Newsletter - May 2, 2002

A RACE OF OLYMPIC PROPORTIONS IS ON AS CHINA’S HOTEL INDUSTRY GETS ON THE FAST TRACK

By Steve Shellum Hotel Asia Pacific
April 2002  

The race is on as hotel chains jostle for position in the run-up to the Beijing Olympics in 2008. But, as the field gets increasingly crowded and competitive, there are likely to be many also-rans and laggers who will get left behind in the mad dash for gold and glory in China.

When Beijing's winning Olympic bid was announced, China's TV screens were filled with images of crowds thronging the city streets in jubilant celebration beneath a sky lit up with fireworks. Although the hoteliers of China's capital may not all have been literally dancing in the streets that night, they were all feeling pretty jubilant

Town planners in the Beijing Municipal Government are already busy at the drawing boards. The city is going to need more hotels to host not only the Olympics but also the hordes of business visitors expected over the next seven years. 

While many will be going to Beijing in some connection with the Olympics, the main springboard for growth will be business: over the next two decades, China will become the world's largest global economy. 

The Games are only the icing on the economic cake, but they offer huge prestige and an unprecedented opportunity for China to show the world what it has achieved.

Economists are predicting that the Olympics will add between 0.2 and 0.3 percentage points to China's annual economic growth in the run-up to the Olympics but, despite the euphoria and prestige of clinching the Games, there are many hurdles ahead, and there are likely to be as many losers as winners as more and more hotel groups join the fray.

The biggest international hotel player in China, Six Continents Hotels, plans to operate 60 hotels in the country by 2005 - nearly double the number it operates currently. But none of the planned expansion has anything to do with the Olympics

In fact, the group's MD for Asia Pacific, Richard Hartman, worries that hotel operators and investors will "go all loopy" about the event and start building hotels in the capital

As it is, he believes Beijing might already have enough hotels to handle the Games.
Olympic cities have a track record of having to cope with massive oversupply after the event. It happened in Atlanta, Barcelona and Sydney, says Hartman. "We could go back even further to see the almost irrational frenzy to add inventory which takes years to recover.

"If anyone reading this thinks otherwise, they should call me, because I can tell them a lot of stories about what happened [in those cities]".

Although Hilton International is excited about the prospects for China, it plans to "keep a cool head" on developments, and is reviewing its strategy there.

The review process has just started, and the group's president for Asia and Australia, Koos Klein, and VP operations for Asia, Simon Barlow, will be visiting China in the next two months "to look at all the projects we have on the way and all the destinations we have on our strategic list, just to reassess: is this where we want to go?"

  Asked why he is reviewing China, Klein says: "In the past few years, we have been chasing projects so hard that we think the time has come to take a step back and ask ourselves, 'Does all of this really fit in with what we need to do to be successful in China?'"

The Beijing Olympics, China's entry into the World Trade Organisation (WTO), the fact that the country's economic performance is a rare bright spot on the global economic stage and a huge potential market for both domestic and outbound travel have combined to make the country the darling of hotel investors and chains eager to grab a slice of the rising pie.

The country is preparing itself for what it says will be "one of the greatest building projects undertaken in China since construction of the Great Wall", with Beijing spending a mammoth US$20 billion on infrastructure, as well as an additional $12 billion over 10 years on environmental improvements  

215-hectare Olympic park will be constructed in the northern part of the city, on the same axis as the Forbidden City and Tiananmen Square. The park, to be called Olympic Green, will be the site of the Olympic Village and the venue for 15 events.

With traffic congestion one of the biggest problems Beijing faces, proximity to the ring roads is a key issue for hotels. The capital promises that it will treble the length of expressways, and complete a fifth ring road to alleviate traffic problems. The fourth ring road, running through an area where 80% of the Olympic facilities will be built, was recently completed.

There is confidence that Beijing will rise to the task of solving its massive infrastructure problems, however daunting they may seem from the perspective of a Beijing traffic jam circa 2001.

Beijing currently has around 200 hotels in the 3-, 4- and 5-star categories, and it is estimated that the total number of hotels in this range will increase to about 300 by the time the Games open. 

About 35 of these are "5-star", of which perhaps just 10 are of international 5-star standard. 

According to the Beijing Olympic Committee, the current 85,000 hotel rooms in the city will grow to 130,000 by 2008. This is a total growth of 52.9%, or a compound average annual growth of 6.3%.

Meanwhile, the influx of hotels and hotel groups into the Chinese capital continues. The Grand Hyatt opened last October in the Oriental Plaza on Chang'an Avenue, just next to the Beijing Hotel in one of the city's prime locations near the Wangfujing pedestrian shopping street. 

Accor has acquired a second property in the old Xinqiao Hotel, which was rebranded as a Novotel. Several other groups are negotiating entrance to the market, including Ritz-Carlton, Four Seasons and Marco Polo. 

A prime location for many of the newer hotels is the eastern stretch of the third ring road, which is already the location for the China World, the Great Wall Sheraton, the Hilton and the Kempinski. 

Over on the western side of the city, the Shangri-La is in the enviable position of being the only hotel in its competitive set, and there are no projects planned in the area in the near future that could threaten it. 

Of the group's nearly 8,000 guestrooms in mainland China, nearly 2,500 are in Beijing alone, and its four hotels in the city are in the early stages of determining promotions and rates for the Olympics period.  

Raffles International's chairman and CEO Richard Helfer believes China's fundamentals are right for expansion. 

"In a world economy that is softening, China grew about 7% last year, and the Olympics are going to give it that extra impetus. In Beijing, that typically means overbuilding, and a bit of a trough after the event - as shown in many previous Olympics," he says. 

"It's important to be there before the Games, and we're already there through the Swissotel Beijing. The positive thing is that the event will give China the exposure it would not otherwise get, as well as infrastructure improvements. 

"From what I read, China is so excited about the Olympics it has probably promised even more [than what is expected].

"The other part about China is that the Chinese people themselves are travelling more. Previous Olympics have shown that, during the event, locals tend to stay away, but I expect the domestic market will return to the destination after the event."

Accor is planning massive expansion in China, according to David Baffsky, chairman of Accor Asia Pacific. "Hotel companies looking to pass the finishing line as China gears up for the 2008 Olympics will need to build a comprehensive network of at least 100 properties," he says. 

"If you don't have the vision to come up with a minimum of 100 hotels in an acceptable time frame of, say, five years, then you can forget about being a market leader.

"If one just looks at the increase in air travel within China over the past 22 years - a remarkable 29-fold increase to 134 million airport passenger movements - you can appreciate the scale of the opportunity. "While Beijing and Shanghai are remarkable, there are cities in provincial areas that are growing just as rapidly with vast overseas investment, particularly from Europe.

"China represents the new frontier - a country steeped in history and culture, and yet offering the most exciting future of any country in the world. 

"Accor aspires to be a market leader in China's mid-scale hotel sector and for that you need a comprehensive network."

Starwood, meanwhile, plans to bring its Westin, Four Points and W brands to Beijing, and to set new Westin standards in China.

Eric Waldburger, CEO of the Harbour Plaza Group, estimates that a 20% increase in room stock is required, bringing the total to about 130,000 rooms in new 4-star and 5-star properties. "Although there is a world economic decline, China is perceived as having tremendous promise," he adds.

For a city looking forward to a virtually guaranteed future boom market, the increasing competition is not necessarily a bad thing, according to hoteliers in the city. With the huge increases expected in both business and tourist travellers into Beijing as the Olympics approach, they say it's hard to see how they can lose.

"[An influx of new hotels] has a positive effect in a lot of ways," says Leon Larkin, GM of the International Club Hotel St Regis. "It helps the industry grow, markets the area more and brings in higher quality of standards of staff training."

Peter Carmichael, GM of the China World Hotel, voices the general feeling. "Right now for Beijing, whether it is the WTO, Olympics, or business, everything is positive."
The city's hoteliers understand well the long-term benefits that the Games will have - up to, and well beyond, 2008.

"It's a great development for the hotel industry, in that it basically implies that there will be a lot of emphasis on the sector in the years to come," says Herman Smit, DOSM at the Radisson SAS Hotel. 

"At the same time, we will see great growth in new hotels and conversion of existing hotels to reach the standards required of the Olympic Games.

"There will also be an influx of new regulations, which will make it a little harder to operate, but will definitely raise the standards."

James Lee, of the Marriott-run Jingguang New World Hotel, says: "2005 will be the real boom year. By that time, hotel construction will be in full swing, attention will have shifted from Athens (host of the 2004 Games), and the service and retail industries will be stepping up the pace in preparation for the Olympics."

But Adriano Severi, GM of the Great Wall Sheraton, adds a word of caution. "Although we may be getting an increase in business [through the WTO and Olympics], there will also be an increase in hotels, either local or international, which will present us with the same sort of challenge we have now. The competition will become even fiercer."

Part of the problem is that, jumping in alongside the long-term players - who can make a lot of money by running hotels over a considerable period of time - are the short-term developers who aim to make a lot of money upfront by building them. It's enough to skew any inventory. 

A rush to build in Beijing will have disastrous consequences for the capital city, Six Continents' Hartman warns. "It's going to have a very serious effect on the city's economy and on the expectations of the workforce - they get all trained up, get jobs, then get laid off - as well as on anyone who's made investments there.

"They are going to skew tax revenues in the city, and increase all sorts of real distortions. If you want to stimulate the construction industry, you must do it on a long-term, continuous basis. You don't do it in a lumpy manner like this because, once the Olympics are over, no one will build anything for years, until demand catches up with supply."

Even the expected growth from China joining the WTO is beside the point, he says. 

"The point is, demand for hotel rooms is a function of many factors, all of which are interlocked - such as the pace of growth in air travel, which in turn is a function of growth in airport facilities.

"Even assuming that post-Olympic demand for Beijing will fill it up, how do people actually get there? 

"Even with the domestic market, it's still an air issue. And it's not just Beijing - suppose you want to fly from Chongqing to Beijing to take advantage of this excess supply: someone's got to build the infrastructure to Chongqing airport. "We can't look at demand generation in a vacuum; we've got to make sure that the distribution systems are as well developed as the inventory."

China is, indeed, a bewildering market, if only because it is so huge, fast growing, opening itself to the world, evolving and attracting investors' attention worldwide. 
Serious hotel groups base projects on fundamentals such as demand and supply, and long-term sustainability, and a China that is changing and evolving so rapidly can keep even the most adept of them guessing.

So what are the real difficulties of entering the China market? "Finding the right partners is a bit of a challenge," says Hilton's Klein "There are a lot of hotel projects going up, and it is a lot easier now to find the location, borrow money, etc, and part of that has to do with the loosening up of the economy and giving homegrown companies the opportunities. 

"We do, however, see that some of these entrepreneurs don't always have the money to complete a project or - after building it - don't have the financial muscle to carry it through in the build-up period until it has reached sustainable occupancy.

"Conducting due diligence is not always easy and it can be difficult to get the amount of transparency that is normal in the West - who's behind it, how much financial muscle does it have, etc?"

Klein believes it is naive to think that China's pending entry into the WTO will solve all the problems, and he envisages "a few incidents and setbacks". "[WTO entry] is certainly going to be good for the country, but it will be a gradual rather than  sudden change," he says.
 
What lessons can China learn from previous Olympics, particularly the impact on the hotel sector?

A recent study by Jones Lang LaSalle Hotels of the last four Olympic host cities - Barcelona, Seoul, Atlanta and Sydney - shows that all experienced growth in room supply in the two years leading up to the Games and during the years the Olympic were held. Much of the new supply was concentrated in the international-standard segment of 4-star and above.

Room supply almost doubled in Barcelona, and increased an average of 35% in the other three host cities.

According to the study's author, Melinda McKay, the combined effect of supply and demand resulted in some interesting occupancy movements. Although all host cities suffered a decline in average occupancies during the Olympic year - largely due to the increased level of room supply - they typically recovered in the years following the Games.  

Despite the fall in occupancies, all host cities experienced a substantial increase in average daily rate (ADR) during the Olympic year, averaging 22.6% - although Sydney recorded an increase of just 11.1%.

All host cities recorded a decline in ADR in the year after the Olympics, with Barcelona falling sharply.

The increased room rates were generally sufficient to offset lower occupancies (as a result of increases in supply), and all recent host cities recorded an increase in hotel performance in terms of revPAR during the Olympic year.

Movements in hotel performance in the post-Games period have varied significantly as the markets have resumed their normal cycles. 

Sydney is the only market where revPAR in the second year after the Games is expected to be higher than during the Olympic year itself. In contrast, Barcelona saw revPAR tumble by almost 60% in the two years following the Games, reflecting an oversupplied market in a recessionary environment.

Although jobs and revenue are created in the short-term, the greatest effects are seen in longer-term changes in the host city's urban form and governance: urban regeneration; the creation of Olympic villages; improvements to city infrastructure; growth in tourism and convention business; and heightened awareness of environmental and sustainable development issues.

According to McKay, the key to success (or otherwise) of hosting the Olympics is largely dependent upon the ability of the city to leverage off the images and perceptions created during the event itself, and to "continue delivering on the dream long after the circus has left town".

"How well can the city take advantage of the transient and fickle world focus? How indelible are the images? How can they best be sustained? 

"All of these are questions a host city must answer in a strategic approach to leveraging the event."

All the stops have been pulled out to make the Beijing Olympics a success, and the hotel industry is being asked to play a major role. But many of the existing properties are in need of capital reinvestment, says Donald Harrington, GM of the Palace Hotel, which is operated by the Peninsula Group.

"Hotels constructed in the late 80s and early 90s are clearly showing their age," he says. The Palace has decided to "get ahead of the curve" with a strategic renovation programme that started last month to keep the stately hotel state-of-the-art. 

"Hotel updating is needed to keep up with present demands," he says. "Add the Olympic factor, and it's essential. 

"The challenge for hotels will be to provide services that match those offered in any major city in the world -  and then some."

Sven Isberg, GM of the Beijing Hilton, says the Games make the city an "unprecedented focus of the world" and create enormous opportunities for the hotel industry. Investments will increase demand from corporate accounts for hotel rooms in the very near future.

Lo Young, regional director of marketing in North Asia for Six Continents, says the China Tourism Bureau predicts 800 rated hotels in Beijing when the Games open. This means, at the most conservative estimate, opportunities for foreign groups to participate in advising, managing, investing or having some role in 400 new properties.
"According to some analysts, it's the biggest potential hotel goldmine in world history," says Lo.

Accommodation is a key criteria for selecting which city gets the Games and, back in March, the Olympics Committee randomly inspected a number of hotels. 
"Beijing's victory shows that the keen-eyed critics from the Games' organisers were satisfied with hotel standards," says Lo.

"Indeed, hotels in Beijing are usually well facilitated. Big convention and exhibition centres complement MICE needs and, since many hotels are relatively new compared to the other major cities in developed countries, the equipment and facilities are usually quite advanced."

An example? Broadband internet will become a norm in Beijing hotels.

The city government is notoriously strict about hygiene and guest safety at international hotels, and carry out frequent stringent site inspections. What's most needed? "English-language training," says Lo. 

The Beijing Hotel Association will be meeting officials soon to form a "plan of action" on increasing courtesy awareness. "The hotels and hospitality industry must play their part," says  Harbour Plaza's Waldburger. "It's a golden opportunity to impress the world with the courtesy and efficiency of a world-class metropolitan city."

Numerous hoteliers, however, point out the sting in the tail of all this enthusiasm. 
The eyes of the world will be on China. There will be enormous publicity across the country. A steady stream of consultants, investors, developers and service management companies will visit strategic locations around the country. The press will have eyes everywhere.

Additional waves of investor interest will flow, particularly if the Games are impressively administered, organised and executed. 

But - and here is the danger for Beijing - if any of the vital ingredients are mishandled, the same immense publicity machine that is putting China on the world stage will be there to tear it down.

SAUDI PRINCE AL-WALID SETS UP ONE-BILLION-DOLLAR HOTEL INVESTMENT GROUP

Agence France Presse  -   Billionaire Saudi businessman Prince Al-Walid bin Talal bin Abdul Aziz announced Monday the establishment of a one-billion-dollar group to invest in hotels in the Middle East.

Prince Walid, who owns worldwide investments worth billions of dollars, consolidated his Middle Eastern hotel assets into an independent investment vehicle, Kingdom Hotel Investment Group (KHI), a statement from his Kingdom Holdings said.

"We are very proud to have successfully formed KHI. The company is the sole investment vehicle of its kind in the region and owns a unique collection of high quality assets that will set new standards in the region," the prince said.

KHI currently owns 10 properties in the Middle East, and through local partners it controls real estate worth more than one billion dollars, which includes completed projects and others under construction.

A number of hotels like Egypt's Sharm El-Sheikh Four Seasons, Amman Four Seasons and Beirut Movenpick Resort, will be opened within the next two years.

"KHI's operating philosophy is to aggressively expand its existing portfolio and position itself for a potential Public Offering in the next three to five years," chief executive officer Sarmand Zok said.

"We are currently looking at a number of opportunities in the Gulf region and North Africa, and we are placing emphasis on acquiring hotels that have opened or are just about to do so," Zok said.

Prince Walid already owns 27 percent of the Swiss group Movenpick, 27 percent of the Four Seasons hotel group and 16.5 percent of the Fairmont hotel and resort chain, as well as the George V hotel in Paris.

The 43-year-old prince, a nephew of King Fahd, has amassed a personal fortune of 20 billion dollars and is ranked as the world's 11th wealthiest entrepreneur by the US magazine Forbes.

He built his global financial empire by investing in major companies experiencing hard times.

HOTELS’ STAR RATING RISES IN MARKETS AS CHAINS ADAPT TO A DIP IN DEMAND
 

Bonnier Media   --   Hotels are back in favour with investors after a strong recovery from the grim days last autumn when whole floors were empty, restaurants and bars were deserted and staff were being laid off almost daily.

Demand has recovered in most sectors, although it will be some time before room yields follow suit which suggests that valuations of the best quality stocks are still attractive.

The position is in contrast to the long downturn of the early 1990s that followed the Gulf War, when Forte and Hilton were forced to cut dividends and several of the smaller groups had to sell properties to generate the cash to stay in business.

Cashflow is generally much stronger than it was a decade ago, because interest rates and levels of debt are much lower.

Jeffrey Harwood, of Credit Lyonnais Securities, says that companies have taken "a more rational attitude" towards pricing in response to lower levels of demand.

"There has been far less outright discounting and hotels have taken a firm line in rate negotiations with major corporates," he said.

Instead, companies are looking at other segments of the market away from their traditional areas. The weekend press contains several examples of business hotel chains targeting leisure travellers, particularly for weekends, while hotels in London and other major cities are focusing more on domestic customers to counter the fall in international trade.

Many readers will have seen that promotional activity has been stepped up with a wide range of incentives three-for-two offers, upgrades and cut-price spa treatments which hotel managements say give better value than discounts.

But the picture is not uniform across the industry. It depends on the business mix and factors such as the level of dependency on the US commercial market.

The small-scale business meeting market has picked up again, but there are fewer of the big set-piece business and management conferences with hundreds of delegates particularly those involving US-based international companies.

Goldman Sachs has increased its price target for Millennium & Copthorne from 230p to 375p after results that were ahead of City expectations.

John Wilson, M&C's chief executive, said that trading had recovered so significantly since September that the company has re-employed more than 100 of the 500 workers it sacked to cut costs.

He revealed that "a huge wave of sympathy" towards New York had prompted a big increase in numbers of visitors to the Big Apple.

That lifted room occupancy by 11 percentage points year on year to 78% in the first quarter. In London, where the group has nine hotels, the occupancy rate was 80%.

In October, the stock was trading below 230p plunging to 190p at one point.

On Friday it closed unchanged at 376.5p.

Hilton, highlighted on these pages last month at 242p, closed last night at 253p within sighting distance of the 12-month high of 266p seen just a year ago.

EUROPEAN DESTINATIONS DOMINATE TOP 10

Analysis of visitor levels from global hotel booking website,
www.laterooms.com, have revealed a huge shift in destination searches in the
lead up to the summer season.

Statistics suggest people are taking advantage of discounted European flight
offers and combining their own short break packages to destinations further
afield than the UK.

An in-depth analysis of trends was performed on visitor activity for the
month to 25th February and the month to 25th April, and results were
compared. In the more recent statistics, 4 European destinations appeared
in the top 10 search destinations while just one featured in February's
figures.

In like for like comparisons, Barcelona moved up 9 places to number 4 in
April while Rome moved up 8 places to number 7 and Paris up 6 places to
number 10. Amsterdam featured at number 3, up 2 places.

Chris Allen, Sales Director at Laterooms.com comments:

"With a huge increase in the cheap flights market and many hotels on our
site offering discounts of up to 80%, the growth of European short breaks
has been phenomenal over the past few years. People have also realised that
it is often more cost effective to organise the break themselves through
discounted airline websites, and accommodation sites such as Laterooms.com"

These figures clearly show a shift in travel habits in the UK and the signs
are concerning for Chris who insists the UK travel industry will suffer.

Although Inner London and the Lakes remain in the top two respectively over
the two months, searches in the Cotswolds have reduced by 33%, Edinburgh by
32% and South Wales by 22% despite the fact that total unique users
increased by more than 7% from February to April.

Launched in November 1999, Laterooms.com provides hoteliers with the
facility to unload their unsold rooms. With the site attracting an average
of around 25,000 visitors a day from all over the world, hotels are given
the opportunity to generate income on unsold rooms. The site has expanded
quickly since its launch and now has over 49,000 hotel partners around the
world. Hotels are included in over 50 countries and the service can be
viewed in 5 languages.

Customers simply search for a hotel room that meets their location, budget
and travel date requirements and book either online or by phone directly
with the hotel.

Hotels can access the database and update their rates as often as they
choose and visitors book directly so there is no commission to pay. Many
hotels on the site gain over 50% of their bookings through LateRooms and
consider the site to be their number one marketing tool.

NEWS @ PATA

PATA ANNUAL CONFERENCE PROCEEDINGS

The 51st PATA Annual Conference concluded in New Delhi, India on April 18. Mr. Peter de Jong, PATA President and CEO, praised the host country for its professionalism and world-class hospitality. Speeches from the Conference are available at www.pata.org in the members-only area (non-member delegates, please send your requests to conference@pata.th.com). If you did not attend the Conference, you may order proceedings from publications@pata.th.com.

NEW OFFICERS CONFIRMED

During the PATA Annual Conference, the Association confirmed the appointment of its three officers for 2002/2003: Chairman Mr. Bo W. Long, Senior Executive Advisor for Sea Cloud Cruises; Chairman-Elect Mr. Richard Gordon, Secretary, Philippine Department of Tourism; and Secretary/Treasurer Mr. Ram Kohli, Managing Director of Creative Travel Pvt. Ltd. “We are privileged to have such a strong and diverse team of officers for the upcoming year,” said Mr. Peter de Jong, PATA President and CEO.

TRAVELLER'S CODE RELEASED

PATA’s Sustainable Tourism Committee, chaired by Ms. Dawn Drew of National Geographic Traveler magazine, has released the PATA Traveller’s Code -- a set of guidelines to help consumers travel in a responsible and sustainable manner. The six-point code advises travellers to “choose responsibly,” “support local enterprise” and “be respectful and observant.” To view the complete code, please visit www.pata.org and click on “Office of Environment and Culture.”

DE JONG ADDRESSES PATA-GULF OPPORTUNITIES

At the Arabian Travel Market in Dubai, PATA President and CEO Mr. Peter de Jong will hold a media briefing on “Travel and Tourism between Pacific Asia and the Gulf Countries: A Growing Opportunity.” The Middle East continues to be one of the world’s fastest growing travel and tourism markets, and there are many opportunities for strengthening ties between PATA and that region. Mr. de Jong’s media briefing will take place at 1300 on Wednesday, May 8.

SUSTAINABLE TOURISM CARAVAN SET FOR JUNE

A five-day educational road tour highlighting the environmental and cultural attractions of Thailand is being organised by PATA, in conjunction with the Tourism Authority of Thailand and supported by AVIS Rent A Car, Thailand. The June 12-16 caravan is designed to give travel industry professionals first-hand experiences of sustainable, community-based tourism. The self-drive tour begins in Bangkok and visits Khon Kaen, Nong Khai, Loei, Phitsanulok and Petchabun before returning to the Thai capital. The itinerary includes visits to three national parks, as well as to community and agricultural tourism projects. Participation is open to all PATA members, PATA Chapter members and other interested travel industry professionals. Two-person packages cost US$599 for PATA members and US$799 for non-members. The package includes vehicle rental, double/twin accommodation for four nights and three daily meals. Single rates are also available. For more information or to register, visit www.pata

.org. Or contact Mr. Aaron Tan, Manager-Support Services. Fax: (66-2) 658-2010. E-mail: aaron@pata.th.com.

COMMUNICATORS' WORKSHOP IN DHAKA

A PATA Communicators' Workshop will take place in Dhaka, Bangladesh at the NTO office May 11-12, following an opening ceremony at the Dhaka Sheraton Hotel on May 11. Subjects to be covered include, "The Art of Constructing a Professional Press Release," "How to Maintain a Favourable Relationship with the Press," "Promoting Bangladesh to Overseas Markets," "Mastering the Art of E-mail Distribution," and "Crisis Communications." Speakers include Mr. Imtiaz Muqbil, Executive Editor of Travel Impact Newsire, Mr. Steve Joel, Managing Director of Bangkok-based Joel Publicity and Mr. Ken Scott, PATA Director-Communications. For further information e-mail: ken@pata.th.com.

EDIT SCHOLARSHIP WINNERS FOR 2002 ANNOUNCED

PATA and the PATA Foundation have awarded five partial scholarships to participants in the Executive Development Institute for Tourism (EDIT) Programme, operated by the School of Travel Industry Management, University of Hawaii at Manoa. This year, the Jerome A. Keller Memorial Scholarship was awarded to Mr. Tek Bahadur Dangi, Director-Marketing & Promotion, Nepal Tourism Board. Mr. Andrew Nihopara, Marketing Manager, Solomon Islands Visitors Bureau received the PATA Foundation Scholarship. Three winners were selected for the PATA Scholarship: Mr. Taufiq Rahman, Proprietor, Journey Plus, Bangladesh; Ms. Martiningsih Chandra, Public Relations & Communications Advisor, Pan Travel, Indonesia; and Ms. Dechen Wangmo Penjor, Chief Executive Officer, Yarkay Tours & Treks, Bhutan. The three-week EDIT programme will be held in Honolulu, Hawaii, June 10-28. The curriculum is designed to serve the ongoing needs of executives and professionals in both the private and public sectors of tourism an d offers participants the chance to learn in the classroom as well as on field trips. For more information about PATA EDIT scholarships, contact Mr. Tongchan "Aye" Srinava at PATA Operational Headquart ers, Bangkok, Thailand. Fax: (66-2) 658-2010. E-mail: aye@pata.th.com. Inquiries about the EDIT programme may be directed to Ms. Rachel Soma at the University of Hawaii. Fax: (1-808) 956-5378. E-mail: rsoma@hawaii.edu.

PATA STRATEGIC INFORMATION CENTRE WORLDWATCH

* According to a survey by the London-based Economist Intelligence Unit (EIU), Singapore has overtaken Hong Kong SAR as the best place to do business in Asia. Australia moved up a spot to third, trading places with New Zealand. In global rankings, Hong Kong SAR fell to 11th from fifth while Singapore slipped two places to ninth.

* Thai authorities are looking into the possibility of allowing Malaysians to travel without visas to all 14 southern provinces in an effort to boost tourism and trade in Thailand. Currently, if they have border passes, Malaysian nationals who have relatives in Thailand can enter the five southernmost provinces and stay overnight.

* A new 2,180-metre runway has opened at Tokyo’s Narita International Airport in time to cope with the expected increase in air traffic for the 2002 FIFA World Cup Tournament. The new runway will increase the total number of flights at Narita to 200,000 a year from about 133,000. Following protests by local residents, the new runway is short of the required 2,500 metres needed to handle 747-class aircraft.

* According to the latest OECD Economic Outlook forecasts, the U.S. economy will grow about 3.5 percent in 2003, the Euro area about 2.9 percent and Japan about 0.3 percent.

PATANET QUICK LINKS

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LONDON HOTEL MARKET RevPAR DECLINES 16 PERCENT IN MARCH 2002  -  ACCORDING TO ANDERSEN

Easter hampers recovery of London hotel market

Andersen, a leading adviser to the international hotel industry, today released preliminary first quarter results for the performance of London hotels. 

Since the events of September 11 the performance of the UK hotel industry has been under pressure as visitor numbers have dwindled.  The impact has been most severely felt in London, where RevPAR declined by an unprecedented 34.7 percent in October 2001 and the occupancy level in 2001 hit a seven-year low.  Encouragingly however, the differential in RevPAR performance contracted each month between November 2001 (-27.5 percent) and February 2002 (-14 percent).  Unfortunately, the trend has reversed again in March with RevPAR declining 16.0 percent. 

Julia Felton, director of the Andersen Hotel Industry Benchmark Survey comments, “The timing of the Easter holidays this year has caused an aberration in the pattern of the general recovery that we have been witnessing in hotel performance.  In 2001 the Easter holidays fell in the second week of April whilst this year they fell in the last week of March.  The Easter holidays are always a period of softer demand for hotels in London, particularly those with a high reliance on commercial business.  Consequently, London hotels have experienced two weeks of relatively low demand and price sensitivity.  We therefore anticipate that April results should show a marked improvement over March, and so continue the gradual improvement that we have been experiencing in the market”. 

Whilst all market sectors in the capital experienced RevPAR declines in March, there was a marked variation in the strategies employed by hoteliers.  Hotels with average room rates over £200 refused to enter into significant price discounting and, as a result, occupancy levels fell 13.8 percent to 63.5 percent for the month.  However, with average room rates only falling 4.7 percent this sector reported a revPAR decline of 17.8 percent.  Hotels with an average room rate below £160 adopted different tactics and sought to protect occupancy at the expense of average rate.  Hotels with an average room rate below £80 and between £80-£110 reported marginal occupancy increases over 2001 levels, whilst hotels with an average room rate of between £110 and £160 reported a 0.1 percent decline. All three market segments experienced declines in average room rates of between 12 and 18 percent.  Hotels with average room rates between £160-£200 found themselves floundering in the middle with a significant fall in occupancy of 8.3 percent, compounded by a 15.1 percent decline in room rate, resulting in a 22.2 percent fall in revPAR – the highest RevPAR decline in March of the market segments monitored. 

Although average room rates remain under pressure, occupancy levels across the whole market have been steadily improving and are now only marginally behind March 2001 levels.  In March 2002, central London hotels reported occupancy levels of 75.8 percent just 1.6 percent behind March 2001 levels. Generally speaking, London hoteliers remain optimistic about the underlying recovery in the market.  With improving demand levels, they hope to soon be in a position to curtail future price discounting.

About the Hotel Industry Benchmark Survey:
Launched in 1996 as the definitive source of hotel performance data outside North America, the Andersen Hotel Industry Benchmark Survey comprises information gathered from more than 5,500 hotels in 300 markets across 140 countries.  The survey currently tracks hotel performance everywhere outside the North America. Regional surveys are produced for Asia Pacific, the Caribbean and Latin America, Europe and the Middle East and Africa.  These are supported by in-depth country/city reports for Australia, Germany, Italy, New Zealand, South Africa, the UK and London.  Further surveys are underway for Benelux, Japan, Scandinavia and Spain.   

Copies of the recently released Andersen Hotel Industry Benchmark Survey Annual Survey – London detailing an analysis of the full 2001 results are available for purchase at a cost of £250 from Andersen.  Please call us on +44 20 7304 1304 or e-mail us at hotelbenchmark@uk.andersen.com.

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