U.S. Hotels cope in downturn with aid from interest rates

The U.S. hotel industry is holding up better than expected in the post-Sept. 11 downturn due to low interest rates, flexible bankers and, in the case of smaller owner-operators, a growing reliance on Small Business Administration loans.

About 19.2% of hotels didn’t generate enough revenues to pay their dept in 2001, according to an analysis of nearly 4,000 hotel financial statements by Hospitality Research Group, a division of PKF Consulting. About 2.5% to 5.5% of the properties surveyed defaulted.

That is a sharp contrast to the last big hotel recession in 1992, when about 16% of hotels in the U.S. defaulted and many owners lost their properties.  While the lodging industry isn’t expected to recover until at least 2003, owners and analysts alike say they don’t expect the foreclosure rate to grow substantially this year and next. “It’s not nearly what we expected when we first did this analysis last year”, said Jack Corgel, managing director of the PKF division. “We expected a lot worse.”

Low interest rates have been important to the industry’s survival during a downturn that has seen occupancy rates slide and revenue per available room (RevPAR), the standard industry measurement of profitability, plummet in some cases. More than three-quarters  of the sampled hotels refinanced last year, reducing their interest expenses by an average 9%. And while lenders have been hesitant to grant new loans, they have generally been flexible and have allowed hotels to restructure their obligations.

“Lenders are willing to forbear a little more than in the past,” said  Joe Green,  chief financial officer of Wisnton Hotels Inc., of North Carolina, which owns and operates limited-service properties such as Homewood Suites by Hilton and Marriott’s Residence Inns. He can’t name one property in danger of going under, partly because “you have a lender base that isn’t willing to foreclose and own a bunch of hotels. At the end of the day, they don’t want to be in the hotel business.

Interest rates were much higher in the early 1990’s, and banks were far less forgiving due to regulatory pressures from U.S. Congress. Now, “lenders aren’t pushed to drive borrowers into default as ruthlessly,” Mr. Corgel said.

Lenders also have received a nudge from the SBA, which guarantees loans for small businesses in the U.S.  Since October, the SBA has facilitated 188 loans totaling $26.9 million to hotels outside of New York City and Washington that lost business because of the Sept. 11 attacks.

An increasing number of small hotels and motels, typically classified as having fewer than 100 rooms, are relying on such loans to stay afloat, according to Peggy Berg, president of Highland Group, an Atlanta hotel-research firm.

The Asian Wallstreet Journal

The Center For Hospitality Research at Cornell University releases New Report: The Safety and Security of U.S. Hotels: A Post-September 11 Report by Cathy A. Enz, Ph.D., and Masako S. Taylor, MMH

Among the many outcomes of the terrible events of September 11, 2001, is a renewed interest in the safety and security of hotels. This has always been an important issue, but it has become a top-of the- mind matter for hotel guests and managers alike. For one thing, experts have warned that hotels themselves may become targets of terrorism.1 In response to those concerns, some hotel operators have created new security procedures, such as conducting more detailed background checks on their employees.

To read the complete report,     Click Here  (Acrobat Reader required)

Summit MD planning to net more revenue

e-Tid.com  -  Summit Hotels’ new managing director has recognised that overhauling the IT infrastructure of the business is key to increasing revenues.

Richard Lewis, who joined from WorldRes, said: ‘Independent hotels have always been at a disadvantage compared to the big chains because IT costs can be prohibitive. We need to have a look at all areas of distribution, starting with our own web site, to make sure that we’re driving the maximum revenue possible from our properties.’

Summit, which has 160 properties, is owned by privately-held Chicago-based IndeCorp, which also owns Sterling Hotels and Preferred Hotels. President and CEO Richard Cass added that while the three brands would have a common IT platform, each would continue to operate independently.

One element of the IT overhaul will be easier cross-selling between the three. ‘That’s something the chains are very good at,’ said Lewis. ‘Marriott cross-sells so effectively because it has technology built for that purpose’.

Lewis is also looking to revamp Summit’s loyalty programme. ‘Summit Club is out, and we’ll replace it with something we haven’t named yet,’ he said. ‘But I want to be innovative – we are not a “me too” company.’ He added that the new scheme will put the emphasis on stayers rather than bookers. ‘We’ve got deals with a number of airlines so we’ll keep a points and miles element, but we want the scheme to reward people for staying with us, which isn’t the same as just booking with us’.

Lewis concluded the interview by saying ‘We see ourselves as a hotel company which neither owns nor operates hotels. We’re not a ‘marketing alliance’ or ‘umbrella organisation’. Summit people are hotel people.’ \ 

Regional tourism in the Caribbean expected to recover in 2004

BBC News - Vice-President of the Caribbean Hotels and Tourism Association CHTA , Berthia Parle, says while some Caribbean states are registering slight increases in arrivals out of the United States market, no significant recovery is anticipated before the first quarter of 2004.

Reflecting on the progress of the tourism sector on the first anniversary of the terrorist attacks on the United States, Parle said that while the small increases were a welcome sign, St Lucia and the rest of the region were still some distance away from recovering to the levels of the year 2000, which was an exceptional one for the industry.

"For most Caribbean states, arrivals up until the end of August 2002 have been on the up especially for the US and UK markets and the latest figure for St Lucia suggests that we were only 3.5 per cent down from as much as an earlier 8 per cent," she said sentence as received .

"This is a remarkable achievement, as whatever we have done in the market place over the last six months has really began to pay dividends," Parle added.

Travel Agent, the internationally renowned news weekly magazine as received of the global travel industry, recently named Parle, who also serves as president of the St Lucia Hotel and Tourism Association (SLHTA), "the most powerful woman in travel" for the year 2002.

She welcomed the fact that St Lucia and some other territories were able to attract some additional charters from the Chicago and Detroit areas, while US Airways is promising an additional flight in mid-December.

"That's good news at least for now but we still have every reason to worry and feel vulnerable where the airline industry is concerned, for while we are saying that on paper we have negotiated additional airlift as received , the airlines themselves are going through a particularly difficult period," she contended.

Parle said that, more than the fear of flying among travellers, the state of the US economy is going to be affecting the region and it is clear that the revival of Caribbean economies is contingent on a resurgence in the US market.

She made reference to a recent survey which suggests that four out of five people in the US will continue to travel and contends that it was imperative that the Caribbean remains a safe, secure and serene place where visitors feel comfortable, as all the measures for the safety and security of the airports have been adopted.

The CHTA vice-president was also pleased with the early reaction to the regional marketing campaign: "Life is the Caribbean".

"The responses to the television advertisements have been positive and we are hoping to at least continue to see increases in arrivals from all of our promotional activities", she said.

However, while Parle was quick to admit that the "worst may not be over", she said that barring no further catastrophic events for the rest of the year, the region should continue to see increases in arrivals on a monthly basis.

Arts tourism in Singapore is a multi-billion dollar business

It’s showtime

Arts tourism in the Lion City is a multi-billion dollar business, and the opening of Esplanade–Theatres on the Bay on October 12 is expected to rake in more dollars for the segment. In 2000, arts and cultural activities contributed S$1.06 billion (US$570.39 million) in revenues to the Singapore economy, says the Singapore Tourism Board (STB). “Over 70,000 overseas visitors participated in arts-related activities in Singapore, more than double the number in 1999,” says Yeow Mei Sin (meisin@stb.com.sg), deputy director-marketing communications of STB.

Figures for last year are as yet unavailable but Yeow reveals that an overall 63 percent jump in attendance was recorded at the Singapore Arts Festival this year, to 277,000. Of this, 10 percent were overseas visitors. To encourage more overseas patrons, the board has commited $500,000 a year, beginning last year, for the next three years to promote arts tourism and market arts events overseas. The spinoffs are worth the investment. For every dollar a tourist spends on the arts, another $1.80 is spent on accommodation and food and beverage, according to David Lim, acting minister for Ministry of Information, Communication and the Arts (Mita), in The Straits Times (23 May 2002).

“The Esplanade marks Singapore’s coming of age as a global city for the arts,” says Yeow. “It will allow us to stage world-class performances and signature events.” The Esplanade will also provide more opportunities for Mice events with its state-of-the-art facilities, F&B and retail outlets, and a view of the resettled Merlion against the city skyline, to boot.

“All four performance halls are booked solid till end-2002,” says Julie Lee (ljulie@esplanade.com), director of marketing operations at the The Esplanade. “As for 2003, we have bookings through December but there are still some weekly slots available between long-running productions.”

Many of The Esplanade’s programmes will coincide with the major cultural festivals in Singapore and STB’s calendar of events, adds STB’s Yeow. This will supplement the range of available activities for visitors to Singapore. “This adds to the appeal of Singapore as an arts hub,” says Yeow.

Unfortunately, travel agents and hotels will not get ‘exclusive deals’ although discounts may be offered on volume purchase. But Lee is confident the Esplanade will present industry players ample opportunity to offer “value adds to enhance the attractiveness of their products and services”.

Meanwhile, the Marina Square hotels are waiting with bridled optimism. “The arts is expected to bring in $400,000 in room revenue this year,” says Kenneth Law (klaw@panpacific.com), director of sales and marketing of The Pan Pacific Singapore. The figure is based in part on the forecasted reservations from The Esplanade. For the opening celebrations, the hotel has confirmed close to 1,800 room nights over the first 30 days, with a year-end closing forecast of 2,300 nights. He declines to give a year-on-year figure as “our hotel only increased focus on this category in late 2001 for 2002”.

For the Ritz-Carlton Millenia Singapore, where arts tourism accounts for some 10 percent of total room nights, the figure has not changed over the past few years. “The number of high-budget arts events held in Singapore has not dramatically increased [over this period],” explains Prema Irangani (premairangani@ritz-carlton.com.sg), associate director of sales of the hotel. Also, not all performers or visitors stay at top-end hotels. Irangani does expect forward bookings to grow some 10 percent. The hotel will focus on the audience from the Asia-Pacific region, and to “attract a selection of main artistes – not the entourage”. The Esplanade will be used as a highlight for incentive programmes in Singapore, she adds.  

HSMAI is the largest operator of meetings industry Trade Shows

The Hospitality Sales & Marketing Association International (HSMAI) debuted an additional HSMAI Meetings Quest trade show in St. Louis yesterday, bringing the total number of shows annually to a record 11 for HSMAI, the largest operator of meetings industry trade shows.  At a time when suppliers are searching for cost-effective ways to generate business, and buyers are looking for options and the greatest value, HSMAI delivers like no other organization in the marketplace. 

With its portfolio of HSMAI Affordable Meetings and HSMAI Meetings Quest, HSMAI ranks number one in terms of meeting planners (5,286), exhibitors (1,715) and number of shows held (11).

Ranking of Industry Trade Shows for Meeting Planners
by Overall Planner Attendees*

Rank Owner/Operator   # of Shows  Planners Exhibitors
1       HSMAI                              11       5286      1715 
2       ASAE**                               1       2300       460 
3       MPI**                                  2        2250     800 
4       GWSAE                              1       2000      750 
5       PGI                                     3       1900      400 
6       Assn Forum of Chicagold   1       1500      650 
7       NYSAE                               1       1300      150 
8       VNU Expositions                1       1000      200 

Per Show Planner Attendees

Rank      Show                     Location   Owner/Operator  Planners
1 ASAE Annual Conference**  Varies       ASAE                   2300 
2 Springtime in the Park      Washington, DC GWSAE           2000 
3 HSMAI Affordable Meetings  Washington, DC HSMAI          1875 
4 Holiday Showcase               Chicago, IL      Ass Forum        1500 
5 World Education Congress**  Varies               MPI                 1350 
6 We Love New York   New York, NY         NYSAE                  1300 
7 HSMAI Affordable Meetings Chicago, IL      HSMAI                 1053 
8 Meeting World   New York, NY                 VNU Expositions   1000 
9 Destination Showcase   Washington, DC             PGI               900 
10 Professional Education Conference**Varies       MPI               900 
11 HSMAI Affordable Meetings San Jose, CA         HSMAI          807 
12 Destination Showcase   Chicago, IL                  PGI              600 
13 Destination Showcase   New York, NY              PGI              400 
14 HSMAI Meetings Quest  Washington, DC         HSMAI          375 
15 HSMAI Meetings Quest  Atlanta, GA                HSMAI          225 
16 HSMAI Meetings Quest  Chicago, IL                 HSMAI        230 
17 HSMAI Meetings Quest  Boston, MA                HSMAI         170 
18 HSMAI Meetings Quest  Dallas, TX                   HSMAI         153 
19 HSMAI Meetings Quest  St. Louis                     HSMAI         150*** 
20 HSMAI Meetings Quest  Anaheim, CA               HSMAI          127 
21 HSMAI Meetings Quest  Minneapolis, MN          HSMAI          121 

By Exhibitors

Rank     Show             Location      Owner/Operator      Exhibitors
1 Springtime in the Park  Washington, DC      GWSAE         750 
2 Holiday Showcase   Chicago, IL                   Ass Forum    650 
3 HSMAI Affordable Meetings Washington, DC HSMAI         605 
4 World Education Congress**  Varies             MPI              525 
5 ASAE Annual Conference**  Varies              ASAE           460 
6 HSMAI Affordable Meetings Chicago, IL        HSMAI          325 
7 Professional Education Conference**Varies   MPI              275 
8 HSMAI Affordable Meetings San Jose, CA     HSMAI         260 
9 Meeting World       New York, NY        VNU Expositions     200 
10 Destination Showcase   Washington, DC    PGI               190 
11 We Love New York   New York, NY             NYSAE          150 
12 Destination Showcase   Chicago, IL           PGI                110 
13 HSMAI Meetings Quest  Washington, DC   HSMAI          110 
14 Destination Showcase   New York, NY        PGI               100 
15 HSMAI Meetings Quest  Atlanta, GA          HSMAI          90 
16 HSMAI Meetings Quest  Chicago, IL           HSMAI          85 
17 HSMAI Meetings Quest  Boston, MA          HSMAI          50 
18 HSMAI Meetings Quest  Dallas, TX             HSMAI          50 
19 HSMAI Meetings Quest  St. Louis               HSMAI         50*** 
20 HSMAI Meetings Quest  Minneapolis, MN     HSMAI        50 
21 HSMAI Meetings Quest  Anaheim, CA         HSMAI         40 

By Shows Held

Rank    Owner/Operator   # of Shows     Planners      Exhibitors
1             HSMAI                     11          5286           1715 
2              PGI                           3               1900         400 
3              MPI**                        2            2250          800 
4             ASAE                         1           2300          450 
5            GWSAE                      1            2000           750 
6            Assn Forum of Chicagld  1   1500           650 
7            NYSAE                       1         1300             150 
8            VNU Expositions        1        1000             200 

*Attendance numbers are based on the most recent shows held as reported by the individual organizations or by media reports. 
**Denotes annual meetings with a trade show for MPI and ASAE. 
***Estimated attendance; first show debuted Sept. 12, 2002.

“With one of our key missions being to bring buyers and suppliers in hospitality, travel and tourism together, each show brand has an excellent reputation for attracting qualified meeting planners from various market segments in diverse geographical markets,” says Robert A. Gilbert, CHME, CHA, president and CEO of HSMAI. 

“Being the industry leader affords us opportunities and benefits that directly impact exhibitors and meeting planners. Our scope and range is unmatched in terms of penetrating the meeting planner community in the most geographic markets, as well as attracting the largest number of planners and suppliers,” he adds. 

The launch of a new St. Louis show yesterday, Sept. 12, brings the HSMAI Meetings Quest line-up to eight regional, one-day forums held in the fall.  The remaining line-up for 2002 is: Atlanta (Sept. 19); Boston (Oct. 2); Minneapolis (Oct. 10); Chicago (Oct. 24); Dallas (Nov. 8); Washington, DC (Nov. 26); and Anaheim (Dec. 5).  Meetings Quest was founded by James T. Dunn Enterprises in September of 1984 with its first show in Washington, DC, and has benefited from its affiliation with HSMAI since 1997. 

The one-day show format features educational sessions, a reception and luncheon with a speaker, and an afternoon trade show providing the opportunity for meeting planners to visit one-on-one with suppliers. 

The highly successful HSMAI Affordable Meetings – a two-day event that couples a trade show format with over 20 educational sessions and boasts a three-to-one ratio of suppliers to buyers, is held in three cities annually.  Dates for the 2003 shows are: HSMAI Affordable Mid-America in Chicago (April 2-3); HSMAI Affordable West in San Jose (June 11-12); and HSMAI Affordable National in Washington, DC (Sept. 3-4). 

All HSMAI Affordable Meetings and HSMAI Meetings Quest shows, which are free to qualified meeting planners, have an educational component so that participants can get expert advice about topics and issues that will help further develop their sales skills and business techniques.  Meeting planners and exhibitors seeking more information should visit the respective websites at www.affordablemeetings.com or www.meetingsquest.com. 

HSMAI is an international organization of sales and marketing professionals representing all segments of the hospitality industry. With a strong focus on education, HSMAI has become the industry champion in identifying and communicating trends in the hospitality industry, while operating as a leading voice for both hospitality and sales and marketing management disciplines.  Founded in 1927, HSMAI is an individual membership organization comprising nearly 7,000 members from 35 countries and 60 chapters worldwide. 

Website:  http://www.hsmai.org

Mexico Tourism Recovery

Mexico's Tourism Secretary Leticia Navarro said the tourist industry could recover this year after the serious drops provoked by the Sept. 11, 2001 terrorist attacks in the United States

She reported that between January and July some 12 million tourists visited the country, 5.2% less than in the same period of 2001. Revenues from the sector reached US$5.6 billion.Navarro said that during the whole of 2001, Mexico received US$8.2 billion in revenue from the sector and that if current trends continue the sector would reach the same level.

"In 2002, there is a positive trend in the recovery of tourism and expectations are that last year's levels will be met," said Navarro.

She also said that during July some US$800 million was registered in tourism revenue, a figure that was 5% more than in the same period of 2001."There is definitively a tendency recovery," said Navarro by reporting that from January to July cruise ship passengers entering Mexico reached 2.9 million, 29% more than in January-July 2001.

Corporate Teambuilding Popular with Conference Clients at JW Marriott Phuket Resort and Spa

Since its inception in March following the grand opening of JW Marriott Phuket Resort and Spa, the corporate teambuilding program has become very popular with conference clients.

The program is run by Sean Panton, the resort’s high energy Director of Tennis and Recreation, together with his Recreation team.  Sean, also a member of the Peter Burwash International (PBI) network of recreation professionals, has been conducting teambuilding programs for more than seven years and developed a range of programs especially for the resort.   “The main objective is to provide an action learning experience exemplifying ideal team characteristics such as leadership, decision making, planning, allocation of human resources and a commitment to communication as the foundation for an effective performance,” Sean said.

Programs are flexible and can be varied according to client’s specific goals or theme, and the time they wish to allocate within the conference.  A range of activities designed to focus on teamwork through specific problem solving exercises also evoke feelings of thought, anticipation, fear, anxiety, fun, happiness and laughter, while helping to break down barriers and build confidence.

Teambuilding is an excellent way to introduce an educational, fun-filled activity into a conference program and often is the highlight of the conference.  Participants are required to co-operate and share resources to succeed, which also provides opportunities for building trust, tolerance and understanding that can then be used in both professional and personal situations.

In addition to the teambuilding programs, the resort offers a range of health and lifestyle sessions for conference clients including Mini-Olympics, Yoga, Meditation, Aerobics, Aqua Aerobics and  Tennis tournaments.   The resort’s wide range of activities for guests can also be adapted for a conference group, for example, cultural learning (Thai Boxing, Thai Dancing, Thai Cooking, Thai language, Batik Making, Introduction to Buddhism etc).

Optional additions include refreshment breaks, a video recording of the event, personalized souvenirs with the client’s name or conference theme printed on caps, t-shirts, trophies, notepads, etc.   Photographs are a must for the in house newsletter as a reminder of a great event,  A complimentary post evaluation digital presentation is offered free of charge.

Jerry Phelps, resort General Manager recently brought his Sales and Marketing Team from Bangkok to Phuket and did the program together with the resort based Events and Operational teams.  “In addition to being highly entertaining, it enabled everyone to get to know each other better and on a more personal level.  Additionally it enabled our sales team to personally experience what they can offer our clients - something a little different.  It also further enhanced the communication and relationship aspects that are especially important with the majority of our sales force being based off property,” Jerry added

JP Morgan Cuts Starwood Hotels to 'Long-Term Buy' 

Analyst Harry Curtis says he downgraded because the outlook for lower RevPAR and EBITDA growth in 2003 reduces the upside in Starwood to about 10%. Curtis thinks Starwood's estimates have greatest risk due to more optimistic guidance from management and underperformance at its Sheraton brand.

He cut the $292 million third quarter EBITDA estimate to $283 million, due mostly to RevPAR contraction and lower margins. He thinks improvement in lodging demand is likely to improve in six months, after corporate profits show real growth and industry supply declines to less than 1%. Curtis also cut his $1.55 2003 earnings per share estimate to $1.37, and cut the $1.289 billion EBITDA to $1.24 billion.