Europe’s hotel industry:  France posts record performance  for September

In Europe, the RevPAR grows by 5.6% in September
The rise in the RevPAR ranges between +2% and +5%
in most European counties

France has an exceptional September
The RevPAR gains 13.5% in September across all categories
|In 4* growth reaches 25.6%

In Paris, the RevPAR grows by 26.1% in September
In 4* the rise is by 36.3%  

Methodology

This study is based on a sample of 5,000 corporate operated chains in Europe, representing 500,000 rooms.  The data, gathered monthly from each hotel, is redressed according to the segmentation of the corporate operated hotel chain supply, and by the weight of each country in the European Union.

These results come from figures supplied by the hotel chains located in France and throughout Europe, of which MKG Consulting is the official statistical supplier.

The complete dossier concerning the hotel activity in France and in Europe will be published in the November edition of HTR magazine.  

MKG Consulting has the largest hotel database in the world, outside the United States, with the best coverage of all the hotel segments

MONTHLY REsults FOR CORPORATE OPERATED HOTEL CHAINS

BY COUNTRY: SEPTEMBER, ALL SEGMENTS

Source : MKG Consulting Database – October 2002
Official statistics from corporate operated hotel chains
ARR and RevPAR are in local currency

MONTHLY REsults FOR CORPORATE OPERATED HOTEL CHAINS

PEr segment: SEPTEMBER, EUROPEAN UNION

Source : MKG Consulting Database – October 2002
Official statistics from corporate operated hotel chains
ARR and RevPAR are in local currency

Among the most significant facts from the summer of 2002, the following merit particular attention:

1- The revenue per available room is now on an uptrend in Europe

A year after the events of September 2001, the European hotel industry’s awaited rebound took place in September 2002. The occupancy rate grew by 0.7 points to 76.2%. The average daily rate gained 4.6% and the RevPAR improved by 5.6%. The last time the RevPAR progressed dates to April 2002 and one has to go back to 2001 to find similar growth.

France is the reference country with a monthly RevPAR up by 13.5%. In Belgium the RevPAR dropped by 6.6%. Brussels, in particular, did not have an exceptional September, while other European countries post particularly homogeneous increases from one country to the next: in Germany, Austria, Spain, Italy, The Netherlands, Portugal and the United Kingdom the rise in the RevPAR falls within a range from +2% to +5%. While some countries are able to compound the increase in the occupancy rate and the average daily rate (Austria, France, Italy and The Netherlands), others managed to compensate for the drop in their occupancy rate by increasing their average daily rate. Finally, it will be observed that the average daily rate drops slightly in the United Kingdom while the occupancy rate progresses by 2.2 points. Despite high occupancy rates (78.5% on average) British hotelkeepers limited the inflation of their rack rates. Nevertheless September remains a good month for Europe’s hotel industry. Despite being below performance posted until March 2001, it nonetheless enables European hotels to return to the growth track.

 The categories posting the best results in September are the 4* (RevPAR up by 8%) and the 2* (RevPAR up by 7.2%). The 2* category once again confirms excellent resistance to the economic slump and the consequences of the attacks in September 2001. The 4* category, on the other hand, which had pretty much got used to indicators following a downtrend in these last months, benefited from an awaited influx of “Business” customer and the clear success of the many trade fairs held each September.

2- France does better than all its European neighbours

All indicators were in the green. France once again saw its RevPAR on the same level as in September 2000 (around 60 euros), which is exceptional considering the growth of the offer in budget categories. The increases posted by the segment are worthy of the best times in 1998 / 2000 with increasingly significant improvements as we rise in category. The 2% to 7% increases in the RevPAR posted for the budget categories are below the +8.5% recorded for 3* and particularly the 25.6% rebound boasted by the 4* segment ! These strong rises are the result of a double lever effect: price / occupancy. The occupancy rate grew by 1.4 points across all segments and gains up to 4.8 points in 4*. The average daily rate progressed by 11.5% on the market overall and by nearly 18% in 4*.

The fact remains that these results are above all representative of the hotel industry in the Ile de France and the Paris region in particular. Thus, we see the RevPAR gain 5.9% in the provinces, 10.9% in the Ile de France outside Paris and 26.1% in Paris. The most spoiled in Paris are 4* hotels (+36.3% for the RevPAR), but strong growth (+14.1%) may also be observed in the 3* category.

These results do not suggest a mass return of American customers but rather the growing strength of other nationalities. They also suggest a sophistication of the commercial strategies and tools used by the vast majority of hotelkeepers. Finally, these excellent results prove the success of congresses and exhibitions that took place in the capital. The fashion trade fair (end August / beginning September) and above all the World Automobile Show (end September / October) were excellent editions.

2- A clear improvement of results in the mid-term

These good monthly results thus made it possible to see clear improvement of the trend in the mid-term. On 12 sliding months, the RevPAR lost 8.1% at end August 2002. At end September, the revenue per available room drops by only 5.7%. In 4* in particular, the situation made a distinct improvement (from -14% at end August to –10% at end September).

The budget segments, on the other hand, continue to post constant growth from month to month and, on 12 sliding months, at the end of September, the rise in the RevPAR is around +3/4%. The budget categories confirm their insensitivity to the economic slump and the drop in international travel.

September’s uptrend should be confirmed in the fourth quarter. The months to come should corroborate with the trend that has been developing for several months: the fail proof resistance of the budget categories, a renewal of business in the mid- and upmarket categories, an occupancy rate that is either stable of that improves slightly (considering the development of the supply in particular) and an average daily rate, on the other hand, result in clear growth. Even if an eventual United States intervention in Iraq leaves a certain amount of doubt about the extent of the recovery, we can count on hotels to close the quarter with their business indicators rising.

For further information,
please contact Georges Panayotis on +33 (0)1 56 56 87 90
Website:  www.mkg-consulting.com

The Hidden Costs of a Hotel Room

New York Times  -  I CHECK into the hotel room and, as always, march around on inspection like a Parris Island drill sergeant. Sure enough, I spot things. On a tray by the television, for example, is a bottle of water with a cardboard sign hanging around its neck like a clown-school regimental tie.

"$6.00 Liter. Enjoy!" the perky sign says.

Who can enjoy a hotel room that tries to peddle you a $6 bottle of water before you get your bags unpacked? I check out the minibar. Here are some prices: Pretzels, 1.5 ounces, $3; M&M's, 3.14 ounces, $3; "Breath Saver Kit," consisting solely of a plastic bag with a five-stick pack of Wrigley's gum and a regular roll of Lifesavers, $3.50.

The name of the hotel is the Wyndham Checkers. It's a nicely refurbished 188-room luxury boutique hotel in a terrific location right behind the grand old Biltmore Hotel on Pershing Square in downtown Los Angeles.

All over, hotel minibars and surcharges continue to be a major irritant for business travelers. I single out this particular hotel partly because I often go on in this space about how some big hotel companies, Wyndham among them, are really beginning to understand that business travelers hate paying felony-hijack-level prices for a bag of crackers.

The Wyndham room was fine — quiet and comfortable, if a bit smallish, and with an inadequate work desk. At check-in, the desk clerk elaborately inquired about which newspaper I would like delivered each morning, but no newspaper appeared on any day.

Checkout brought additional surprises. On the bill were three room-service breakfasts I never ordered (the clerk removed them); various $95-cent fees for picking up the telephone to dial a toll-free number; and a $10.83 charge for a one-minute call to Manhattan that would have cost less than 40 cents on my home phone bill.

So I was loaded for bear when I phoned Wyndham International, the hotel company whose brand name adorns the Wyndham Checkers.

I've written favorably about Wyndham, which markets heavily to female business travelers and which introduced an innovative customer-preference loyalty program called ByRequest whose enrollment has more than tripled to about a million since last June.

In July, the last time I spoke with Fred Kleisner, Wyndham's affable chief executive, we discussed the fact that business travelers hate these fees and especially loathe the minibar shakedown.

Mr. Kleisner said then that Wyndham, having already moved to sharply reduce telephone surcharges, was looking hard at the minibar problem. "I just don't think you should have to pay $15 for a can of peanuts," he said.

So what's up in downtown Los Angeles, I asked him.

Plenty, actually. It seems that Wyndham officials have already had pointed discussions with the private company that owns the Wyndham Checkers and operates it as a franchisee. By what both sides said was mutual agreement, the Wyndham name is coming off the property.

Minibar pricing was partly at issue in the decision to haul down the Wyndham flag when the Los Angeles hotel didn't go along with a new policy requiring across-the-board price reductions, Mr. Kleisner said.

He explained, "One of the core issues I had was, while it's a very interesting and with-it hotel, when we franchise our name you must subscribe 100 percent to our brand requirements, and the minibar issue is a big issue to us."

Without publicity late last summer, Wyndham had established new policies for hotels under its brand that drastically reduced prices for nonalcoholic drinks and candy bars and other selected snacks from in-room minibars. Nothing could be priced higher than a comparable item sold in a hotel vending machine, he said.

"The big M&M's and the big Snickers bars, the movie theater size, are set at $1.25," he said. "Last summer I said, let's just fix this. Our policy now is we have a great opportunity to increase revenues in our minibars by lowering our prices on selected items and selling more of them."

On Dec. 2, the Wyndham Checkers, which is owned by Tarsadia Hotels, a privately held California-based hotel company, will operate under the Hilton Hotels brand and be known as the Hilton Checkers, said Joe Mottershead, the general manager.

Mr. Mottershead said that the change in brands represented a "great opportunity" for the hotel, which he said had "been the leader in occupancy in downtown Los Angeles for a long time," though the downtown market was currently "depressed" as convention and meetings business had fallen off. Hilton has 11 million members in its customer loyalty program, Hilton Honors, he noted.

He said he wasn't aware of any dispute about Wyndham policies such as minibar prices. "My understanding is we basically wanted more business and we felt that the power of the Hilton brand" could entice to the downtown area Hilton loyalty members who now stay in Hilton properties on the more-glamorous west side of town, closer to Hollywood and Beverly Hills. "There's no other Hilton brand" downtown, he added.

Still, the change in flags may present an opportunity to have a closer look at those minibar prices, Mr. Mottershead acknowledged. "We're actually going through all the pricing at the hotel anyway, and we're kind of revisiting that," he said.  

Jim Rosenberg to step down from post as President/COO of Winston Hotels

Rosenberg, who joined the company in 1998, is leaving to fill a top position at a publicly traded U.S. apartment real estate investment trust, according to a Reuters report.

Shares of the company, which owns 53 hotels in 16 states, closed Monday, Oct. 28, up about 1.2% at $6.80 on the New York Stock Exchange.

Rezidor SAS  to Manage Three  Al-Hassawi Group Hotels in the Middle East;

Rezidor SAS, the parent company of Radisson SAS Hotels & Resorts, which currently operates six Middle East properties, announced that it will immediately re-flag three hotels – including two that were previously Holiday Inns – to Radisson SAS with two additional hotels to be added by January 2003.  Including three properties already under development, the announcement brings the company’s total number of hotels in the region to 14.

The three newly re-flagged hotels are in the United Arab Emirates (U.A.E.), Lebanon and Saudi Arabia, and are owned by the Al-Hassawi Group.  Two more Saudi Arabian hotels, one in Jeddah and one in Riyadh, will join the chain’s Middle East network by January 2003.

Kurt Ritter, president & CEO of Rezidor SAS Hospitality, said, “Our portfolio of hotels in the Middle East may not yet be as large as that of other chains, but our Fresh, Host and Easy approach to hotel management and guest services, combined with our award winning ‘Yes I Can!’ training programs, have made Radisson SAS stand out amongst our competitors. The demand for the Radisson SAS brand is substantial and the fact that we were awarded the management of these three hotels is proof of the market’s confidence in our capabilities.” 

The hotel in Sharjah, U.A.E., was formerly known as the Holiday Inn Resort and will now be branded Radisson SAS Resort Sharjah. The hotel has 301 guest rooms and is situated on a white sandy beach close to Sharjah’s business district, appealing to both business and leisure segments. Extensive renovation of the property has already begun to reflect Radisson SAS’ quality standards.

In Beirut, Lebanon, Radisson SAS will be assuming management of the Martinez Hotel, which opened two years ago and 

was previously known as Holiday Inn Martinez. It has 185 well-appointed guestrooms and is located in Ain El Meraiseh, the historical area of Beirut.

The 183-room Al-Hayat hotel in Yanbu, Saudi Arabia, was one of the first hotels in Yanbu. As of November, it will also fly the Radisson SAS flag. It has been completely renovated and can now be categorized as one of the premier hotels in Yanbu, a city driven by oil and related businesses on the Red Sea coast of Saudi Arabia.  It also has a beach location and offers ample leisure facilities, in addition to newly created meeting rooms.

Rezidor SAS’ Middle East portfolio also includes the soon-to-open Radisson SAS Taba Resort in Egypt and the opening of resorts in Hurghada and Al Quseir, Egypt, in 2003.

Kurt Ritter continues, “Three weeks ago we announced a major licensing partnership with U.S.-based Carlson Hotels Worldwide (CHW) whereby we will grow three additional Carlson hotel brands, Regent, Park Inn and Country Inn, in Europe, the Middle East and Africa under a 30-year exclusive master franchise. 

“This is a breakthrough agreement which significantly benefits both Carlson and Rezidor SAS. As the travel industry continues to consolidate, the power of global branding is a key element of future success in serving our customers. Partnership is power, and this agreement is a major advancement of that strategy in the hotel industry. The deal is expected to reach a total of more than 700 hotels in the next 10 years,” said Ritter.

“Our luxury Regent brand has strong potential for growth in the Middle East.  The company is renowned for its total dedication to customer service and enjoys a clearly defined leadership role in the luxury market.  Regent established its reputation with a commitment to exceptional guest service, attention to detail and an uncompromising dedication to quality.  Rezidor SAS expects to have at least three new Regent hotels in the Middle East in the next few years,” continued Ritter.

“Today’s announcement of an additional five Radisson SAS hotels to our already rapidly expanding portfolio is a sign of Rezidor SAS’ global commitment to reach the 700 hotel target,” Ritter said.

Rezidor SAS currently operates 117 Radisson SAS hotels and resorts with over 44 hotels under development in 40 countries in Europe, the Middle East and Africa. Rezidor SAS Hospitality is a wholly owned subsidiary of the SAS Group. 

Radisson Hotels & Resorts and its parent company Carlson Hospitality Worldwide includes 818 hotel and resort locations representing 137,830 guest rooms in 63 countries plus six luxury cruise ships sailing worldwide.

What’s new at AIME?

eTurbo.com  - With more than 600 exhibitors from 50 destinations, AIME 2003 is a must. The 11th Asia Pacific Incentives and Meetings Expo will be held on 18 & 19 February at the Melbourne Exhibition Centre, Australia. Here is some of the new product that will be on show - just to whet your appetite. AQWA, the Aquarium of Western Australia, has a fantastic new Corporate Adventure program including ocean rafting, snorkelling with sharks, sea kayaking, beachcombing, team building and more. 

Bali MICE Initiative will distribute the second annual Bali MICE Guide at AIME 2003, which provides all the information needed to plan and organise meetings, incentives, conventions or exhibitions in Bali, Indonesia. BreakFree Resort Conferences - July 2002 saw the formation of Queensland based BreakFree Resort & Holidays and the acquisition of 28 Resort properties. A specialised Conference, Incentive and Weddings Sales division has been formed to manage the seven Resort properties with Conference and Function facilities.

The newly launched Constellation Hotel Group is a first- time exhibitor at AIME. The group has 37 properties across Australia, with meeting facilities for various budgets in capital city locations, popular resort and major regional centres. Crowne Plaza Christchurch, New Zealand, is offering Untouched World vouchers to organisers, for new business, booked and completed from 1 October 2002 until 31 December 2004.

Vouchers are valued from NZ$300 to NZ$1000 dependent on the booking. Cypress Lakes Resort, New South Wales, Australia - A new addition to the resort's facilities is the Golden Door Resort Spa, which has a corporate health program, and features six dry treatment rooms and two wet treatment rooms, with vichy showers and sauna/spa. Dreamworld, Australia, is punching the fun back into corporate incentives and events with the launch of its new kids zone, Nick Central. Opening this Boxing Day (26/12), you can slime your workmates or blast your boss in the Foam Factory. East Africa - Nationwide Airlines, Southern Africa's largest independent airline is expanding its route system to include East Africa, linking Kilimanjaro in Northern Tanzania with Victoria Falls, Zambia. Emirates will have its own stand for the first time at AIME, where it will showcase recently-added routes including Perth-Dubai (direct), Casablanca, Khartoum, Mauritius, and Osaka.

Exotissimo Travel, a leading destination management company in the Greater Mekong Region, is exhibiting at AIME for the first time. Exotissimo has offices in Vietnam, Cambodia, Laos and Myanmar. Gold Coast Convention Bureau - The Gold Coast Tourism Bureau, Australia, has established a dedicated convention offshoot and launched a new 'bible' for the business tourism industry. The initiative comes prior to the expected opening in 2004 of the new $118 million Gold Coast Convention and Exhibition Centre, which has already attracted in excess of 20 conference bookings worth a total of more than $5m. Hayman Island, Australia, completed a three-year $25 million enhancement program in 2002, introducing new levels of resort living and dining. The island can accommodate small meetings and large conferences or incentives for up to 450 guests. Hong Kong will have its largest stand ever at AIME 2003: 120 square metres with 20 stand partners in total.

Hong Kong Tourism Board will be joined by Cathay Pacific Airways, Hong Kong Convention and Exhibition Centre, three destination management companies and 14 of Hong Kong's leading hotels. The stand theme will be "Many faces of Hong Kong", showcasing the variety of culinary, heritage and cultural events in Hong Kong. Hyatt Regency Perth, Australia, has developed new Executive Spa Suites featuring a king-size bed with feather duvet plus ensuite bathroom and spa; and a living room with expansive balcony overlooking awesome views of the city and Swan River. Indonesia - the Indonesia Culture and Tourism Board (ICTB), is attending AIME for the first time. The board has targeted corporate events as a strong potential market for the country, and aims to encourage more business from Malaysia and Singapore.

Lake Taupo, NZ - The Lake Taupo Convention Bureau will be at AIME for the 6th consecutive year. New developments include Wairakei Terraces, which recreate the magnificent pink and white terraces destroyed by the Mount Tarawera volcanic eruption in 1886, Gravity Hill, Australasia's first park dedicated to Mountain Boarding, a cross between snowboarding, skateboarding, surfing and BMX bikes, a new outdoor rock pool and 14 treatment rooms for Taupo Hot Springs & Health Spa.

Australia's Mardar Management, well known for the act the Three Waiters, is introducing The Rat Pack's Back, a tongue-in-cheek cabaret act evoking the style of the infamous 1950s American Rat Pack. Melbourne - Melbourne's stand at AIME 2003 will be themed 'Think Melbourne, Think Victoria' and will feature 15 stand partners. Music Theatre Australia - MTA is once again the Entertainment Sponsor for AIME, supplying unique performers to rove around the exhibition and make your visit to AIME something special! Perth Convention Centre, Australia - With less than two years until the official opening of the new state-of-the- art Perth Convention and Exhibition Centre (PCEC), statistics released by the Centre anticipate more than AUD$87 million in economic benefit to the state. The Centre's new visitor incentive campaign titled 'Delegate ReWArds Program' provides cash incentives for organisers that book conferences.

Shangri-La Bangkok, Thailand - World class Shangri-La hotel has just completed major refurbishment of guestrooms in both the Shangri-La Wing and the prestigious Krungthep Wing. The US$19 million refurbishment project involved major changes to the 836 guestrooms in both wings. Stamford Plaza Brisbane, Australia, got the thumbs up from Crocodile Hunter Steve Irwin, who declared, "Crikey...if you guys looked after the Queen as well as you looked after me, she'd have been stoked." Adding to that accolade, the hotel's signature restaurant, Siggi's at the Port Office, was awarded 'Best Restaurant within a Hotel' and 'Restaurant of the Year in Queensland' in the 2002 Queensland Restaurant and Catering Awards for Excellence. Singapore Tourism Board, winners of Best Multi Exhibit Award at AIME 2003, will host a stand with 24 co- exhibitors at AIME 2003. Tour East will promote its 'Live it Up Singapore' incentive ideas, including a Colonial Era experience, a Safari adventure, a 'Singapore Fling', or Emperor's banquet.

The Beaufort Singapore will showcase its plans for a S$15 million renovation, including a new spa centre. The Shangri-La Hotel will promote its 'pillow catalogue' offering a choice of pillows, and a new 'service call' network that links check-in with an in-room bedside panel and individual staff pagers, and broadband internet service. Tahiti Tourisme - New properties in Tahiti include Tahaa Pearl Beach Resort, a US$14 million luxurious property in Tahiti's Pearl Resorts group, the traditional Polynesian-style Moorea Pearl Resort, featuring over- water bungalows with glass tables for viewing aquatic life, and Bora Bora Nui Resort and Spa, the most exclusive Starwood Property in French Polynesia. The Beachcomber hotel company plans to build three more properties in French Polynesia, including a major convention centre in Tahiti. AIME 2003, 18 & 19 February, Melbourne Exhibition Centre. For more information visit the AIME website

Paris Ritz losses turn screw on Fayed

ThisisLondon.com  -  Losses at Mohamed Fayed's Paris Ritz Hotel almost doubled last year, putting further pressure on the Egyptian tycoon's sprawling business empire.

News of the spiralling deficit at the hotel where Diana, Princess of Wales, dined with Fayed's son Dodi on the night of her death, came amid heightening speculation about the health of Fayed's companies.

His Harrods cash cow will have suffered from London's tourism slump while Fulham Football Club racked up losses of £24m last year.

Pre-tax losses at the hotel central to the downfalls of Tory MPs Jonathan Aitken and Neil Hamilton widened to e3.9m in the year to 31 December 2001 from e2.1m (£1.3m) a year earlier. Turnover fell from e57.7m to e56m, according to figures filed with Companies House. 

In what has been called the worst year for the hotel trade since the Gulf War of 1990-1991, average occupancy levels fell from the record 83.3% in 2000 to only three-quarters full. 

A Fayed spokesman said: '11 September has had its ramifications in all areas of the economy due to the fact that so few Americans are coming across the Atlantic. These are fairly fraught times.'

The declining luxury hospitality market in France also had its impact on the hotel throughout the year, even before 9.11, as the global economic slowdown took hold.

The Ritz suffered a hefty e7.5m of interest charges compared with the previous year's e5.1m. Much of that was due to one-off costs associated with a refinancing of the hotel's bank loan. Royal Bank of Scotland has provided e141m to be repaid over eight years. 'Due to the non-recurring nature of some of the refinancing charges incurred in 2001, the directors anticipate that the net loss will be reduced in 2002,' said the company.

The figures also highlight the slump in Fayed's investment portfolio. Between 2000 and 2001, the Ritz's investments quoted on the Paris stock exchange collapsed from e6.2m to e3.1m.

Fayed's spokesman said recent trading figures indicated Harrods was picking up. September sales were 8% stronger than the disastrous same month of last year. 'We're generally optimistic about the second half of the year but this might change if the international situation deteriorates,' he added, citing a potential Iraq conflict and the Bali atrocity as possibly decisive events.

Losses at Fulham FC were revealed by the Evening Standard in April, shortly before Fayed closed down the loss-making Punch magazine.

Choice Hotels Reports 3rd Quarter Recurring Diluted EPS Increase Of 20%;  

Choice Hotels International, Inc. (NYSE:CHH), today reported third quarter 2002 recurring net income of $ 21.9 million, or $ 0.54 recurring diluted earnings per share (EPS), compared to $ 19.8 million of recurring net income and $ 0.45 recurring diluted EPS reported for the third quarter of 2001.

"Choice's franchise system continues to enjoy strong unit growth, which demonstrates our success in delivering value to our franchisees," said Charles A. Ledsinger, Jr., president and chief executive officer. "By consistently providing exceptional services and building brand awareness through multiple marketing and reservations channels, we continue to increase franchisee retention and growth. This strong unit growth drives improvements in royalty revenues, in spite of continued RevPAR softness, as well as initial fee revenue."

He added, "Choice is well positioned to continue to offer its franchisees leading-edge services, proprietary technology and superior support. Our proven performance and stability in a volatile marketplace speaks to the talent of our associates and the efforts of our franchisees to maintain and grow a strong franchise system."

Third Quarter Results

The Company reported recurring earnings before interest, taxes, depreciation and amortization (EBITDA) of $ 39.3 million for the third quarter and $ 88.4 million for the first nine months of 2002, compared to $ 38.5 million for the third quarter of 2001 and $ 88.2 million for the first nine months of 2001. Franchise EBITDA margins were 72.7% for the third quarter of 2002 and 67.7% for the first nine months of 2002, compared to 73.3% and 67.7%, respectively, for the same periods a year ago.

Royalty revenues increased from $ 44.6 million for the third quarter of 2001 to $ 46.3 million for the third quarter of 2002.The system-wide domestic effective royalty rate increased 3 basis points from 3.96% in the third quarter 2001 to 3.99% for 2002. Domestic revenue per available room (RevPAR) was $ 43.79 for the third quarter of 2002, compared to $ 44.85 for the same period a year ago.

The Company reported recurring net income for the first nine months of 2002 of $ 45.7 million, or $ 1.12 recurring diluted EPS, increases of 6.5% and 16.7% respectively, over the $ 42.9 million of recurring net income and $ 0.96 recurring diluted EPS, respectively, reported for the same period a year ago.

Royalty revenues increased from $ 107.6 million in the nine months ended September 30, 2001 to $ 108.6 million for the first nine months of 2002. The Company reported revenue from partner services of $ 9.0 million in the nine months ended September 30, 2002 compared to $ 8.9 million in the first nine months of 2001.

The system-wide domestic effective royalty rate increased 5 basis points for the first nine months of 2002 to 3.98% from 3.93% for the same period a year ago. Domestic RevPAR was $ 35.17 for the first nine months of 2002, compared to $ 37.00 for the same period a year ago.

The quarter's net income includes approximately $ 0.8 million of federal and state tax credits. The net impact of these credits was to increase diluted EPS by approximately $ 0.02 for the third quarter of 2002. These credits were offset by a $ 0.01 per share decrease in diluted EPS related to equity losses in Flag Choice Hotels recorded in the third quarter of 2002 as a result of the Company's acquisition of a controlling interest in Flag on July 1, 2002. The Company's results for the three months and nine months ended September 30, 2001, included equity losses of $ 11.7 million and $ 14.6 million, respectively, related to its investment in Friendly Hotels plc. The Friendly equity loss is excluded from the Company's recurring net income and recurring diluted EPS results for 2001.

Updated 2002 Outlook

The Company revised its 2002 diluted EPS estimate to range from$ 1.47 to $ 1.49.

System Growth

Choice continues to attract prospective franchisees and to convert a relatively high percentage of executed contracts into open and on-line properties, even in the face of economic uncertainty and the impact of international crises on the travel industry.

Choice executed 82 hotel franchise contracts in the third quarter of 2002, compared to 74 contracts signed in the same period a year ago. During the nine months ended September 30, 2002, the Company has signed 211 franchise contracts, representing 17,936 rooms, compared to 199 contracts, representing 16,312 rooms, for the comparable period a year ago. In the first nine months of 2002, 42 contracts for new construction hotels, representing 3,121 rooms, were executed. The Company has signed 169 contracts to convert existing hotels to a Choice brand in the first nine months of 2002, up from 123 conversions from the same period a year ago.

The total number of domestic Choice hotels on-line grew 4.2% from 3,296 as of September 30, 2001 to 3,434 as of the September 30, 2002. As of the same dates, the total number of domestic rooms increased 4.1% to 279,135 from 268,176. The Company had 358 franchised hotels with 27,902 rooms either in design or under construction in its domestic hotel system as of September 30, 2002. The number of property terminations for the nine months ended September 30, 2002 decreased 15.1% from the comparable period in 2001.

Conference Call

The Company will conduct a conference call on Wednesday, October 30, 2002, at 9 a.m. Eastern time to discuss the Company's third quarter results. The call-in number to listen to the call is 1-888-273-9886. To access a simultaneous Webcast of the call, interested investors and other parties should go to www.choicehotels.com, click on the "Corporate Information" link and then the "Investor Info" link. The Investor Info page will feature a conference call microphone icon to access the call.

The audio of the call will be archived and available on www.choicehotels.com for those unable to listen to the call on October 30. It also will be archived and available for replay until November 20, 2002, by calling 1-800-475-6701. The access code for the replay is: 655961.

Notable Events

Among the notable company events occurring since the previous earnings report:

-- As of October 21, 2002, Choice has repurchased 26.4 million shares at an average price of $ 16.40 per share for a total cost of $ 432.7 million, since announcing its stock repurchase program on June 25, 1998. During 2002, the Company has purchased 5.3 million shares of common stock. Yesterday the Company announced that its Board of Directors has granted authority to acquire up to an additional five million shares. Total shares outstanding as of October 21, 2002 were approximately 37.1 million.

-- Beginning July 1, 2002, the Company consolidated the results of Melbourne-based Flag Choice Hotels ("Flag"), its franchising partner in Australia, as a result of its previously announced acquisition of a controlling interest in Flag.

-- The Company announced that it will expense the cost of all stock options it grants, beginning with options to be granted in the first quarter of 2003. This change reflects the Company's view that expensing stock options is the preferable way to record employee compensation costs.

-- The Board of Directors has created a Diversity Committee to oversee the Company's initiatives to promote diversity throughout its business practices, with particular emphasis on its workforce, franchisee and vendor bases. William L. Jews will serve as committee chairman and will be joined by Barbara Bainum and Dr. Jerry Robertson.

Choice Hotels International is one of the world's largest lodging franchisors, marketing more than 5,000 hotels open or under development in 46 countries under the Comfort Inn, Comfort Suites, Quality, Clarion, Sleep Inn, Econo Lodge, MainStay Suites, Rodeway Inn and Flag brand names. For more information on Choice Hotels, visit the Company's web site at www.choicehotels.com.

Certain matters discussed in this press release may constitute forward-looking statements within the meaning of the federal securities law. Such statements are based on management's beliefs, assumptions and expectations, which in turn are based on information currently available to management. Actual performance and results could differ from those expressed in or contemplated by the forward-looking statements due to a number of risks, uncertainties and other factors, many of which are beyond Choice's ability to predict or control. For further information on factors that could impact Choice and the statements contained therein, we refer you to the filings made by Choice with the Securities and Exchange Commission, including its registration statement on Form S-4 and report on Form 10-Q for the period ended September 30, 2001.

Choice Hotels, Choice Hotels International, Comfort Inn, Comfort Suites, Quality, Clarion, Sleep Inn, Econo Lodge, MainStay Suites, Rodeway Inn, and The Power of Being There. Go are proprietary trademarks and service marks of Choice Hotels International.

RFS Hotel Investors 3rd-qtr profit falls 16 pct

(Reuters) - Real estate investment trust RFS Hotel Investors Inc. (RFS) said on Tuesday its third-quarter results fell 16 percent, citing a steep drop in demand for lodging.

Memphis, Tennessee-based RFS reported third-quarter funds from operations -- a common benchmark of performance in the sector -- of $10.4 million, or 34 cents a share, down from FFO of $12.4 million, or 45 cents a share, in the year-ago quarter.

Analysts forecast FFO of 34 cents to 35 cents a share, with a consensus estimate of 35 cents a share, according to research firm Thomson First Call.

Revenue fell 4.6 percent to $53 million.

The company, which specializes in hotel properties, also forecast full-year FFO of $1.20 a share to $1.25 a share. The First Call FFO estimate is $1.28 a share.

Crime seen threatening Caribbean tourism, economy

(Reuters) - Crime and the scruffy surroundings of resort areas are hampering Caribbean tourist officials' efforts to make more money in hard times by enticing visitors out of their hotels.

The problem, say local politicians, is not confined to the violent island of Jamaica, which has one of the highest murder rates in the world, but is evident across the Caribbean, a popular winter vacation destination for Americans and Europeans.

Officials say minor crimes like pick-pocketing, and harassment of visitors can have a devastating effect on tourism throughout the region. They cite harassment on beaches for the Bahamas losing its edge over other destinations.

"Why would a visitor want to leave a clean, safe, all-inclusive resort to be exposed to filth and rip-offs? How many times have we seen dead animals in the streets on the way to resorts?" Bahamas Prime Minister Perry Christie said at this week's Caribbean Tourism Conference.

"A band of no-good young fellows does not have the right in our countries to cause the nationals to suffer," he said. "A priority must be placed on stamping out criminal behavior."

For much of the Caribbean, tourism accounts for more than 50 percent of the economy, and up to 90 percent on smaller islands. It is the largest foreign exchange earner for the region and the largest employer, with more than 1 million Caribbean people working in the sector.

But the islands have been hammered by economic weakness that began in 2001 and the severe drop in travel after that year's Sept. 11 attacks on the United States. The financial pressure has so far shown no sign of easing, with soft hotel bookings and flight reservations ahead of the important winter travel season.

It has also left some tourism ministers and travel agents worrying quietly about rising crime.

Crime statistics are often hard to come by, as many of the region's governments do not readily disclose figures. Anecdotal evidence highlights incidents during 2001 such as a series of rapes in St. Lucia and a shooting in St. Thomas in the U.S. Virgin Islands, that left a U.S. teen-ager paralyzed.

This year, Guyana has fallen prey to a spate of shootouts and murders while Barbados has seen an upsurge in break-ins.

CRIME DISCOURAGES TOURISTS

Economic sluggishness and rising unemployment has often been linked to increases in crime, which in turn discourages tourists from visiting not only the country in question but the whole region.

"In the context of people traveling globally, they are not distinguishing in any great detail between a country here and a country there in this region," Christie said.

Violence and crime rates are indeed a consideration for tourists when choosing destinations, agents said.

A business study from the Karma Center for Knowledge and Research in Marketing at Canada's McGill University found the rate of crime was the main concern for tourists considering Caribbean destinations. And that research was done in 1998 -- a robust period for the Caribbean travel industry with strong bookings, high occupancy rates and frequent flights.

Some travel agents played down the problem.

"There's no question it's been an issue," said Richard Kahn, a New York travel agent attending the conference. "When it happens, the impact is on that destination and then it trickles down throughout the Caribbean as well. Thankfully, it's not an issue right now."

Other agents echoed Kahn, saying violent crime is not now a high-level concern for Caribbean destinations. They also brushed off a string of murders in Jamaica before the election earlier this month, saying they did not affect tourist areas.

Tourism officials are more focused on pick-pocketing and general harassment, said Bahamas Tourism Minister Obie Wilchcombe.

St. Vincent and the Grenadines has set up a special police unit to patrol the hotel areas.

"We do not pretend that we don't have a problem with harassment and crime," said Vera Ann Berreton, director of tourism at the country's tourism and culture ministry.

Copyright 2002, Reuters News Service

Terrorism poses tourism dilemma

(AP) -- It sits at the edge of the land, enticing visitors to its dramatic coastline, its Hard Rock Cafe, even its Sleepless Lobster seafood hut. Cabo San Lucas is one of those sun-drenched paradises that travelers choose when they want to escape the world.

Before this month, though, so was Bali.

This resort community, where the Asia-Pacific Economic Cooperation forum chose to convene this year, embodied a key dilemma for many of the organization's 21 member economies, who view tourism as crucial to their financial well-being: In the age of terror, how do you keep the visitors coming?

"For consumers, it doesn't matter where it happens. It affects all of us," says Alfredo Rosas, marketing director for Pueblo Bonito Hotels and Resorts, whose Pueblo Bonito Rose sprawls across several acres of Cabo San Lucas coastline.

There isn't an APEC nation unfazed by the October 12 bombing in Bali, which, for the tourist economy across the Pacific Rim, was a left jab to September 11's right hook. And those aren't insignificant blows.

"The region as a whole is totally dependent on tourism," said Hidetaka Saeki, Japan's top APEC representative.

The sweep of APEC economies constitutes a great chunk of modern tourism -- from Thai beaches to the Australian outback, from Beijing's Forbidden City to Mexico's ancient ruins and Florida's Walt Disney World.

Tourism vs. terrorism

Of the 15 top tourist sites listed by the World Tourism Organization, six -- the United States, China, Russia, Mexico, Canada and Hong Kong -- are APEC members.

After September 11, visitors to the U.S. state of Florida, a popular domestic and international destination, dropped by about 19 percent in the last three months of 2001. Other economies across APEC have reported similar unsettling numbers.

For places like Bali, where tourism truly forms the backbone of the economy, the future is uncertain. The Bali bombing could interrupt "the flow of long-haul tourists to other countries of Asia and the Pacific," the World Tourism Organization says.

During their meeting last week, leaders of APEC economies often sounded a warning bell about tourism, saying that fortifying their security together could help persuade visitors that the region was safe.

But travelers' confidence is a risky game to bet on, and PR after the fact may not be enough.

"Services, and particularly tourism, are becoming more and more important to the global economy -- and especially to APEC. It's one of the most profitable industries there is," says Rock-Antoine Mehanna, an international economist at Wartburg College in Waverly, Iowa.

"Countries," he says, "need to put tourism on their policy agenda."

More crucial than ever

Most APEC nations, especially those in Asia, have spent years working to industrialize and long considered tourism a "soft sector." But now, especially as some countries attempt to move from industrial to service economies, tourism is becoming more crucial than ever.

Mexico's president, Vicente Fox, realizes the difficulties of attracting "people who have stopped traveling out of fear," particularly Americans. His strategy: Let Americans know that Mexico is both nearby and safe, while simultaneously courting domestic tourists -- Mexicans who want to see their nation.

"What we're doing is promoting more and more this internal tourism and we're compensating for the tourism that isn't coming from outside," Fox said. "But in the end," he acknowledged, "we need both."

The Bali blast has already affected tourism in Indonesia and the Philippines, according to Usha C.V. Haley, a professor at the University of Tennessee-Knoxville and an expert on business in the Asia-Pacific region. She says analysts disagree on the long-term economic impact of Bali.

Experts believe one class of tourists -- business travelers who tack on a few days afterward -- won't wane significantly. The group they worry about are leisure travelers who plan a trip purely for vacation. Those are the ones who won't want to visit nations where strife might break out.

"Some people travel regardless. Other people want to travel feeling safe. Those are the people that APEC has to address if it's talking tourism," says Seiji Naya, director of Hawaii's Department of Business, Economic Development and Tourism.

"No one thought that Bali would be hit like that," Naya says. "If it happens in Bali, it can happen in Thailand, it can happen in other places. It's a really difficult thing for APEC to address."

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