May I Speak to the Manager? A Storm at Marriott

New York Times  By Lynnley Browning

For John J. Flatley, a multimillionaire property developer, the eviction of his trusted overseer was more than he could bear. Mr. Flatley, an experienced real estate executive, had hired Marriott International to run his big new hotel in Quincy, Mass., south of Boston, but had installed his own man, Steven Lambert, to keep an eye on the business. The relationship between Mr. Flatley's team and Marriott had grown contentious over some disputed invoices, and the breaking point came last March, when Mr. Lambert asked Marriott to explain what he said was a vaguely worded bill to the hotel for $3,000 in unspecified sales and marketing services.

"Marriott said, 'You're not privy to that information,' " said Philip A. Baldi, the chief financial officer of the Flatley Company, in Braintree, Mass., which runs a Flatley family trust that owns the hotel. Marriott, Mr. Baldi said, then ousted the asset manager from his hotel office.

Last month, just 15 months after his Boston Marriott Quincy Hotel opened, Mr. Flatley sued Marriott in Federal District Court in Boston, accusing it of fraud, accounting irregularities, mismanagement and taking kickbacks from suppliers.

At least three other lawsuits by the owners of Marriott-run hotels — including Ritz-Carltons, Marriotts and Renaissances in several cities — make similar complaints, tarnishing the company's reputation and its stock price.

At stake is not just Marriott's market value but tens of millions of dollars in fees — and, perhaps, the balance of power in the $80 billion hospitality industry.

Hotel owners now pay Marriott up to 17 percent of their gross revenue in fees, up from about 9 percent in the early 1990's, said Jack Westergom, an asset manager at Manhattan Hospitality Advisors, a consulting firm in Manhattan Beach, Calif.

In some cases, hotel owners say Marriott's fees have unexpectedly doubled or tripled, in part because of what one lawsuit calls self-dealing by Marriott.

"Marriott had always seemed to run great properties," Mr. Baldi said. "But then they built a culture of secrecy in their accounting practices. Had we known what we were getting into, we wouldn't have gotten into it." Last year, he said, Marriott billed the hotel about $8 million, but despite repeated requests by Flatley has yet to provide invoices backing up the expenses. Flatley has hired two forensic accountants, Warren M. Schneider and Raymond R. Ciccone, to review Marriott's books in connection with the lawsuit.

Marriott, based in Bethesda, Md., denies the allegations and dismisses the suits as harassment by a tiny fraction of the 500 independent business owners who have hired the company to manage almost 2,500 hotels.

"We are in these lawsuits because we will not submit to extortion by owners who are trying to renegotiate contracts or insist that we rescue them from their bad business investments," said James E. Akers, a senior vice president and associate general counsel at Marriott.

Still, some investors — increasingly concerned about what many say is Marriott's opaque accounting and the specter of lawsuits like Mr. Flatley's — smell blood. Short-sellers have been putting pressure on the stock in recent weeks, betting that its price will fall. And it has fallen, by 34 percent from its high of $46.45 in April. It closed on Friday at $30.48.

In addition to accusing Marriott of refusing to explain additional fees that can double or triple the management fees set out in their contracts, the plaintiffs' lawsuits contend that Marriott is reaping hundreds of thousands and possibly millions of dollars in kickbacks from hotel suppliers. They say that it does this by channeling goods and services for hotels through Avendra, a purchasing company that is run by former Marriott executives. (Marriott is half-owner of Avendra; the remainder is owned by Hyatt, ClubCorp, Six Continents Hotels and Fairmont Hotels and Resorts.) The hotels say that the payments originate as rebates on volume purchases and that the money belongs to them.

IN addition to Flatley, the other companies suing Marriott include Strategic Hotel Capital of Chicago, which owns 27 luxury Marriott-brand hotels. It sued Marriott last month over the way it has run three resorts in Southern California — the Ritz-Carlton Laguna Niguel, the Rancho Las Palmas Marriott and the Renaissance Beverly Hills. In Town Hotels, the owner of a Marriott in Charleston, W.Va., and CTF Hotel Holdings, one of the biggest owners of Marriott hotels, have also sued. In its suit filed last April, CTF, which is based in Hong Kong and is a unit of the New World Development Company, also asserted that Marriott had violated racketeering laws.

The plaintiffs contend that Marriott refuses to provide invoices detailing what it or Avendra pay for goods and services bought on behalf of its client hotels, and whether those hotels could have procured them elsewhere for less.

The lawsuits, which seek unspecified damages, challenge a significant part of the $236 million in profit that Marriott reported last year on revenue of $10.15 billion. Marriott's profit last year was already down 51 percent from a year earlier, and its earnings could fall further if it loses the lawsuits or decides to renegotiate its management agreements on terms more favorable to owners.

A handful of owners have already renegotiated their contracts, gaining more influence over Marriott's management of their affairs and a greater cut of profits. Host Marriott, a real estate management company that is the biggest owner of Marriott-managed hotels, won new terms last July, having made claims similar to those in the lawsuits. (Marriott, which is run by J. W. Marriott Jr., and Host Marriott, whose chairman is his younger brother, Richard E. Marriott, were created in 1993 by the breakup of the Marriott Corporation.) CTF reached a similar agreement, in 1999, but its lawsuit complains that Marriott has violated the terms of that deal.

OTHER owners are also considering legal action, according to several lawyers and owners, most of whom spoke on condition of anonymity.

"We're following all of these litigations very closely and are trying to get an understanding of what they mean for our hotels," said Michael D. Barnello, the chief operating officer of LaSalle Hotel Properties, a real estate investment trust in Bethesda that owns four Marriotts.

Marriott, which owned scores of hotels before selling them in the early 1990's, manages several chains, including the midpriced Courtyard and Residence Inn names.

A brand that promotes its origins in a 1927 root-beer stand owned by the parents of J. W. and Richard Marriott, Marriott has long been considered a leading example of solid leisure service. The company is not the only hotel manager to be criticized by the actual owners of its various hotel properties. Hyatt and Starwood Hotels and Resorts Worldwide have also been hit with lawsuits making similar claims in recent years. Rebates, extra fees and an unwillingness to share documentation with owners are industrywide practices, said Donald Winter, an independent hotel consultant based in San Francisco.

Management contracts have been an industry fixture for two decades. And for most of that time hotel owners operated with almost blind trust in their operators.

Owners typically pay a hotel management company like Marriott management fees of around 3 to 4 percent of a hotel's gross revenue, incentive fees of around 20 percent of cash flow, marketing fees of around 2 percent of gross revenue and centralized service fees of around 5 percent of gross revenue. In return, the management company handles all of a hotel's operations, from hiring staff and booking guests to buying food, linens and furnishings to running marketing programs for frequent guests. The owners send revenues directly to Marriott-controlled bank accounts, and Marriott pays their bills, often providing no more than general invoices.

Such arrangements have let real-estate developers focus on what they do best — building hotels — while leaving the details of operating the hotels to professional managers. Those managers, in turn, get the benefits of steady fees and access to owners' capital — all without risks like mortgages and pressing loans.

This relationship began to unravel in the economic downturn of the late 1980's, and the process accelerated through the last decade. Some owners, desperate to shore up profits, began questioning charges. Managers, eager for new sources of revenue, began levying new fees for an expanding list of services like guest loyalty programs and audio-visual equipment rentals

Now, with the economy again weak, the stock market floundering and occupancy rates down, the owners are stepping up their campaign.

They are emboldened by a recent verdict against a management company. In 1999, a Federal District Court in Delaware awarded $51 million to the owner of a Sheraton hotel in Washington after finding that the Sheraton unit of Starwood took payments from suppliers that were in fact rebates belonging to the owner. While the award was later reduced, to $30 million, the case validated the legal theory that management companies have a duty to build wealth for their clients, the owners — much as mutual fund managers are entrusted with making money for investors.

In their suits, hotel owners complain about poor service as well as high fees. The Flatley lawsuit, for example, contends that Marriott filled a job at the hotel in Quincy with a convicted drug dealer who kept a gun in the hotel's health club. It also complained that Marriott booked a convention for fans of the fantasy game Dungeons and Dragons last January at a deeply-discounted price — a move that the owner's lawyer said would make it harder to attract the professional groups that the hotel had hoped to draw. "Once you get those guys, you're not going to get the orthopedic surgeons convention," said William E. Wallace III, a lawyer at Milbank, Tweed, Hadley & McCloy who represents Flatley.

The plaintiffs' biggest complaints against Marriott concern Avendra, a centralized joint venture created in March 2001. Marriott said the company is the successor to its internal purchasing arms, and buys everything from lightbulbs to cleaning supplies to little bottles of shampoo.

The complaints contend that Marriott uses Avendra's enormous power for bulk purchases to secure millions of dollars in rebates each year from suppliers. The suits claim that any rebates are owed to the owners and that for Avendra to keep them, they amount to kickbacks.

In Town, for example, contends that Marriott took rebates for long-distance services, newspapers and other goods it bought through Avendra from AT&T, USA Today and American Express. USA Today did not respond to questions about the matter. Representatives of AT&T and American Express said the two companies sometimes offered incentives — which they characterized as a standard practice — in co-marketing deals with other entities, but declined to be specific.

Mr. Akers, the Marriott lawyer, said Avendra saved hotel owners about 8 percent a year on what they would have paid had they used other suppliers. He added that Avendra lost $1 million in its first year. The company said it spends $10 billion on supplies each year.

Richard S. Hoffman, a senior vice president for finance at Marriott, said his company "makes no money on rebates" from any vendors. He said Marriott distributed back to some hotel owners "several million dollars in rebates" last year but declined to provide details.

Hotel owners also say Marriott engages in related-party transactions — doing business with companies in which it owns a significant stake — and that this is to their detriment. In its suit, Flatley contends that Marriott uses one of its own subsidiaries, Marriott Distribution Services, to transport supplies — an arrangement that Flatley believes raises costs.

Separately, CTF contends in its suit that Marriott received rebates from the Molloy Corporation, an audio-visual services company, via a Marriott program called "Marriott Visual Presentations," or MVP. Molloy owns MVP, said Roger W. Conner, a Marriott spokesman. John Molloy, Molloy's director, declined comment.

CTF also says in its suit that, at Marriott's urging, it signed a contract in 1998 with Molloy to provide video presentations at corporate meetings. CTF says that it paid $1.03 million to Molloy in 2000 but that $706,809, or 70 percent, went back to Marriott. CTF says Marriott returned to it more than $2 million it had paid to Molloy.

Marriott says it never tried to conceal its arrangement with Molloy, and did get permission from CTF before beginning. "They knew we were making a profit on it, and they agreed to it," said Richard Hoffman, Marriott's senior vice president for finance. "These are not kickbacks."

Hotel owners are also increasingly upset about the fees they pay for new services and programs created by Marriott, like preferred-guest perks and restaurant upgrades. The fees are in addition to those covered by the basic management contracts and are often embedded in other charges.

"The managers have been looking for various ways to increase their fee income, and they've been incredibly creative," Mr. Westergom said. He said Marriott and other managers charge 40 to 50 separate fees for services ranging from daily accounting and bandwidth connection to souped-up national reservations offices, brochures and trade shows.

Some owners complained that some fees were for services they had never requested. CTF says it never agreed to partake in Marriott's Renaissance Street Restaurant and Bar initiative, which creates trendy restaurants at Marriott-managed Renaissance hotels. But CTF says it was charged for it anyway — $394,000 last year and $137,000 in 2000.

In a similar gripe, the Flatley complaint alleges that Marriott overbills for some commissions paid to travel agents it trains. Independent agents who complete Marriott's Hotel Excellence program receive 10 percent commissions when they book guests into Marriott-managed hotels, compared with 8 percent for other agents. Flatley says that its basic management fee already covers training and commissions and that the surcharge for higher payments is unjustified and raises its own costs.

Mr. Flatley's investment trust paid almost $940,000 last year in what it says were unjustified extra charges, nearly twice the $561,250 core management fee it paid to Marriott, according to the complaint.

CTF contends that in 2000 it paid Marriott extra charges and fees of $48 million, on top of a base fee of $18.45 million and an incentive fee of $7.8 million. A lawyer for CTF, Jonathan J. Lerner of Skadden, Arps, Slate, Meagher & Flom, said that only some of the fees were justified because CTF had agreed to participate in certain programs, but he declined to provide details.

EVEN some Marriott clients who have not sued the company said they don't like the way it accounts for its charges. "We've had issue with their disclosure for years," said Mr. Barnello, the LaSalle executive. "When our hotel is charged something, we want to know what it's for and how does it benefit my property."

Not even the head accountant for the Boston Marriott Quincy, who was hired by Marriott and works at the hotel, has access to detailed invoices and charges, said Mr. Baldi, the financial officer for Flatley. Through a program called Project Mercury, Marriott now runs all of its accounting from Knoxville, Tenn.

Mr. Akers, the Marriott lawyer, said the company could be "hard to understand" because it has a centralized business model that spreads costs among its clients. Last month, Marriott representatives began meeting with hotel owners to explain its methods and fees.

Source:  New York Times

Meristar lowers profit view, cites business travel

(Reuters) - Hotel property owner MeriStar Hospitality Corp. on Friday halved its third-quarter financial guidance, citing weak business travel caused in part by concerns surrounding the anniversary of the Sept. 11 attacks on the Pentagon and World Trade Center.

The company, which owns 109 hotels, said it now expects funds from operations, a widely-watched measure of a real estate investment trust's performance, to total 10 cents to 12 cents a diluted share for the third quarter, down from previous guidance of 20 cents to 25 cents. Analysts on average expect 20 cents a share, according to market research firm Thomson First Call.

Revenue per available room is expected fall 4.5 percent to 5 percent, MeriStar said, down from previous guidance of flat to a 2 percent decline.

Estimated earnings before interest, taxes, depreciation and amortization were cut to a range of $38.5 million to $39.5 million from a previous range of $44 million to $47 million.

MeriStar has declared a dividend of 1 cent a share for the third quarter and said it does not expect to raise the dividend in the fourth quarter.

PKF Data Now Available to Help Hotel Managers with Their Budgets

Each fall, hotel managers struggle through the process of preparing their budgets for the upcoming year.  “How do I forecast RevPAR for an entire year?” and “How do I know if the hotel is operating as efficiently as comparable properties?” are the questions most commonly heard from operators.

To assist U.S. hotel managers prepare their 2003 budget, The Hospitality Research Group of PKF Consulting (HRG) has developed two products designed to simplify the budgeting process, as well as enhance accuracy.

START the budget process with Hotel Outlook, an objective, base-line forecast of quarter-by-quarter RevPAR for your market.
 

FINISH the budget process with Benchmarker to compare your revenue, expense, and profit projections to averages for comparable hotels.
 

For sample Hotel Outlook and Benchmarker reports, please visit our website at www.tortowheatonresearch.com/hotelbudget_ad.htm or call Claude Vargo at (404) 842-1150, extension 237.

The Hospitality Research Group (HRG), headquartered in Atlanta, is the research affiliate of PKF Consulting, the international consulting and real estate firm specializing in the hospitality industry.  PKF Consulting has offices in New York, Boston, Philadelphia, Washington DC, Atlanta, Houston, Dallas, Los Angeles, San Francisco, and Singapore.

Global Distribution Systems in Present Times

This article is the first of several that will be published on the topic of online marketing

Written By:  Samipatra Das  HVS International

The travel marketplace is a global arena where millions of buyers (travel agents and the public) and sellers (hotels, airlines, car rental companies, etc.) work together to exchange travel services. Among the “shelves” on which buyers search for travel services are world’s global distribution systems and the Internet distribution systems. These systems have become electronic supermarkets linking buyers to sellers and allowing reservations to be made quickly and easily. Nowadays, more travel is sold over the Internet than any other consumer product. The Internet is a perfect medium for selling travel as it brings a vast network of suppliers and a widely dispersed customer pool together into a centralized market place. Nearly 37 million of America’s more than 162-million active Internet users have already purchased travel online. Online travel bookings exceeded $23 billion in 2001, and are expected to reach $63 billion by 2005.

However, any discussion of the Internet as a distribution channel for travel needs to start with an understanding of the existing electronic distribution infrastructure, the Global Distribution System (GDS). The airline industry created the first GDS in the 1960s as a way to keep track of flight schedules, availability, and prices. Although accused of being “dinosaurs” due to their use of legacy system technology, the GDSs were actually among the first e-commerce companies in the world facilitating B-2-B electronic commerce as early as the mid 1970s, when SABRE (owned by American Airline) and Apollo (United) began installing their propriety internal reservations systems in travel agencies. 

Prior to this, travel agents spent an inordinate amount of time manually entering reservations. The airlines realized that by automating the reservation process for travel agents, they could make the travel agents more productive and essentially turn into an extension of the airline’s sales force. It is these original, legacy GDSs that today provide the backbone to the Internet travel distribution system.    

There are currently four major GDS systems:

1.       Amadeus

2.       Galileo

3.       Sabre

4.       Worldspan

In addition, there are several smaller or regional GDSs, including SITA’s Sahara, Infini (Japan), Axess (Japan), Tapas (Korea), Fantasia (South Pacific), and Abacus (Asia/Pacific) that serve interests or specific regions or countries. In this article, we will provide a closer look at the four major GDSs.

Amadeus

Founded in 1987 by Air France, Iberia, Lufthansa, and SAS, Amadeus is the youngest of the four GDS companies. Amadeus is a leading global distribution system and technology provider serving the marketing, sales, and distribution needs of the world’s travel and tourism industries. Its comprehensive data network and database, among the largest of their kind in Europe, serve more than 57,000 travel agency locations and more than 10,500 airline sales offices in some 200 markets worldwide. The system can also provide access to approximately 58,000 hotels and 50 car rental companies serving some 24,000 locations, as well as other provider groups, including ferry, rail, cruise, insurance, and tour operators. 

Upon its inception, Air France, Iberia, Lufthansa and SAS held equal shares of Amadeus Global Travel Distribution S.A. Shortly after the formation of the company, however, SAS sold its shares to Amadeus Data Processing. The three founder airline shareholders currently hold 59.92% of the company: Air France (23.36%), Iberia (18.28%), and Lufthansa (18.28%). Remaining shares are held publicly.  

As the youngest of the four GDS companies, Amadeus has done remarkably well during its short tenure. Yet, in many ways, the company remains an anomaly. Amadeus has the greatest number of travel agency locations with the highest productivity per terminal in the world, yet its booking share is Number 3, and its revenues are dwarfed by Sabre and, to a lesser degree, by Galileo. 

While the company is Number 1 in locations worldwide, serving the greatest number of countries, it provides the fewest U.S. destinations of the top four GDSs. As with its competitors, the future for Amadeus will continue to be linked to the technological and structural changes that are revolutionizing the travel industry. Amadeus appears to be adapting well (albeit cautiously) to the shift of business to the Internet. Having acquired e-Travel, Inc. from Oracle Corporation in July of 2001, Amadeus now has a new business unit dedicated to delivering solutions to e-commerce players worldwide. 

The e-Travel solutions integrate all components of a managed travel program into a single Internet-based service that enables travelers to book air, car, hotel, and rail services, all within corporate guidelines. With its strong company infrastructure worldwide, impressive product set, and growing customer base, Amadeus is one of the most significant players in shaping the future of the GDS. 

Galileo International

Galileo International was founded in 1993 by 11 major North American and European airlines: Aer Lingus, Air Canada, Alitalia, Austrian Airlines, British Airways, KLM Royal Dutch Airlines, Olympic Airlines, Swissair, TAP Air Portugal, United Airlines, and US Airways. It is a major player in the GDS business throughout the world: North America, Europe, the Middle East, Africa, and the Asia/Pacific region. Galileo International is a diversified, global technology leader. Its core business is providing electronic global distribution services for the travel industry through its computerized reservation systems, leading-edge products and innovative Internet-based solutions. Galileo is a value-added distributor of travel inventory dedicated to supporting its travel agency and corporate customers and, through them, expanding traveler choice. 

In 1997, Galileo International became a publicly traded company, listed on the New York and Chicago Stock Exchanges. In October of 2001, Cendant Corporation acquired Galileo International for approximately $1.8 billion in common stock and cash. Currently, the company is represented in 116 countries, and serves travel agencies at approximately 45,000 locations. Other travel suppliers include 500 airlines, 227 hotel companies, 33 car rental companies, and 368 tour operators. 

Galileo’s competitive strengths include market share, well-balanced and global presence, relationships with diverse groups of travel vendors, technologically advanced information systems, highly skilled personnel, and a stable product line. Compared to other GDS companies, Galileo is a cautious follower when it comes to technology. 

However, in response to the growing demand of web-based travel, the company has established successful relationships with entities such as Go, UK’s best low-cost airline; subsidiaries such as Highwire, Inc., providing Internet-based tools and services to the corporate travel market; and Sheperd Systems, an industry leader in the provision of sales and marketing intelligence systems and services within the travel industry. Additionally, Galileo has sponsored membership to the THOR Worldwide Negotiated Hotel Rates Program, and has a state-of-the-art development center supplying information and systems support to travel agencies operating more than 178,000 computer terminals, all of which are linked to the Galileo’s Data Center.

Galileo’s primary weakness, its singular focus on the distribution side of the business, is also its perceived strength. Based on its competitive strengths, Galileo is pursuing a strategy that includes expanding its global distribution, strengthening customer loyalty, leveraging technology, and capitalizing on opportunities created by increasing Internet use. Galileo sees the GDS industry as having the ability and potential to provide electronic distribution and many components of e-commerce to other industries, and is utilizing its strengths to provide expanding services to its growing customer base.   

Sabre    

For more than 40 years, Sabre has been developing innovations and transforming the business of travel. From the original Sabre computer reservations system in the 1960s, to advanced airline yield management systems in the 1980s, to leading travel web sites today, Sabre technology has traveled through time, around the world, and has touched all points of the travel industry. In July of 1996, Sabre became a separate legal entity of AMR (parent company of American Airlines), followed by a successful initial public offering in October in which AMR released approximately 18% of its shares to be publicly traded. Sabre, represented in 45 countries, is a leading provider of technology for the travel industry and provides innovative products that enable travel commerce and services, and enhance airline/supplier operations. 

Headquartered in Southlake, Texas, Sabre connects more than 60,000 travel agency locations around the world, providing content from approximately 400 airlines, 55,000 hotel properties, 52 car rental companies, 9 cruise lines, 33 railroads, and 229 tour operators. In addition to being one of the leading GDS companies, Sabre also provides a broad range of products and services that enhance travel agency operations and their ability to serve the traveler. Sabre-connected travel agencies use Sabre web- based technologies and low-fare finding solutions to create new sales opportunities, drive operational efficiencies, and improve customer service. Among the company’s recent innovations is Sabre Virtually There, a personalized web site service that automatically gives travelers up-to-the-minute details about itineraries, while also providing a wealth of information about their destinations.

Sabre owns Travelocity.com, the industry’s leading online consumer travel web site. In 2001, Travelocity.com’s 32 million members used the site, generating more than $300 million in revenues. Travelocity.com offers innovative technologies that help consumers find the best air, car, hotel, and vacation reservations. Sabre also owns Get There, a provider of web-based corporate travel procurement, including the purchase of air, hotel, car, and meeting planning services. Customers include more than 800 leading corporations.    

Sabre’s competitive strengths include market position, global reach, stable product line, diversification of revenue streams, and intellectual capital. The Sabre business model is a strong one, and continues to make significant progress in advancing both its electronic travel distribution and its information technology solutions businesses. Revenues have been growing steadily, and the company has embarked on a strategy that fully embraces diversification of its customer base and revenue streams. Sabre is considered to be one of the most significant and competitive GDSs due to the fact that it anticipates and takes advantage of the changes in the information economy and develops innovative practices, leveraging both human resources and technology systems. 

Worldspan

Founded February 7, 1990, Worldspan was originally owned by affiliates of Delta Air Lines, Inc., Northwest Airlines, and Trans World Airlines, Inc. It is currently owned by affiliates of Delta Air Lines, Inc. (40%), Northwest Airlines (34%), and American Airlines, Inc. (26%). Since its 1995 advance into the world of Internet technology for the travel industry, Worldspan has successfully developed the strategies, solutions, and services to ensure the company’s long-term success in the new web-based world of travel distribution. Worldspan provides worldwide electronic distribution of travel information, Internet products and connectivity, and e-commerce capabilities for travel agencies, travel service providers, and corporations. Worldspan currently serves 20,021 travel agencies in nearly 90 countries and territories. Headquartered in Atlanta, Georgia, Worldspan connects approximately 421 airlines, 210 hotel companies, 40 car rental companies, 39 tour and vacation operators, and 44 special travel service suppliers.

To escalate the delivery of web-based technologies and services to its customers; Worldspan has forged a number of new partnerships and equity agreements with leading travel technology companies. Resulting technologies, joint developments, and an expanded realm of solutions and Internet travel products are enabling the company and its customers to participate in a spectrum of e-business opportunities. Some of the successful partnerships have been with companies such as Datalex, a leading provider of e-business infrastructure and solutions for the global travel industry; Digital Travel, a global online tour provider; Kinetics, Inc., developer of technology and solutions for the airline industry; OpenTable.com, an Internet-enabled restaurant management tools system; and Viator, a major provider of Internet-based content, technology, and distribution services, including data management, hosting, and e-commerce. 

Additionally, in 2001, Orbitz LLC was launched on the Internet, using Worldspan as its Internet Booking Engine, and in 2002, the launch of Worldspan ePricingSM made Worldspan the first GDS to introduce a revolutionary new multi-server-based technology, offering an unprecedented selection of pricing options to all of Worldspan’s customers.  

Worldspan has a legacy of industry firsts that are not well known. The company therefore has an opportunity to raise the industry’s awareness of its accomplishments and more importantly, its future strategy. Worldspan continues to look at benefits of creating its own consumer brand and has been partnering with different companies to expand the services that it can provide to its customer base.  Worldspan believes in focusing on its core competencies, and is determined to be perceived as a distribution facilitator across all channels. It is increasingly getting a clearer sense of its capabilities and building its appetite for technical and commercial challenges. 

Through the company’s revolutionary e-world ideas, offerings, and services, along with its agility and eagerness in meeting the needs of the travel distribution market on a global scale, Worldspan and its customers are transforming the way travel is distributed, bought, and sold. 

Samipatra Das
HVS International
372 Willis Avenue
Mineola, NY  11501
860-836-3896
516-742-3059 Fax

Outbound restrictions for China may lift

Outbound restrictions on outbound travel for the Chinese may be lifted by 2005, said John Koldowski, PATA's managing director of the Strategic Information Centre.

Speaking to a packed workshop at the Abacus International Subscriber Conference in Bangkok, Koldowski presented the facts and figures on the exploding China travel market that is said to be worth some US$20 billion.

Koldowski said there is suggestion that with WTO entry pending, travel restrictions may be lifted by 2005, and the impact of that remains untold. However, even with existing restrictions, the numbers coming out of China are massive – in 2001, 12 million outbound trips were registered from China.

Currently, the Chinese travellers are still keeping within the region, going into countries like Malaysia, Philippines, New Zealand, Singapore, Hong Kong and Macau.

Koldowski cautioned that although big, China cannot be treated as one market and the demographics and travellers' profiles differed vastly among regions.

The middle class is expanding the discretionary market and they are earning and spending more on such items as recreation.

He urged travel providers who are interested in tapping the China market to focus on specific regions that generate the most travellers before moving on to the rest.

He also gave a list of hints on how to deal with Chinese travel habits such as accepting local Chinese currency for payments since the Chinese can only get up to US$2,000 in China and few have credit cards.

Koldowski's full workshop presentation will soon be available at www.abacus.com.sg/aic website.

UK: August second best month for inbound tourism

According to the British Incoming Tour Operators’ Association (BITOA)’s ‘Business Barometer’ for August 2002, visitors to the UK were just 1.45% below the same month of last year.
BITOA said that made August the second best month for a year behind June, which showed a drop of 1.33%. August forward bookings were even more promising, 1.91% higher than in 2001.
However, BITOA pointed out that the figures were still some way below August 2000, the last ‘normal’ year – that is, pre-foot and mouth and 11 September – for inbound tourism.
Average overseas visitor arrivals for the eight months to end-August 2002 were 3.77% lower than the corresponding period of last year, while forward bookings fell by 3.24%.

Announcing First Asia-Pacific Chrie Conference And Call For Papers

Newly created Asia-Pacific CHRIE (APacCHRIE) will hold its “first” annual conference and meeting in Seoul, Korea, on 21-23 May 2003. Seoul is a city known for its rich history and culture coupled with modern landscapes and reputation for its vibrant economic development and cutting-edge technologies. The conference theme is “Hospitality & Tourism Research and Education: The Asian Waves”, a theme that reflects the dynamic and rapid development in Asia’s hospitality and tourism industry and education. The first APac-CHRIE Conference is hosted and organized by the APac-CHRIE’s founding institution The Hong Kong Polytechnic University’s School of Hotel and Tourism Management in collaboration with Yonsei University in Seoul.

The Conference dates (May 21-23) were selected to coincide with the Second Asia-Pacific Forum for Graduate Students Research in Tourism, scheduled to take place in the ancient city of Gyungju near Busan, Korea, on May 24-25, 2003. This “back to back” arrangement between the two conferences should allow the first APac-CHRIE Conference participants to travel to the historical city of Gyungju and attend the Forum. Furthe r information on the Second Asia Pacific Forum for Graduate Students Research in Tourism can be obtained from Dr. Sang Taek Lim, Dong-A University, Korea (email: stlim@daunet.donga.ac.kr).

The Conference organizers invite abstracts of papers for presentation. Papers dealing with a broad range of topics related to research and education in hospitality, tourism and related areas would be acceptable for presentation at the Conference. Deadline for submission of a three-page abstract (typed double-spaced) is February 15, 2003. Final copies of accepted papers will be professionally published with an appropriate recognition (e.g. ISBN number) as an edited conference proceedings PRIOR to the Forum

Rica Hotels ASA and HKC Hotels sign partnership agreement

M2 Comm -  The Norwegian hotel chain operator Rica Hotels ASA said today (26 September) that it had entered into a long-term partnership agreement with the privately-owned Swedish hotel chain HKC Hotels.

The partnership agreement covered purchasing, sales and marketing and meant that HKC Hotels' five hotels in Sweden would join the Rica Partner Hotel organisation, Rica Hotels said.

Americans Are Still Traveling, But Their Reasons Are Personal
 
/PR Newswire/  -  The travel industry may be suffering, but nearly three quarters of the population have stayed in a hotel room over the past 12 months, according to a recent eBrain Market Research Online Poll. Although the reasons why they traveled and where they stayed vary almost as much as the population.

"The economy may be negatively affecting business travel, but a vast majority of Americans have stayed in a hotel in the past year, largely for personal reasons," said Tim Herbert, Director of Research for eBrain. "And people are definitely multitasking when it comes to travel, 26% of our respondents said they combined work and leisure during hotel stays in the past year." Men were more likely than women to combine the two and as the respondents' annual income rises, so does the likelihood of mixing business with pleasure. Only 8% of respondents said business or work was the primary reason for a hotel stay in the last 12 months.

People are also more likely than not to share a hotel room as only 20% said they stayed solo on their last trip. Americans with an annual income of $ 75,000 or higher take more business trips, are more likely to pair personal and business stays and are most likely to stay in a large hotel chain. Marriott enjoys the highest degree of loyalty among hotel chains from this demographic with 15% saying they stayed at a Marriott hotel the last time they traveled. Holiday Inn was the overall favorite, with 10% of all respondents claiming to have stayed there on their most recent trip.

"But regardless of brand loyalty, location was the primary reason to choose a hotel for 44% of those surveyed," said Herbert.

The eBrain Online Poll was fielded via a web-based survey to a national sample of 1,000 U.S. households during the week of August 26, 2002. The results are representative of the online population. The eBrain Online Poll is a multi-client survey that provides an inexpensive, quick means to gauge consumers' opinions. Contact eBrain for more information about fielding questions in future polls.

eBrain is a full service market research firm providing comprehensive, cost-efficient data solutions. eBrain strives to provide quality research at affordable prices by leveraging technology. For more information contact Amber LaCroix, 703-907-7451, AmberL@eBrain.com or visit http://www.eBrain.com.

More records set as August 2002 Hong Kong visitor arrival figures pass 1.5 million

AsiaTravelTips.com   -  Hong Kong's tourism industry is maintaining this year's record-breaking trend, with arrivals in a single month passing 1.5 million for the first time in August 2002, the Hong Kong Tourism Board (HKTB) announced today (26 September).

Arrivals from all markets totalled 1,501,078, a 20.5% increase on the figure for August 2001. Meanwhile, arrivals from Mainland China, which reached a new peak of 565,322 only the previous month, eclipsed this record by soaring to 659,726 in August, a 55.6% year-on-year increase. All other markets except The Americas also recorded healthy growth.

A surge in Mainland and South & Southeast Asian visitors in the last week of August took final arrivals for the 11-week HSBC Mega Hong Kong Sale promotion to 3.52 million, a growth of 16.6% compared with the same period in 2001. This comfortably exceeds the original forecast of 3.25 million visitors for the sale period.

For the first eight months of 2002 to date, total arrivals have now increased by 14.4% to 10,372,874, leading the HKTB to upgrade its full-year forecast to 15.35 million arrivals, representing 11.8% growth on the 2001 result.

HKTB Executive Director Clara Chong explained that the Board had taken a conservative view in drawing up its original 2002 forecast of 14.8 million visitors (+7.9%) at the beginning of this year. "A number of our markets were going through economic uncertainties at that time, while the global tourism market was still suffering the effects of the September 2001 terrorist attacks," she noted.

"Indeed, the market remains quite fragile, as these issues still exist, while there are added concerns such as turbulence in the airline industry and the possibility of conflict in the Middle East. We therefore continue to take a cautious outlook. Nevertheless, we are now confident that a final arrivals figure well in excess of 15 million is achievable."

The powerful driving force behind Hong Kong's success this year, Ms Chong observed, was clearly the Mainland China market. "At this time last year, the highest number of Mainland visitors we had ever welcomed in a single month was 423,000. We reached the half-million mark for the first time in April this year, and now we are seeing numbers in excess of 650,000. With the number of authorised Mainland travel agencies being further increased from 67 to 528 at the beginning of October, we can expect to see this trend continuing."

Analysis by Markets

In addition to Mainland China, where August is the peak month for student and family travel, most other source markets showed encouraging growth in August. Arrivals from South & Southeast Asia grew 7.4% compared with the same month last year, led by Thailand (+19.7%) and the Philippines (+18.2%). As well as increased leisure travel attracted by special HSBC Mega Hong Kong Sale packages, business traffic from this region was boosted by a number of major trade fairs held in Hong Kong during the month. Arrivals from Taiwan recorded their first increase since February, with the recent increase in air capacity helping contribute to 2.2% visitor growth. North Asian arrivals increased by 1.0%.

In the long-haul markets, arrivals from Australia, New Zealand & South Pacific continued their upward trend, growing 3.1%, while those from Europe, Africa & the Middle East rose by 1.6%. Only The Americas (-1.3%) recorded negative growth, with stock market concerns and fear of more terrorist attacks continuing to have an effect on long-haul travel from the United States. Nevertheless, arrivals from Canada increased by 1.8%.

Cumulative figures for the first eight months of 2002 show Mainland China leading the way with a 44.8% increase to 4,110,047 arrivals, almost as many as for the whole of 2001. Arrivals from South & Southeast Asia are showing a 4.5% increase, followed by Europe, Africa & the Middle East (+3.0%) and Australia, New Zealand & South Pacific (+1.5%). On the other hand, The Americas (-0.1%), North Asia (-1.1%) and Taiwan (-2.5%) currently remain in negative overall growth, although the latter two markets are now showing an encouraging upward trend.

Same-Day Visitors

During August there was a small increase in the percentage of visitors staying for one night or longer, which rose to 67.1% from 65.9% in the same month last year. The remaining 32.9% continued to other destinations on the same day. There was an increase of two percentage points, to 74.9%, in overnight stayers from Mainland China, while more visitors from Taiwan also stopped overnight, although this remains the principal "short stay" market with only 26.6% staying for one night or more. At the other end of the scale, 81.9% of all visitors from The Americas did so.

For the first eight months of the year to date, 64.6% of all visitors have stayed for one night or longer, an almost identical figure to the 64.7% recorded in the same period in 2001.

Hotel Occupancy

Average hotel room occupancy across all categories was 86% in August, a significant increase on the 81% achieved in the same month in 2001. The improvement was reflected across all different categories of hotels and tourist guest houses, with top tariff (High Tariff A) hotels achieving 78% occupancy (2001: 72%) and medium tariff hotels 89% (2001: 86%).

Hotels in Yau Ma Tei and Mong Kok averaged 93% occupancy, while those on Hong Kong Island outside the main Central to Causeway Bay corridor achieved 91%.

For the first eight months of the year to date, average occupancy stands at 82%, compared with 79% in the same period of 2001. Nevertheless, there is still downward pressure on hotel room rates, with average achieved rates showing a 10.8% fall to HK$677 compared with the first eight months of last year. 

Traditional Versus Cyber Trade Fairs

The threat to travel exhibition organizers from 'Virtual Trade Fairs' is nonexistent, claims a report. Vanessa Baubock, commissioned by the European Tourism Trade Fairs Association (ETTFA), conducted a one- year study of both physical and virtual exhibitions. Her findings show that Internet expos are claiming to be up to seven times more cost effective, easy to access and free from the logistical headaches that face any traditional fair. But, while market share for online fairs is increasing, the Baubock report says their physical counterparts still outstrip them at the most fundamental level.

While maintaining the confident image, many exhibition organisers nevertheless have detailed knowledge of their high-tech competitors. Meanwhile, among show- goers, the aftershock of Sept 11th gave rise to uncertainty: might virtual fairs, cheaper and more time- efficient to run and attend than real ones, soon become the better option? Certainly the spectre of virtual shows has caused sleepless nights in the travel expo industry. But is there anything to worry about?

According to the Baubock report, virtual fairs offer some tremendous advantages to visitors and exhibitors alike - attractions with which physical fairs cannot compete. Besides obvious savings in time and travel xpenditure, the absence of materials means that exhibiting online costs a fraction of the 'real world' price. The scope for each exhibitor is seemingly limitless (and not measured in square meters); a single stand can hold seminars, competitions, product demos and onversations simultaneously. And the 24/7 nature of the Internet means that visitors who would be unable to attend a physical fair can visit online. 

The biggest advantage, however, is that a decentralised trade fair held in cyberspace is far more likely to ride out waves of economic uncertainty. Despite all of this, physical exhibition organizers remain confident that they will retain a comfortable lead - and their clients appear to agree. With physical fairs enjoying steady growth and their virtual counterparts yet to mount a coherent offensive, it seems unlikely that any collision will take place in the foreseeable future. But the Baubock report, which assimilated data from a large number of fairs and consultations with members of the ETTFA, recommends that a 'third way' be taken.

The most surprising revelation of the report, however, is that to date, no-one has thought of this yet. "In a year of research, I could not find one exhibition that had been approached by a virtual fair with a view to collaboration," Ms Baubock says.

Marriott anticipates higher profits for third quarter

(Dow Jones/AP) -- Shares of hotel giant Marriott International Inc. rose Thursday after it said profits for the third quarter may be higher than analysts' expectations, thanks in part to its synthetic fuel production business.

When it updated its forecast Wednesday, the world's No. 1 lodging company also confirmed its previous third-quarter forecast for lodging operating profits and earnings, before charges for exiting the distribution services business.

Wall Street analysts were looking for Marriott to earn 42 cents a share for the third quarter, according to First Call.

New York Stock Exchange listed Marriott International shares traded Thursday morning at $29.81, up $1.61, or 6 percent.

On July 11, Marriott reaffirmed its estimate for third-quarter earnings of 41 cents to 43 cents a share. The Bethesda, Md.-based company confirmed its quarterly earnings expectation of $160 million to $165 million for its core lodging business.

In the quarter ended Sept. 7, 2001, the company earned $101 million, or 39 cents a share, which met First Call estimates.

Marriott plans to report third-quarter earnings on Oct. 3.

The company has more than 2,000 units worldwide, including hotels, vacation ownership resorts and senior living communities. Its brand-name hotels include Marriott, Courtyard, Residence Inn and Ritz-Carlton. 

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