travelers, and Staybridge Suites by Holiday Inn as an extended-stay lodging option.

On August 1, the Holiday Inn brand marks their 50th birthday by ringing the closing bell at the New York Stock Exchange.

The Changing World of Trade Buyers

Issues facing buyers by and large, buyers (comprising of travel agents, tour operators and wholesalers) are being affected by the following factors:

1)       Consolidation among both buyers and sellers

2)       Market-share battles by the mega-groups

3)       Airline financial problems, commission- and other forms of cost- cutting, restructuring and development of loyalty programmes

4)       Insurance costs

5)       Consumer protection regulations

6)       Changes in lifestyles, consumer travel habits, including concerns over safety, fickle loyalty, shorter booking periods and shifts to stable destinations

7)       Development of Internet booking systems and the growth of direct-sell, bypassing middlemen

8)       Internal costs of restructuring, re- equipping, training and marketing, to name just a few challenges. At the same time, this is impacting on both travel marts and sellers themselves.

Buyers are becoming very selective about the marts they attend, and mart-organisers have to make sure that participating buyers will find the products they are looking for. Both have to ensure improved quality of contact.

Australia’s Advantage For the most part, Australia qualifies as a ‘good buy’ for several reasons: It is a stable country, relatively free of personal safety fears and travel advisories; it has reversed seasonality; has a multi-cultural, environmentally-conscious infrastructure with a huge diversity of tourism products; and the industry is generally well-managed and responsive. It is, overall, a ‘desirable’ destination with potential for generating high-yield business.

The Australian Tourist Commission also spends an enormous amount of time researching market trends and customer profiles, constantly fine- tunes its product offerings in line with those trends and supports productive buyers with tools to improve their business performance. These factors, among others, make the Australia Tourism Exchange an attractive show for buyers. At the same time, it yields a rich harvest of information about the changing profile of buyers.

The Globalisation Onslaught The global consolidation and expansion onslaught by the major U.S. and European travel groups will have a significant impact on the future of the industry. They are seeking to cut unit costs and build market share by linking up with other companies with access to distribution networks and databases. This is being done via outright purchases, cross-equity links, franchises, etc.

Their ability to use negotiating power to drive down prices and seize business is obvious. The borderline between wholesaler and retailer is fudging. All are cross-pollinating. At the ATE, one major German wholesaler made this quite obvious by offering six different brochures and the potential to sell via 10,000 travel agencies. Here are some of the emerging trends: All aspire to become one-stop shops to encourage the customer to buy everything from the one place, and keep buying from that place in the future.

Many are now selling directly over the Internet and using their own magazines and direct mail systems to reach customers. The days of printed brochures are set to fade. They are broadening their choice of products and services, but narrowing the number of suppliers in key categories like hotels. Some are trying to get into niche-market territory by setting up specialist departments focussing on destinations or fast-selling niche-products like wellness and ecotourism.

The Future of the Independents For the independents, it has clearly become a matter of life and death. But their biggest asset is the value they place in their independence. With that comes a corresponding determination to avoid becoming part of a large, monolithic organisation with its constant restructuring, cost-cutting, staff transfers, internal politics, ego battles and other problems.

One clear opportunity lies in specialisation. In terms of products, huge opportunities are emerging for small and medium-sized independent operators to focus on market segments that are still beyond the return-on- investment targets of the mega-groups. Such segments include senior travel, sports travel, travel by youth, students and backpackers, upmarket products, indigenous travel, wine tours, honeymoon packages, gay and lesbian travel. Here are some examples of new trends: One European company that specialised in group travel is "now changing more and more to upmarket and deluxe FITs." One Irish agency is run by a husband and wife team. Formerly a High Street retail travel agent, they now operate a Web-booking engine, business house travel section and wholesale arm specialising in Australia and New Zealand.

Wanting to become a one- stop shop for Irish agents, they also hold GSAs for various Australian products. Some niche-market agents are establishing partnerships with other tour operators and wholesalers who can cross-sell their products. For example, a specialist in golf tours links up with a wine-tour specialist. One Italian operator began focusing on Australia after years of specialising only in the Caribbean. One U.S. tour operator specialising in gourmet tours now works with wine-tasters and top chefs to develop cooking courses. Another U.S. agent focuses only on filling off- season beds and seats at "great prices."

Travel Web sites are also buying directly. One invited Web site buyer, who was formerly an airline ticket consolidator, claims to be the leading online pan- European tour operator and is planning a significant expansion of its land product programme to give passengers "the widest range of accommodation and broadest choice of ancillary product across all regions of Australia." One South Pacific tour operator specialises in handling the French military traffic which it describes as having high amounts of disposable income and high yield. Some are specialising in accommodation only.

In addition to offering some mainstream products, they offer boutique hotels, luxury resorts, private homes and apartments. This product range is being buttressed with luxury cruises and boat charters. One Belgium group says it only offers exclusive small-scale properties in unique locations. One buyer specialises in wildlife holidays to remote locations. One group has linked up with ticketing companies to sell only sports events like cricket matches, football, rugby, World Cup, Olympics, etc, calling itself a ticketing and tour operator. Others are also adding theatres and concerts, anything that involves tickets. There were two buyers from such companies, one of which is focussing not just on selling tickets but the entire management of visitors to sports events complete with logistics, transport schedules, accommodation, security and passes.

Trends in Asia

GROWING MATURITY OF THE CHINESE MARKET: After the initial chaos of the early days of outbound travel, the growing professionalism of the Chinese market is noticeable. Chinese buyers are part of huge conglomerates with huge economic strength and an extensive business network that gives them a good source of regular, corporate and incentive travel. Many are cross-linked with companies in Hong Kong SAR to access that market. They are increasingly becoming members of international organisations such as IATA and PATA and seeking higher standards of certification and professionalism.

Some of them are moving beyond groups and into individual travel, study tours or special interest travel. Many are spending time working on improving multi-language capabilities for their guides. Chinese operators dominate the turf in their respective regions. All appear to be very conscious of their reputation, size, level of respect and the number of travellers they send overseas. Some are setting up specialised departments to sell specific destinations such as Australia and New Zealand. Many are looking for new products to cater to the evolving taste of Chinese travellers.

Most do both inbound and outbound. In future, they will soon be at the professional level of operators in Hong Kong SAR where FIT travel is the rage and payments can be made over the Internet. Sellers wishing to tap the Chinese market will need people who can speak the language. Australia has many ethnic Chinese who are robustly capitalising on this asset.

MEGA-GROUPS EXPANDING: In Hong Kong SAR, Singapore, India and many other parts of Asia, mega- groups are making inroads and finding no shortage of local partners anxious to get global coverage, bring in a number of business travel accounts, and secure access to training, automation and distribution. Travel companies affiliated to charge-card companies are also growing their distribution networks. One Hong Kong SAR agency, focusing on niche markets such as special interest tours, study programmes, events management and deluxe FIT travel, has set up another company to take care of conferences and incentives.

INDIA, ANOTHER BIG GROWTH MARKET: Like China (PRC), India is another big potential growth market, but one with a much less structured industry. The sheer size and diversity of the market means infinite opportunity for operators to tap into niche segments: conferences, honeymooners, students, adventure, incentives, cruises, etc. Buyers are also Internet-savvy and anxious to establish new destinations. However, culinary requirements are very specific.

Operators also have to provide services like visas and foreign exchange handling. They are spreading their offices nationwide and acquiring GSAs. While the widespread use of English is an advantage, they are very sharp negotiators due to the size of the market.

JAPAN, MORE SPECIALISATION: The mass-market tour operators are expanding their distribution networks into more cities and becoming more specialised, leading the specialist tour operators to burrow even deeper. One operator linked to a major airline has now opened a division focusing only on the silver market. Another buyer who specialises in hotels has begun to sell direct to customers. In addition to hotel vouchers, it is now adding vouchers of other travel components to FIT trips. For example: sightseeing, optional tours, golf packages, weddings, cruises, rent a car.

KOREA (ROK), STRONGER INDUSTRY EMERGING: Since the 1997 economic crisis, Koreans have won plaudits for the way they have restructured many of their companies. Before 1997, Korean tour operators were considered mostly tour-group oriented and interested mainly in shopping commissions. Today, one of the invited buyers at the ATE described his company thus: ÒWe've made our multidisciplinary focus and integrated approach the foundation of building strategy, marketing segmentation, sales promotion, online strategy, enterprise systems and processes for our clients' competitive advantage. Several are expanding into specialist niches such as honeymooners, backpackers, young adventurers, etc, all of which indicates the growing sophistication of the market.

SOURCE: PATA