Lodging Industry Won't Rebound Until 2004

Reuters) - The lodging industry will rebound very slightly in 2003 from its worst slump in about a decade, but it will be another year before travelers push hotels back to pre-2001 recession levels, a top industry consultant said on Thursday.

"It will be 2004 before the industry experiences any kind of real turnaround," Bjorn Hanson, who heads the hotel consulting practice at PriceWaterhouseCoopers, said at a lodging industry briefing in New York.

Hanson said he sees occupancy rates of 59.3 percent in 2002, edging up to 60 percent in 2003 and then advancing to 61.4 percent in 2004. Over the last 25 years, occupancy has averaged about 64.8 percent.

The hotel industry has been struggling to right itself from the twin blows of security fears, which have kept travelers at home, and an economic downturn that has put a serious dent in business travel.

"The effect of the recession on lodging has been profound," said Hanson. "This will be a very long and slow recovery for the industry."

The sector has also suffered dramatically from fears of terror attacks. Each security alert issued by the federal government has led to a sharp drop in room bookings, Hanson said. While consumers are worried about the actual attacks, they are even more concerned about the prospect of being far from home if an attack occurs, and being unable to get home quickly if airlines shut down, he said.

Hotel industry profits will be flat in 2002 at $16.1 billion before climbing to $16.9 billion in 2003, Hanson said. Industry profits peaked at $22.5 billion in 2000.

Revenue per available room (RevPAR), a key indicator that factors in both occupancy levels and room rates, will rise 2.1 percent in 2003, Hanson said. RevPAR fell 2.6 percent in 2002, a year hoteliers were hurt by a travel slump after the Sept. 11 attacks.

But don't be fooled by that 2003 increase, Hanson warned. In real terms, it is only a 0.1 percent gain assuming an inflation rate of 2 percent.

More substantial growth will arrive in 2004, Hanson said. He expects RevPAR to increase 5.1 percent that year, excluding inflation. Even then, though, real RevPAR will only meet 1995 levels.

Room rates, too, will see stronger growth in 2004. They will rise 2.6 percent that year after a relatively small 0.9 percent increase in 2003. In 2002, average room rates fell 1.6 percent to about $83.

SECURITY AND WAR

Those forecasts also assume that there will be no U.S. military action in Iraq. Any conflict would have a dramatic effect on the sector, Hanson said.

In that event, demand would be severely curtailed, though hotels might slowly recover by discounting rates. If the duration of any action looks likely to be more than three months and draws in other Middle Eastern countries, lodging demand could fall to levels similar to the last quarter of 2001, just after the Sept. 11 attacks, Hanson said.

The Center for Strategic and International Studies, a Washington-based think tank whose research Hanson used in his analysis, has estimated the likelihood of military action against Iraq at 60 percent.

The recent creation of the Department of Homeland Security will add to the unstable nature of the sector, Hanson said. The new agency "is likely to clarify these alerts, so we can expect more volatility," he said.

The bleak near-term outlook hasn't stopped developers from seeking out financing for new hotels. But Hanson said banks have become much more conservative in making loans, and are demanding that builders line up more equity now than they required in the past. As a result, only better-quality projects are getting to the construction stage, Hanson said.

He said there were 61,000 room starts (new construction) in 2002, with 63,000 expected in 2003 and 88,200 starts expected in 2004. The slow pace of room starts should help the industry recover since hotels can push up prices if supply is low, especially if the economy rebounds and business and leisure travelers go ahead with their travel plans.  

Travel Industry Helped by Web, Frequency

Internet.com   -   The travel industry seems to be flourishing as research finds that half of all U.S. Internet users — equaling roughly 59 million individuals — have made a travel purchase online, and more than 2-in-10 adults are frequent domestic travelers.

The Pew Internet and American Life Project measured a significant increase in the amount of online travel buyers in 2002, up from 36 percent (about 31 million Internet users) in 2000 — representing a 90 percent growth rate. Comparatively, other online activities, such as participating in online auctions experienced 69 percent growth, and playing games had a 45 percent growth rate during then same period.

Scarborough Research took an in-depth look at the domestic travel habits of Americans and found that 21 percent in 74 cities are frequent domestic travelers, taking five or more overnight trips (business or personal), either by air, land or sea, within the Continental U.S. during February 2001 to March 2002.

Scarborough's profile of the frequent domestic traveler would likely be a high-income, white-collar, college-educated male. Scarborough found that frequent travelers are 17 percent more likely then the average adult to be white-collar workers and 12 percent more likely to be men; 38 percent have annual household incomes of $75,000+; 25 percent are single; college grads are 29 percent more likely than average adult to make frequent domestic journeys, while those with post-graduate degrees are 50 percent more likely then the norm to do the same.

Alisa Joseph, vice president, director of sales, advertiser marketing services at Scarborough Research, analyzed the results even further: "Scarborough found that markets with a high percentage of frequent travelers have bigger families and higher household incomes. Additionally, frequent travelers have a tendency to work for large companies in those markets. Types of professions also seem to be a factor, particularly in the engineering, sales, financial and computer-related industries."

Scarborough determined that frequent travelers are more likely to visit certain hot spots, such as New York City (more than twice as likely); Los Angeles (79 percent more likely); Orlando (65 percent more likely); and the Las Vegas strip (62 percent more likely).

Furthermore, frequent travelers are 85 percent more likely than the general population to snow ski, 43 percent more likely to go camping, and 29 percent more likely to go bicycling. Almost half (48 percent) have attended a professional sports event in the past 12 months, 34 percent have seen a live theater performance, and 18 percent have attended a rock concert.

Source: CyberAtlast @ Internet.com 

Macao's tourism industry grows rapidly in 2002
 
(Xinhua) --Macao's tourism industry has developed rapidaly in 2002, buoyed by the huge influx of China's inlanders.

The Macao Special Administrative Region (SAR) of China saw 10. 46 million tourist arrivals in the first 11 months of the year, outnumbering the figure for 2001.

Hong Kong remained the largest tourist source for Macao in the 11-month period, bringing in 4.68 million visitors, but the figure dipped 1.5 percent per annum. China's inland was catching up quickly, with tourists from there now making up 36 percent of the total. And Taiwan tourists ranked the 3rd place in number, reaching 13.6 percent of the total.

In November, inland tourists soared 56 percent per annum, exceeding Hong Kong tourists for the first time in number, figures show.

More importantly, the inlanders' per capita money spending in Macao nearly doubled the average for all visitors.

Industry insiders note that the city's tourism business has benefited greatly from a sharp rise of travel agencies allowed by the China National Tourism Administration to manage the SAR-bound tours. Since Macao returned to the motherland three years ago, more and more inland Chinese have satisfied their wishes to take a look at the new SAR, known as Monte Carlo in the East.

According to statistics, Macao received 9.16 million tourists in 2000, and the figure hit a record of 10.27 million in 2001.

Macao with its roughly 450 years of history boasts a blend of the cultures of the East and West, which are exposed in local architecture, living style, traditions and food, a big attraction for visitors.

In an effort to make tourists stay longer, Macao has been involved in building new tourist spots while preserving ancient relics such as Ruins of St. Paul Church and the A-ma Temple.

A sightseeing tower higher than the Eiffel Tower in Paris, for example, has opened to visitors. Soaring 338 meters above the city, it enables sightseers to enjoy breathtaking panoramic views of the heart of Macao, the Pearl River and even some islands of Hong Kong in a clear day.

Work on the Fisherman's Wharf, which is designed to house buildings of different countries, imitated volcanoes and other scenic spots, is well under way.

After liberalization of the gambling industry, three winners of new casino licenses have pledged to inject, in the near future, billions of dollars in Macao to build theme hotels and facilities for gambling, sightseeing and leisure-seeking purpose.

Macao has also decided to build the third cross-sea bridge between its peninsula and Taipa Island.

In addition, the SAR government is building the city into a MICE (meetings, incentives, conferences and exhibitions) location, which will draw more business travelers to the city. Macao now offers a wide variety of meeting venues.

In the past few years, the Macao Government Tourist Office held various tourism promotions worldwide, including Hong Kong and China's inland. It plans to exert greater efforts to expand visitor sources.

As a major engine for the economy, tourism and gaming industry accounts for more than 50 percent of the SAR's gross domestic product and employs about 40 percent of its population

Philippine Tourist travel 'booming'

The arrival of nearly two million tourists this year has belied all fears that terror threats can dampen the tourism industry, according to Tourism Secretary Richard Gordon. The number of tourists totalled 1.86 million as of December 22, or 98.27 per cent of the country's target of 1.9 million for the year.

Gordon said records at the end of the year will surpass the target. About 1.79 million tourists came to the Philippines in 2001. During this month alone, there were 125,611 arrivals at Pasay City's Ninoy Aquino International Airport (NAIA), or 18.40 per cent higher than the 106,094 arrival for the same period last year. The Philippines posted double-digit increases from 10 to 36 per cent in tourist arrivals from June to November, in comparison with monthly records last year. "The Philippines has become a model of a comeback country," said Gordon, adding that fixing the country's problems and moving ahead despite the bombing in Bali, which killed almost 200 on October 12, "should inspire us to move further ahead".

He said it is astounding that the local travel trade increased despite the devastating travel advisories issued by many Western countries which warned their nationals to avoid the Philippines. The enthusiasm of the local tourists, including the overseas contract workers and the Filipinos who have adopted the citizenship of other countries have really promoted the country as a tourist destination. "Hopefully this show of force can lure foreign travellers," said Gordon. "They will continue to take a strong and determined position to promote the Philippines as a safe tourist destination," said Gordon. Gordon yesterday launched a campaign to promote tourism

Although the "visit Philip-pines 2003" campaign will start on January 10, we are now calling on all attached agencies to make the necessary cleanliness and beautification drive in metro and urban areas," said Gordon.

Christmas gives Bali a boost, but future bleak for the bomb-scarred island
 
AP - Kadek Wiranatha, whose Paddy's bar was destroyed in the Oct. 12 Bali bombings, has closed two of his hotels and delayed the launch of the island's first airline.

His Bounty Hotel remains open, but is mostly empty. His workers have jobs for now, but complain that their incomes have been halved because there are no tourists to tip them.

"This is my worst nightmare," said Wiranatha, who employs 2,500 people across the Indonesian island. "I'm losing a lot. We're talking about millions of dollars. Sooner or later, we will go bankrupt if there is no help from the outside."

The Bali tourist trade has been devastated by the bombings of Paddy's and the neighboring Sari Club, which killed nearly 200 people and prompted Western nations to warn their citizens against visiting the island.

Beaches and shops in the island's capital of Denpasar remain quiet. Hotel occupancy rates have plummeted from 70 percent to 10 percent.

The Muslim holiday of Eid Il-Fitr in early December and now Christmas have given tourism a brief reprieve, filling some hotels and lifting others above the 50 percent occupancy rate, operators say.

But the prospects of a full economic recovery for Bali could be years away.

And, many Indonesians say the worst has yet to come. They fear the atmosphere of belt tightening and uncertainty that has taken hold on the island could soon give way to waves of layoffs, business closures and social unrest.

"We are going to see hard times," said Meity Robot, president of the Association of Indonesian Tourist and Travel Agencies.

"The Balinese are saying that if the situation doesn't change for the better, they have no choice but to resort to layoffs," she said. "I'm afraid that if things don't drastically improve by February, we will face problems like unemployment."

In the past two decades, Bali has recast itself from a sleepy, offbeat island favored by backpackers and surfers to a popular tourist spot for middle-class families and the well-heeled.

Before Oct. 12, foreign tourists - mostly Australians and Japanese - came for the beaches, nightlife and the temples that dot the predominantly Hindu island.

As a result, 90 percent of the island's 3.2 million people have come to depend on tourism either directly or indirectly.

The Bali blasts could cost as many as 200,000 people their jobs, according to figures from the Indonesian government, which has had to revise its forecast for economic growth in 2003 from 5 percent to 4 percent.

The neighborhood of Kuta - where the bombings and resulting fires destroyed dozens of shops and homes - normally would have been packed at this time of year with tourists crowding sidewalks and souvenir shops or mingling in bars and restaurants.

But idle workers now outnumber visitors. The only action is near the blast site, where construction workers are busy renovating a damaged surf shop, a bank and an art gallery. The Sari Club and Paddy's sites are vacant lots, showing no signs of the tragedy that burned them to the ground.

Nyoman Mari, the 48-year-old owner of Mari Shop, says she has gone days without serving a tourist. Her income since the attack has dropped from 300,000 rupiah (US$ 33.76) a day to less than 25,000 rupiah (US$ 2.81).

"It's hard when you go through a day without selling anything," she said. "Before, I never thought about money."

Across the road at the Bounty Hotel, occupancy rates hover around 9 percent. Employees say cuts in income have forced some to return to their villages and sell possessions including cars and motorcycles.

"It's really difficult," said Ketut Karma, 29, a maid who is struggling to look after his two children, wife and mother on 140,000 rupiah a month (US$ 15.75).

"The salary is so little that I can't eat," he said. "I've got no money for gas. I've got no money to pay off loans that I took out to build my house. I'm afraid the bank will take my motorcycle and then I won't be able to get to work."

The World Bank estimates that as many as 3 million people in Indonesia will fall into poverty because of the bombings. But Balinese officials say the social impact has been minor, partly because companies have avoided layoffs.

Many companies have heeded calls from the Indonesian Hotel and Restaurant Association to pay employees through February. But others say government regulations - requiring ministerial approval and months of severance pay for laid off employees - have forced them to keep full staffs.

"It's crazy," Wiranatha said. "The government should be realistic."

Indonesia has attempted to lure back foreign tourists with a multimillion-dollar promotional campaign, scores of discounted tour packages and increased security at the airport and hotels. International donors have also offered health care and employment assistance while banks have offered short-term loans to tourism businesses.

But the promotional push has been somewhat blunted by the travel warnings, especially from Australia, and a shortage of flights from Garuda Indonesia and Australia's Qantas, tourist officials said.

Still, most Balinese tour operators and hoteliers remain upbeat about the island's prospects.

"We are all committed to bringing Bali back," said I De Piton, director of the Bali Tourism Authority. "These bombs will be a turning point for Bali and we are going to use them to make Bali better ... We still have the beautiful scenery, nice beaches and friendly people."

International tourist arrivals in Thailand set to exceed projection

(Xinhua) --Despite the slowdown in the world travel industry, international tourist arrivals in Thailand this year are poised to surpass expectations and reach 10.7 million, 6 percent more than last year, the Bangkok Post reported Tuesday.

According to Juthamas Siriwan, governor of the Tourism Authority of Thailand (TAT), during the first 10 months of this year, foreign visitor arrivals totaled 8.75 million, a 7.2 percent increase over the same period last year.

The growth rate exceeded the previous target of 4 percent, under which 10.5 million arrivals were forecast for the whole year.

Meanwhile, revenue from international tourism was expected to reach 323 billion baht (7.69 billion US dollars) , up 6 percent from 299 billion baht (7.12 billion dollars) last year, she said, adding that tourism from almost all regions has shown growth, led by North Asia, Europe, North America, South Asia and the Middle East.

Juthamas attributed the strong performance to the stepped-up marketing and public relations activities.

She said that next year, the TAT will push the country to become Tourism Capital of Asia by opening up new markets and focusing more on quality and niche markets.

In terms of corporate strategy, the agency also planned to upgrade its image to meet the standards of international organizations and develop a larger public-relations network around the globe.

Hong Kong tourism leaders call for a policy blueprint
 

SCMP  -  Travel industry groups yesterday urged the government to do more to maintain Hong Kong's reputation as a top tourist destination. The Joint Council of the Travel Industry of Hong Kong has submitted a 20-point proposal to Financial Secretary Antony Leung Kam-chung and the Commissioner for Tourism, Rebecca Lai Ko Wing-yee.

The proposal is topped by a demand for a policy blueprint to develop tourism up to 2020.

Joint Council chairman Ronnie Yuen Ka-chai said: "Without this vision, the private sector cannot plan its business directions and push the tourism industry forward. With such a vision, our industry can know what new investments are needed in future."

The body also sought government help on exploring tourism-related business opportunities in the Pearl River Delta. The operators hope to be involved in talks with the mainland on tourism. The proposals also covered new ways to improve access to Hong Kong's natural scenic spots, organise international conferences and exhibitions, reduce pollution, and curb commercial malpractices.

The joint council consists of six major local tourism and travel groups - the Board of Airline Representatives, the Association of Better Business and Tourism Services, the Federation of Hong Kong Hotel Owners, the Hong Kong Hotels Association, the Hong Kong Tourism Board, and the Travel Industry Council of Hong Kong

Manhattan hotel room price plunges to 7-year low

The average price of a Manhattan hotel room reached a seven-year low in 2002. According to estimates from PricewaterhouseCoopers, average room rates slipped to $137 this year from last year's depressed $141.

Rates are predicted to increase to $146 in 2003, a figure that does not come close to the industry record of $222 per night in 2000. Occupancy for 2002 increased slightly, to 74% from 73.3% last year, and is predicted to rise to 76% in 2003.

To join the Forum for free, Click Here