Marriott,
Operators Discuss Fees Washington
Post -
Marriott International Inc. of Bethesda said yesterday that it has
met with the bulk of its hotel owners and franchisees that have large or
multiple properties to explain how it charges those properties for its
management services. Marriott
said it began disclosing the information in an effort to be more
communicative after several owners filed lawsuits against the giant
hotel-management company, accusing it of mismanagement and racketeering. In
an Oct. 7 letter to owners and franchisees, William J. Shaw, Marriott's
president and chief operating officer, and Stephen P. Joyce, executive vice
president of owner and franchise services, said the company intends to
"step up our communication efforts" and "increase the
transparency with which we conduct our business." The
meetings began in the past few months, Marriott said. The
company is facing four lawsuits that include allegations that the hotelier
accepted kickbacks or rebates from vendors when ordering supplies and didn't
properly disclose accounting charges for things such as customer-loyalty
programs. Marriott
has denied the allegations and has said the costs and fees are disclosed in
management contracts with owners. The
lawsuits have "heightened concerns and interests among a broad group of
owners and franchisees," Joyce said. "We
needed to go out and work actively to fight off the negative publicity
that's raised the concerns." The
economic downturn and its accompanying slowdown in travel, especially
business travel, has driven owners to put increasing pressure on managers to
show where their money is being spent. Marriott
acknowledged in its letter, which is posted on its company Web site, that
its "centralized business model is complex." The company said it
will create new Web-based software to give owners detailed accounting
information. This is the first time, owners said, that they will have such
access to bills and charges. Marriott said the software will be available
early next year. In
the information to owners, Marriott also explained the workings of Avendra
LLC, a joint venture between Marriott and several other hotel companies that
orders goods and supplies for hotels. In some of the lawsuits, Avendra's
operations have figured prominently and the company itself has been named as
a co-defendant. Marriott
said it owns "less than 50 percent" of Avendra and lost $1 million
on the venture last year. Among its partners in the venture are Hyatt Hotels
Corp. of Chicago, Six Continents PLC in London, Fairmont Hotels &
Resorts Inc., and ClubCorp USA Inc. Last
year, Avendra took in about $20 million in cash rebates for Marriott hotels.
About $8 million of that went back to Marriott, which passed it on to
owners, Joyce said. Avendra kept the rest for its expenses. Lawyer
William Wallace, who represents the Flately Family Trust, which has sued
Marriott, called the Oct. 7 letter "smoke and mirrors." The trust,
which owns the Boston Marriott Quincy Hotel, filed a countersuit in federal
court in Massachusetts with charges of kickbacks after Marriott sued Flately
for trying to end its 30-year contract to manage the property. Other
hotel owners, however, said they appreciated Marriott's recent efforts. "I
argue with them all the time," said Gene Carter, president of
Dallas-based Western International, which owns and franchises 18 Marriott
hotels. He
said that during his 22-year relationship with Marriott he has questioned
accounting charges at his hotels and that when he asks for the supporting
documents, he has gotten them from corporate headquarters. "Some
of the owners didn't have the detail they wanted," Carter said about
the charges. "I don't think there's been any wholesale gouging on
Marriott's part. "I think Marriott's major problem has been one of
communication and not one of dishonesty." Positive
Growth in the Second Quarter Written
By: Antonia G. Viens
HVS
International The Data Collection and Research Department of HVS
International recently completed a study of major hotel transactions that
occurred between the first and second quarters of 2002. In the study a major
transaction is defined as a hotel that sells for $10 million or greater. Our
findings indicated a positive trend both in increased transactions (albeit a
modest increase) and the aggregate dollars transferred. Barring any
unforeseen catastrophes, hotel sales activity is rising from their recent
recessionary nadir and showing signs of gaining a foothold toward
stabilization. While the 15 major transactions occurring in the second
quarter were only two more than the 13 that occurred in the first quarter,
the dollars transferred increased by more than 184%; major hotel sales
volume increased from $282 million in the first quarter to $802 million in
the second quarter. This sizeable percentage change in aggregate dollars
transferred was due in large part by several larger hotels selling in the
second quarter than in the first quarter. The largest sale occurring in the first quarter was the
purchase of the 353-room Omni Jacksonville Hotel in Jacksonville, Florida
for $52.4 million, or $149,000 per room. The remaining 12 sales had sale
prices between $10 and $50 million. In the second quarter, the largest sale
was that of the 1,147-room Boston Marriott Copley Place in Boston,
Massachusetts for $214 million, or $187,000 per room. In addition to the
Boston Marriott selling, four other sales occurred ranging in sale price
between $25 and $200 million. While the transaction volume is considerably lower than in
previous years, the limited number of sales is not necessarily a bad sign.
Buyers and sellers are apparently willing to consummate transactions, though
they are not always able to agree on price. Sellers are not generally
desperate to sell; actually a positive sign indicating that hotels operating
with reduced average daily room rates and reduced occupancy are still meeting expenses and
debt service, thus allowing owners to wait until prices increase. To that
end, there appears to be mounting pent-up demand for major hotel
transactions to occur by the year’s end. In order to provide some perspective regarding the second
quarter’s major transactions, a brief look back at the last year and a
half is in order. The national economic slowdown commenced in earnest in
early 2001, causing the hotel industry to suffer reduced occupancies and
average room rates. The tragic events of September 11th, 2001
further exacerbated this downturn. At the end of 2001, a total of 105 major
transactions had occurred, a sizeable decrease in annual sales relative to
each of the previous years since 1995. The reduced sales volume in 2001 was
predominately the result of the severely diminished number of major
transactions during the last four months of the year. In the last four
months of 1999, 46 sales occurred, while 39 sales occurred during the same
period in 2000. In 2001, 24 sales occurred during this period, as many
buyers and sellers opted for a “wait-and-see” stance in the final months
of the year. This reduction in major hotel transactions carried over into
the beginning of 2002. January and February of 2002 witnessed a total of 11
major hotel transactions. During these two months in 1999, 22 sales
occurred, 18 sales occurred in 2000, and 24 sales were recorded in 2001.
Sales remained slow through the first half of 2002. Even in June, a
traditionally busy month for hotel transactions, only nine sales occurred.
In June 1999, 11 major transactions occurred; in June 2000, 24 transactions
occurred; and in June 2002, 23 sales occurred. The following table shows the
number of sales occurring during the first six months of 2002, compared with
the numbers occurring during the first six months of 1999, 2000, and 2001.
In the first half of 2002, major hotel transactions were off
roundly 60%, based on the average number of sales occurring in 1999, 2000,
and 2001. While this may appear to be discouraging news, these numbers are
adhering to a typical real estate cycle, wherein decline is followed by
stability and then growth. This is the essence of whatever good news
can be extracted from the data. Given the modest increases being recorded in
terms of transaction volume, it is reasonable to expect that stabilization
may be underway by the end of 2002. The increases in transaction volume and
total dollars transacted from the first to the second quarter allude to this
nascent recovery. The following table compares sales data from the first and
second quarters of 2002.
For
more detailed information regarding major transactions, please contact
Antonia G. Viens, Director of Data Collection & Research at (860)
432-2102. To order a copy of the Summer 2002 Hotel Transactions
Quarterly, where the major transactions are listed and discussed,
contact Joan Raffetto at (516) 248-8828. As an introductory offer to the HVS
Quarterly publications, a $250 purchase of the 2001 Major Hotel
Transactions will also include the quarterlies for 2002. Hotel sale
information provided in this article is predominately derived from HVS
International’s Lodging DataBank, where HVS International maintains
information on hotel sales and hotel operating histories spanning more than
three decades. With this significant volume of relevant data, the HVS Data
Collection & Research Department is well equipped to provide information
and support to the hotel industry Efforts have been
made to verify information that has been presented, but its accuracy and
completeness cannot be guaranteed. Opinions, estimates and projections
constitute our judgment and are subject to change without notice. Antonia
G. Viens
HVS
International Jarvis
Hotels deal will pay £85m to investors Telegraph
- Jarvis
Hotels is to return up to £85m to investors after
agreeing a £150m sale and leaseback of nine of its 66 hotels. The company, in which entrepreneur Jack
Petchey has built a 23.45pc stake at about 110p-120p a share, is selling the
properties to a consortium of private investors, advised by venture
capitalist Lioncourt Capital. They include the Ramada London West in Ealing
and the Ramada Jarvis, Hyde Park, and are in the books for £92.4m. Jarvis will then return up to £85m through
a tender offer to all shareholders at 137.5p a share, representing 36pc of
the issued share capital. The shares rose 16.5 to 120.5p. John Jarvis,
chairman, said the deals were necessary to close the discount between the
market price and the group's net assets. "What we've got is a lot of value in
this company that was doing nothing," Mr Jarvis said. "Everybody's
got the same problem but we've got to see our way through it. This is a way
of looking after our shareholders when the market is not working for
us." He said that, unlike rivals' deals,
"there are no turnover warranties". The 35-year leaseback will see
Jarvis pay annual rent of 31pc of turnover, subject to a minimum of £9.9m.
One leisure analyst said: "The rent in bad years will be less than the
rent in good years. "The most important thing, though, in
closing the net asset gap is giving capital back to shareholders." Net
assets were 143p a share in the late Luxury Hotels Feel Sting of Fewer Business Guests
New York Times
- The Sept. 11 terrorist attacks brought leisure travel almost to a
standstill and worsened the slowdown in business travel, which had been
limping along since early that year. Now that leisure travel has been
inching up in recent months, midscale and economy hotels are showing slight
improvement. Luxury hotels have also begun to show some improvement, at
least in number of occupied rooms, though they have had to make sharp
discounts. Historically,
luxury hotels have depended heavily on business travelers and international
visitors, especially the formerly free-spending Japanese. But with corporate
America reining in travel expenses and Japan's economy in a prolonged slump,
such guests are becoming rare. "Luxury
hotels usually do O.K. in hard times, because their guests have the
money," said Ernest Watari, the chief executive of PKF Hawaii, a
Honolulu consulting firm that tracks the performance of hotels and other
tourism businesses. "But this time around, the combination of 9/11 and
the falling stock market have kept a lot of them away." The
largest number of guests at many luxury hotels these days are likely to be
leisure travelers taking advantage of rates that are still down by as much
as half. One
result is that through the first six months of this year, the latest period
for which results are available, revenue per available room — a
measurement of average occupancy and the average price for a room that is
widely known as revpar — fell an average of 10.2 percent to $96.95 at
luxury hotels in the nation's top 25 hotel markets, according to Smith
Travel Research, the hotel industry scorekeeper. Luxury, in this case, means
being in the top 10 percent of hotels in the area. Because
this figure is derived from occupancy rates and the prices actually being
charged, it is widely regarded as an important indicator of hotel health —
and it strongly suggests that the luxury sector is none too well. The
only markets this year where revenue per available room among luxury-class
hotels exceeded that of the first six months of 2001 were Norfolk-Virginia
Beach (up 11.7 percent to $66.59) and Philadelphia (up 5 percent to
$100.32.) The
Norfolk-Virginia Beach market benefited this year from an increase in
tourists from nearby cities and states, and from an influx of military
personnel and defense contractors visiting the area's Navy bases. Philadelphia
hotels benefited from the city's $3.6 million campaign, which succeeded in
enticing convention delegates as well as tourists within a 300-mile radius
of Philadelphia. Guests were offered a two-for-one weekend stay and free
parking at any of more than 40 hotels. By the time the five-month promotion
ended in March, it had generated more than 280,000 room-nights. The
biggest losers among luxury hotels were those in the San Francisco area,
where revenue per available room plunged 24.4 percent over last year to
$111.27, and Boston, where the figure dropped 17.6 percent to $118.27. Other
markets that experienced double-digit declines include Miami (15.7 percent
to $133.33) and Seattle (15.1 percent to $90.86). Duane
Vinson, a research analyst with Smith Travel Research, said that while the
combination of terrorist attacks and curtailed business travel had hurt
sales at most luxury hotels in large cities, other factors had also
contributed. In the San Francisco area, the demise of dot-com companies took
a heavy toll, while Boston's troubles were compounded by the loss of
conventions. By
contrast, luxury hotels in New Orleans and San Diego benefited from being
within driving distance of vacationers and weekend visitors who did not want
to stray far from home. Many
hotels have been offering an assortment of inducements. On weekends that the
Houston Astros baseball team played at home, guests at the Four Seasons
Houston could book two rooms and free parking for $255, a $400 value. Guests
who stayed two nights in a suite at the fancy Windsor Court in New Orleans
during July or August were given the third night free. Through Dec. 30,
guests who pay the rack rate at the Ritz-Carlton Laguna Niguel in Southern
California will receive the fifth night free. As
for Hawaii, the dream destination for many Americans, revenue per available
room plummeted 16.1 percent to $122.83 at luxury hotels during the same six
months on the island of Oahu, according to Smith Travel Research. But when
the islands of Maui, Kauai, Hawaii and Molokai were included, the figure
fell somewhat less — 10 percent, to $210.15, according to PKF Hawaii.
"Although the Hawaiian luxury hotel market is hurting somewhat,"
Mr. Watari of PKF said, "nearly every other resort destination would be
ecstatic with those results." Georgia
Tourism Helping in Economic Recovery Efforts AFX - FBD Holdings
PLC said it reached agreement to increase its holding in Tower Hotel Group
Ltd to 75% from the current 50% for 9 million euro in cash. FBD is to raise the stake by acquiring 50.001% of the issued
share capital of Travelplan Ltd, which holds 50% in the Tower Hotel Group. The Tower Hotel Group, which operates a chain of hotels,
commenced trading in 1981 when FBD Insurance PLC and Travelplan Ltd came
together to acquire the Tower Hotel, Waterford. Since then, the Castlerosse Hotel in Killarney, Temple Bar Hotel, Dublin, Tower Hotel, Sligo, Faithlegg House Hotel, Waterford and the recently opened Tower Hotel in Derry City have been added to the group. The net assets of the Tower Hotel Group at Dec 31 2001 amounted to 27.3 million euro and the Group made a net profit of 2.3 million euro in the year to that date, FBD Holdings added. Marriott International Loans Executive To The Teaching Hotel At Cornell University Innovative Director Of
Food And Beverage Appointment Links Statler Hotel And Industry Thai
Hotels' Occupancy Rates Dip Slightly The
average occupancy rate in Thai hotels fell to 69 percent, compared with 73
percent for the same period last year, said Prakit Chinamornpong,
secretary-general of the Thai Hotels Association (THA) which has 420
members. Mr
Prakit said that before Sept 11 last year, the local hospitality business
had been performing very well. Therefore, compared with last year, the
industry had not fully recovered yet, he said. However,
he expected that the hotel business would pick up by the end of this year
as bookings were much higher than in the same period last year, when
people stopped travelling after the Sept 11 events. Mr
Prakit said he expected the average occupancy rate for the year would
reach 71-72 percent, up from 70 percent for all of 2001. M.R.
Sarisdiguna Kitiyakara, chairman of the New Imperial Hotels Group, said
that a possible US-Iraq war was the main reason for the slowdown in global
tourism, which would also adversely affect the occupancy rates of Thai
hotels. However,
Bill Heinecke, chairman of Royal Garden Resorts (RGR), disagreed that the
hotel business this year had declined compared with last year. Mr
Heinecke said RGR's performance had been strong this year, due mainly to
the fact that its properties were spread throughout the country in
strategic tourist locations. "It
would be easier (for the industry) to be better than last year which had
the Sept 11 events," said Mr Heinecke. He
said that RGR focused more on leisure travellers while hotels that
concentrated on corporate clients may have been hurt more by the
uncertainty of the world situation. The
average occupancy rate for RGR properties was above 60 percent in the
first nine months of this year, about the same as last year. But the
average room rates were higher by 10 percent, said Mr Heinecke. The
Royal Orchid Sheraton also achieved an increase of three percentage points
in occupancy rates in the first three quarters of this year, said general
manager Peter Thompson. "We
have been focusing on new markets with an aggressive sales effort by
increasing our overseas sales trips this year," he said. The
Banyan Tree Bangkok has also been performing better, with occupancy rates
increasing from 66 percent last year to 78 percent in the first nine
months of this year, said general manager Bernardo Schroder. The
growth was based on the hotel's rebranding from Westin to Banyan Tree
which helped attract more leisure tourists, particularly from North Asia
and Europe, said Mr Schroder. "We
now have a stronger brand for the leisure market," he said, adding
that its famous spa facility was also a significant attraction. In
a related development, shareholders of New Imperial Hotels Plc yesterday
voted to approve the delisting of the company from the Stock Exchange of
Thailand. Liquor
tycoon Charoen Sirivadhanabhakdi, through his holding firm TCC Group, had
sought to delist the company to improve operational flexibility, said a
company executive. TCC now holds a 46.65 percent stake in the company,
whose flagship is the 1,400-room Imperial Queen's Park Hotel in Bangkok. Study
Shows Spas as Tangible Asset to Resorts The spa consulting firm, Health
Fitness Dynamics, Inc. (HFD) has just announced the results of its most
recent economic study, The HFD Study of Revenue Per
Occupied Room for Resort Spas. Twenty-eight (28) properties
participated in the study. The spa gross revenues did not include
membership fees and dues or hotel-related room nights and F&B related
to spa packages. Most spas have a market from people in the
community who use it as a day spa and this income is part of the spa gross
revenues. We excluded the highest and lowest
properties due to the significant extremes in their numbers. Of the
remaining 26 properties, the average Revenue Per Occupied Room was $35.28.
According to HFD’s President,
Judy Singer, “this confirms the spa’s value as a tangible asset to the
property. Furthermore, past economic studies by our company have
shown that spas also help the resort in terms of their marketing
advantage, occupancy and perceived value for room rate. “ Singer adds, “as spas continue to
position themselves as viable businesses, it is important to have accurate
economic benchmarks.” In addition to being the spa consultant to
over $600 million worth of completed spa development since 1983, our firm
has also funded and conducted numerous economic and consumer research
studies as a means of helping owners, developers and operators of spas to
understand their marketability and profit potential within the hospitality
industry.” For more information, contact Judy
Singer…hfd@hfdspa.com or visit the web site
www.hfdspa.com .
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