Olympus Buys Rockresort
By Staff -- Hotels, 8/31/1999 11:00:00 PM
DALLAS In another illustration of the flexibility of private discretionary capital equity, Olympus Real Estate Corp., Dallas and its Phoenix-based affiliate Park Plaza International LLC, have acquired the Rockresort brand from Rockresorts International. While most public hotel companies are compelled to make brand acquisitions that are quickly if not immediately accretive to their earnings, this particular transaction, purchase price undisclosed, is for future brand equity and involves no real estate.
Four resorts owned by Park Plaza International will be flagged "A Rockresort" while retaining their identities. They are: Cheeca Lodge in the Florida Keys; La Posada Resort and Spa, Santa Fe, New Mexico; Rosario Resort, Orcas Island, Washington; and Casa Madrona Hotel, Sausalito, California.
Olympus Real Estate also named two executives to head its full-service division, which oversees Park Plaza hotels as well as the Rockresort brand. L.K. Eric Prevette and Carlos Lopes, previously co-managing directors of Unique Hotels & Resorts, were named president and executive vice-president of the division, respectively.
Created by Laurance Rockefeller in 1966, Rockresort has changed ownership over the years while maintaining its identity as a luxury flag operated in environmentally pristine settings. VMS Realty bought Rockresorts for US$155 million in the late-1980s. In 1994, the brand was purchased by the principals of The Plaza Hotel Company, Wayne Whatley, Frank Haralson and Bob Williamson. Whatley and Haralson, as controlling partners of Rockresorts International, sold the name to Olympus Real Estate, which will likely have a medium- to long-term interest in the brand.
A source at Olympus requesting anonymity explains the fund acquiring Rockresort is designed with a seven- to 10-year life span with the intent of building value into the asset inside of three to six years, followed by refinancing or even an IPO. The brand is viewed as a global flag that will enable to unify the company's increasingly global hotel holdings, particularly in far-flung markets such as Asia Pacific.
Rooms Growth Overtaking Demand In U.S.
HENDERSONVILLE, TENN. Oversupply continues to reduce occupancy in an otherwise upbeat United States hotel market, according to figures released by Smith Travel Research (STR), based in Hendersonville, Tennessee. STR measured U.S. industry occupancy for the first half of 1999 at 63.0%, a decline of 0.8%; second-quarter occupancy was 66.5%, 1.2% lower than than the comparable period in 1998.
The downward trend in occupancy was offset by continued gains in room rates, leading to an increase in RevPAR. First-half room rates in the U.S. were up 3.6% to US$81.14 and RevPAR increased 2.8% to US$51.11. However, STR cautions that U.S. room supply continues to grow faster than demand, with supply up 3.4% versus a demand increase of 4.2%. During the second quarter, major markets Dallas, Denver and Phoenix all saw their supply grow by more than 10%.
"The supply/demand relationship continues to erode occupancy, which in turn affects the ability of the industry to grow rate and RevPAR," says Mark Lomanno, STR President. "We would have honestly expected a slight slowdown in supply growth by now, which we haven't seen. It has plateaued, but at a high level."
Somewhat lost in the concern over supply growth is that fact that rooms demand has remained high in the U.S., actually stronger in the first half of 1999, by a tenth of a point, than in 1998. That translates into the U.S. lodging market selling more than 76,000 rooms per day compared to the same period a year earlier.
In 1998, when U.S. operating figures showed the first serious signs of tailing off, financing for new hotel projects began to dry up. But if demand remains strong, "then that lack of financing last year was more talk than reality," Lomanno says. "The demand side is especially strong. In the last two years, there has been no slowdown, both rooms supply and rooms demand are increasing, it is just that supply is increasing faster."
Lomanno also warns corporate chains could overreact to supply growth by discounting room rates without closely analyzing local markets.
Hilton Sells, Pulls Indo Support
LONDON Following up on its earlier-stated intent to streamline its portfolio, Hilton Group Plc announced plans to sell nine of its hotels to insurance company Norwich Union Plc for US$111 million in cash. The move aids the expansion of London-based Jarvis Hotels, which is being contracted by Norwich to manage the hotels and which has also announced the purchase of the Regents Park hotel for US$113.5 million.
Of the nine Hilton Group hotels being sold, which have an aggregate room count of 940, six are part of the Stakis portfolio Hilton acquired at the beginning of th e year.
In Indonesia, meanwhile, Hilton is facing a different type of ownership issue as it has withdrawn all sales and marketing and distribution services from its five hotels there due to a reported dispute over unpaid marketing and management fees.The Jakarta Hilton International, Lagoon Tower Jakarta Hilton International, Hilton Residence, Patra Surabaya Hilton International and Bali Hilton International are all owned by the Pontjo Sutowo family in a joint venture with Hilton.
Gostelow Report
Georg Rafael has associated his hotels with the arts, especially via his annual Seven Cities Rafael Arts Calendar. Now he is embracing academia in a more public way. Rafael Cambridge Ltd, a newly formed division of Rafael Hotels, has been established in the British Virgin Islands to manage a new-build 122-room hotel with spa and two golf courses in the center of that pinnacle of UK learning, Cambridge. Most of the older colleges also are large real estate owners. Will others see that Cambridge, quickly becoming England's Silicon Valley, is surprisingly short of recommendable hotels?
Another German, Wolfgang Werlé-president of SAirGroup's SAirRelations--announced August 3 that Swissôtel will manage a 320-room hotel already under construction on Berlin's Kurfürstendamm. Andreas Meinhold, president of Swissôtel, said recently to watch his brand pop up in Europe's most important cities. Back at his New York base, Meinhold is also working on synergy between Swissôtel and travel caterers Dobbs, now also owned by SAirRelations. Dobbs begins catering Amtrak's high-speed Acela trains coming online this Fall.
Andy Flaig, newly relocated to Singapore as associate director hospitality consulting for Arthur Andersen, said he believes investment properties are slowly becoming available in Malaysia and that Singapore offers especially good opportunities in the long-term, though seasoned owners are unlikely to sell.
At the same time, Grupo Sol Meliá Executive Vice President Asia-Pacific Miguel Payeras wants to expand the brand in Beijing and Shanghai. For the European market he would like Colombo and the Maldives, and to tap American tourism he would like to acquire in Manila. "It doesn't make sense to build so we are looking for products finished in the last few years," Payeras says.
The boutique segment is seeing new players emerge. Martin Scasserra, then a parking valet, met Keith Spacer when both worked for Ian Schrager. Now Scasserra and Spacer's fledging S&S Hotels is growing out of Miami Beach. By contrast, the Reybier family, which already owns La Réserve, Geneva, are looking for opportunities in financial centers. There is certainly room for another high-level brand in gateway cities, says Tom O'Leary, president and CEO of Richfield Hospitality Services, whose 50 managed properties include the United Nations Plaza, New York. He is interested in talking about joint ventures.
In Egypt, Nader Fayek, chairman, Regina Resorts Group, has tapped his country's main source of arrivals and chosen Milan-based THI Group as partner for his newest project, the 217-room Regina, Nuweiba. It is believed Fayek has three more management contracts to announce shortly.
Worldwide News in Brief
Starwood To Buy Timeshare Leader
NEW YORK In what arguably could be viewed as a watershed event for the vacation ownership segment,Orlando-based Vistana Inc. has become the first publicly owned timeshare company to be purchased by a major hotel entity, Starwood Hotels & Resorts Worldwide, White Plains, New York.
The US$615 million deal (which includes US$210 million of Vistana's debt) means Vistana's top two executives, Chairman and co-CEO Raymond ``Rip'' Gellein and President and co-CEO Jeff Adler, will head up Starwood's timeshare business and will continue to work from Vistana's headquarters. They are expected to report to Ted Darnall, President, North American Hotel Operations for Starwood. Gellein and Adler have entered into new, multi-year employment agreements that will become effective upon the closing of the purchase, expected by year's end.
Jonathan Litt, chief lodging analyst with PaineWebber, says Starwood will leverage its lodging assets, "namely its proprietary chains, land available for development and frequent guest program, to propel them into a leading vacation ownership company."
David Matheson, Vistana spokesperson, says the transaction is the next step in what has been a long period of consolidation among timeshare companies. "We needed scale and brand affiliation and Starwood can do this along multiple tiers."
MINNEAPOLIS Carlson Hotels Worldwide is accelerating its growth plans abroad. First, it has named Harald Einsmann, former president of Procter & Gamble Europe, as a special advisor to its European board to offer expertise about European expansion. Carlson has expanded its territory agreement outside London with Radisson Edwardian. UK deals are pending in Birmingham and Manchester. Another deal has been struck with Radisson SAS Hotels to expand outside its territory, including South Africa. SAS' goal is to have 200 hotels by 2000. As part of its merger with Thomas Cook, Carlson has been granted the option to buy a 49% stake in the company at the end of 2002. In 2000, Carlson expects systemwide sales in Europe to approach US$7 billion.
WASHINGTON As part of its stated growth strategy ExecuStay by Marriott has agreed to acquire the 300-unit Executive Living Inc., Columbus, Ohio, and the corporate housing division of Dallas-based JPI, one of the nation's largest multifamily housing developers. As a result, ExecuStay's inventory will reach about 6,000 units across the United States.
PARIS Accor has signed a 15-year lease with a five-year renewal option on six hotels (666 rooms) belonging to the private Danish group Sorana, owned by Lorentz Jorgensen. Previously operated by the Plaza Hotel Group, the hotels are situated in Copenhagen. The renowned Plaza hotel will be rebranded as a Sofitel, while the others will be incorporated into the Mercure and Ibis brands.
TORONTO Four Seasons Hotels & Resorts reports President John Sharpe will retire at the end of October. Wolf Hengst will become president and COO of international operations, while Kathleen Taylor will be named president and COO with oversight of the company's worldwide business functions and affairs.
ISRAEL HEI Hotels, Tel Aviv, plans to assemble a group of 25-30 hotels in Israel and the surrounding region over 10 years through management, leasing, acquisition and development. The hotels will be operated under franchises from Marriott, Renaissance and Courtyard by Marriott brands. Sonnenblick-Goldman, New York, has been retained to seek an equity partner in the deal.
CLARIFICATION To clarify data and analysis presented in tables about the Canadian hotel market on p.6 of the July issue of HOTELS magazine, information released by Colliers International Hotel Realty and KPMG suggests the Canadian hotel investment market is stronger than previously indicated. While there has been a noticeable decline in hotel investment activity during the past 12 months, hotel operating fundamentals remain strong with most major urban markets reporting RevPAR growth for the first half of this year. Minimal new supply has entered major markets and growth in RevPAR is expected to continue throughout 1999. Transaction volume should reach approximately C$600 million by year's end.
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