USFS Goes Private
Edited and written by Cherie Hensdill -- HOTELS Magazine, 11/1/2000
- USFS Goes Private
- Malmaison To Grow Under MWB, SAS
- Legos Have Landed
- Cala Corporation: One To Watch?
- Extended-Stay: A World Of Possibilities
- Grupo Poma Takes The Fast Track In Central America
- The Lodging Conference 2000
- Health and Well Being
- Grand Lady By The Sea
- World Watch
- Hoteliers
- Gostelow Report
ATLANTA Lodging stocks, particularly those for North American hotel franchising companies, tend to rise and fall with each other, the movement of each stock price, if not the price itself, charting very similar peaks and valleys.
Plot two years worth of price points for Atlanta-based U.S. Franchise Systems (USFS) against mega-franchisor Cendant Corp., Parsippany, New Jersey, in the same time span and the two companies mirror each other, with two strong exceptions: USFS stock plunged drastically in the autumn of 1999 when its senior management disclosed its earnings for the year would be substantially lower than once thought. The other break in the pattern has come since the summer of 2000, when news of a recapitalization plan for USFS involving the participation of the Pritzker family, owners of Chicago-based Hyatt Hotels Corp., caused a momentary boost in USFS stock price before it resumed its decline.
That, in a nutshell, is why the Pritzker family interests ended up as the expected tender offer buyers of USFS instead of a 43% partner, as was announced in June. In any public company, the will of the shareholders prevails and in this case, the Pritzkers' offer of US$5 per share, nowhere near the 52-week high of US$15-5/8, nonetheless helped ensure the stock would not continue its downward slide. The 52-week low had been US$3-3/4.
USFS General Counsel Steve Aronson points out that the tender offer price "was a 20% premium to market." One industry observer calls the price a good deal for USFS shareholders because "the stock continued to go down even with the rumors of a sale; it shows how much the company needed a bailout."
Statements from both sides of the deal seemed to hint at the urgency of a transaction. "We are pleased to have reached this agreement that will provide a favorable outcome for the existing hareholders while allowing USFS to pursue its business with an enhanced focus on the needs of its franchisees," says Doug Geoga, president of Hospitality Investment Fund, advisor to the buyers. Mike Leven, CEO of USFS, calls the tender offer "good news for our shareholders, our franchisees and our employees. I'm pleased the board found both the form and terms of this transaction to be attractive and clearly in the best interests of our shareholders.
Year-Long Selling Process
Aronson says the USFS board of directors considered a "number of factors" before accepting the tender offer from the Pritzker family. He stressed the selling process dates back to January 2000, when Bank of America Securities was retained as a strategic advisor for the company. "It is by no means a one-bidder transaction," he says. "More than 25 companies were contacted."
Unrelated to the tender offer is the resignation of USFS CFO Neal Aronson, (brother of Steve Aronson) who is at the end of his original five-year contract. Leven, meanwhile, is under contract for five years following the close of the current transaction. Steve Aronson says the company will otherwise remain as is, based in Atlanta, with the Microtel, Hawthorn and Best Inn brands in their current configuration. It should be noted the Pritzkers are acquiring all of the outstanding USFS stock. Substantial shares of the company are to be still owned by Leven and President and Chief Operating Officer Steve Romaniello.
The transaction, which takes USFS private for the first time, has some analysts wondering whether it will become attractive for the Pritzkers to shop the company once the U.S. economy lodging sector rebounds.
Malmaison To Grow Under MWB, SAS
LONDON The early September sale of the Malmaison brand by Wyndham International, Dallas, to a joint venture of London-based Marylebone Warwick Balfour Group Plc (MWB) and SAS International Hotels promises growth for the five-unit (460 rooms) boutique-styled chain.
Wyndham purchased Arcadian International Plc in 1998 for about US$296 million, a package that encompassed about 16 properties, the Malmaison name, as well as a 50% stake in the Great Eastern Hotel in London. For about US$112.5 million, MWB bought the real estate and operating business of the Malmaison hotels, while SAS acquired 50% of the brand rights.
SAS will have a 20-year management contract for Malmaison and will name a brand president, but SAS CEO Kurt Ritter says there will be no conversion of Radisson SAS hotels to Malmaisons. Still, analysts are bullish on the prospects for initially doubling the size of the brand, given MWB’s momentum as a public company in the U.K. stock market in the past year.
“The Malmaison deal is a very interesting one,” says Daniel Larkin, lodging analyst with PricewaterhouseCoopers, London. “Marylebone way outbid the next highest bidder, and clearly that kind of a price is very much premised on a substantial rollout of the brand across Europe and perhaps elsewhere.” PricewaterhouseCoopers represented one of the bidders in the sale.
For Wyndham, the asset disposal represents another step in refocusing on owned and managed upscale and luxury properties in the U.S. “The price was attractive to both sides,” says Fred Kleisner, Wyndham’s president and chief operating officer. “With the closing of this transaction, we will have divested approximately US$300 million in non-core assets this year.” Wyndham maintains the rights to develop hotels under the Malmaison brand name in North America and Central America. Before the sale, however, Wyndham did little to develop the brand.
BRUSSELS Legos have landed at Radisson SAS Hotels & Resorts, Brussels. Through an exclusive partnership with the LEGO Company, makers of those colorful snap-together building blocks, Radisson SAS introduced LEGO as a value-added component of its annual Family Magic summer campaign. From June 16 to August 27, all children staying at participating hotels received a small, free LEGO give-away. In addition, they also could play at highly visible LEGO play stations located in the hotels’ lobby and restaurant areas, and could beg their parents to purchase LEGO toys from the minibars, through roomservice and even at the front desk. “All of this helps transform an adult and business-oriented environment into a child-friendly one,” says Farida Blok, director of public relations for Radisson SAS. “The play points are an ideal child minder during times when parents are engaged in check-in, departure, or during meal times.” And the for-sale items have “proven to be extremely popular with parent business travelers who wants to bring home a gift for their child.” As a result, not only are Radisson SAS guests happier, both the small and the tall, but so is Radisson SAS. The partnership helped increase the number of Family Magic campaign rooms nights sold by more than 25%, from 150,000 rooms nights in 1999 to more than 200,000 this year.
Cala Corporation: One To Watch?
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OKLAHOMA CITY According to Securities and Exchange Commission filings, little more than one year ago, Cala Corporation, based here, was involved primarily in the ownership and operation of restaurants. But starting in January of this year, it has made one acquisition after another designed to turn it into an international holding, merger, acquisition and asset management company.
Chairman and CEO Joseph Cala has stated frequently that the cornerstone of Cala Corp. is the realization of the Undersea Resort & Casino Project, but other acquisitions this year have pointed toward the construction of 5-star hotels, franchising an Italian bakery concept, purchasing a golf resort in Sicily as well as a Nevada spa resort company and the purchase of an Italian design and construction company specializing in boutique hotels.
Also, within the same year, Cala Corp. has bought a controlling interest in a rechargeable battery company and then sold it. However, its Italian subsidiary, Cala of Italy, formed in July 2000, appears to have forward momentum, having announced the purchase of a construction company, Costanzo Industries, which will be renamed Cala Construction. Cala of Italy is also overseeing the previously announced overseas acquisitions, which will also include hotel and spa franchising.
In a statement, Cala says, “The Cala Resorts strategy will promote a Ritz-Carlton and Four Seasons style of 5-star service while charging patrons Hilton and Hyatt prices.”
Cala says he has been working on the Undersea Hotel & Casino project since 1996 with the assistance of the University of Hawaii School of Oceanography and with principals of the architectural firm of Wimberly Allison Tong & Goo. A feasibility study has been completed for the project, now labeled the Cala Undersea Resort, which would be built off Maui.
Extended-Stay: A World Of Possibilities
WORLDWIDE Anyone with a pulse in this industry knows the extended-stay success story in the United States is probably one of the most compelling, and one of the most profitable, in the hotel industry. But what some might not realize is the possibilities extended-stay holds for the rest of the world makes the tale even more intriguing, and all the more lucrative.
U.S. Success
The latest figures from The Highland Group, Atlanta, report 205,733 extended-stay rooms at the end of the second quarter of 2000, representing about 5% of total U.S. lodging inventory. That number is expected to reach 300,000 by 2004. And as extended-stay supply is climbing, demand is soaring, with guests attracted to the product’s unique value proposition of larger rooms with built-in kitchens at rates competitive to standard hotels. With 36% of every room night sold generated from an extended-stay trip, demand continues to outstrip supply, increasing 17.8% during the first half of 2000 alone.
Extended-stay occupancies averaged 77.2% through June 2000, representing more than a 13-point premium over the total U.S. hotel occupancy average of 63.5%. If demand continues to increase at historic levels and new supply grows at the more moderate expected annual rate of 10%, versus 33% in 1999, extended-stay occupancy will approach 80% within the next two years, says Highland Group Partner Mark Skinner. And the extended-stay pièce de résistance: unleveraged returns of between 11% and 16%.
What continues to drive profitability and development in the U.S extended-stay market is multi-faceted. Despite lower construction costs, at least among mid- and upscale extended-stay products, and lower operating costs, current socio-economic trends also appear highly favorable for the future of the segment.
“Extended-stay demand is growing,” says Jim Holthouser, senior vice president, Homewood Suites by Hilton. “This is due to the increased mobility of American society. And I don’t see that slowing down. Training and business meetings are the biggest drivers of the customer to this product, and at the same time, the family market continues to grow.” These same factors are just starting to drive extended-stay development abroad.
Prospects In Asia Pacific
In Australia, 28% of all accommodations are extended-stay, according to Horwath Asia Pacific, Singapore. Termed serviced apartments throughout the region, a product that encompasses the U.S. equivalent of extended-stay, all-suite and limited-service, the segment in 1999 achieved a 77% occupancy rate, versus a 71% industry average, and a gross operating profit of 42%, compared with 26% for the industry. With new construction in the country continuing, most analysts say the peak risk period for oversupply has yet to occur. However, unlike in the United States, market segmentation still needs to take place, which means ample room for branding.
Robert Hecker, managing director of Horwath Asia Pacific, says outside of Australia, Singapore has one of the highest concentrations of serviced apartments, with about 35 properties, versus 200 hotels. “The cities with large ex-patriot populations and/or where long-term assignments for projects generate extended stays from foreigners are where you will find the highest concentrations of serviced apartments,” he says. In addition to Singapore, he points to Jakarta, Bangkok, Manila, Beijing and Shanghai.
Service apartment occupancies tend to exceed those of hotels by as much as 20%, Hecker says, and profit margins are typically double. “However, average room rates compare to those of similar quality hotel properties,” he says. “This is one of the reasons why serviced apartments are so popular.”
Another reason is that zoning regulations, building codes and taxation issues favor apartment complexes over hotels. In fact, the added guest space and competitive rates are making the product so popular among guests, for even one-night stays, that competing hoteliers are starting to complain about regulation inequities, Hecker says.
The major serviced apartment players in Asia tend to be local owners and operators, but U.S.-based operator Oakwood has an office in Singapore. And Marriott International, with its Executive Apartments, Accor and Shangri-La are actively seeking opportunities in the region. Marriott already has properties in Hong Kong and Mumbai, with others planned for Shanghai, Bangkok and Tokyo.
European Penetration
Many of the same conditions that exist in Asia also are sparking extended-stay growth in Europe, where the concept is termed aparthotels, although serviced apartments also exist. Heather Saunders, partner in charge of Hospitality and Leisure Consulting for Arthur Andersen, Frankfurt, says the extended-stay market in Europe is highly fragmented. France, the country with the greatest hotel consolidation and the highest penetration by major chains, has the most developed extended-stay market, she says. “Because consolidation hasn’t happened in Europe to the extent it has in the U.S., the chains there are just now looking for other ways to grow their companies.”
Paris-based Citadines is the largest branded aparthotel operator in Europe, with 49 properties, 5,369 units, in five countries: France, Spain, Portugal, the United Kingdom and Belgium. The bulk of Citadines mid-market offerings are in France, with a growing number in London. The company targets city-center locations where the business and leisure mix is highest and where there is ample access to air and ground transportation. Citadines is experiencing system-wide average occupancy of 80% and is looking to expand into Italy, Germany, the Czech Republic, Hungary and Asia.
“Properties that have the best chance in Europe are the ones that can attract a mix of business and leisure,” Saunders says, “because we’ve found there aren’t any markets with enough business demand to support the concept.”
Some aparthotels in London have been conceived strictly for the Arab market, Saunders says. “But London is so large developers can tailor a product for a specific market. You couldn’t do that in any German city.” Demand for aparthotels is strongest in Paris and London, with Germany and Prague showing promise. Southern Europe does have aparthotels aimed at the leisure market, but most are independently owned and operated.
Marriott is one of the only global operators in the region, with a Residence Inn in Budapest. However, the company also has Executive Apartments, which require at least a 30-night stay, in Budapest and Prague with a third planned for Dubai. Candlewood Hotel Company, Wichita, Kansas, just signed an agreement with Dublin-based Midatlantic Hotels to develop six extended-stays in Germany, Austria and Switzerland, says President and COO James Roos. He also is in talks with developers in Latin America. And Hawthorn, out of Atlanta, has one property in Tel Aviv.
“There is still an opportunity for a brand to be introduced to the European arena,” says Melvin Gold, PKF Consulting, London. “Citadines is successful but broadly unchallenged so far.”
U.S. Expansion
Back in the United States, most extended-stay operators are putting their products in suburban markets with a large concentration of technology and telecommunication businesses. These areas also offer low barriers to entry. In addition, many brands have representation in such high-volume leisure destinations as Orlando and Las Vegas, demonstrating the family demand behind the product.
As these markets become saturated, such fast-growing companies as Extended Stay America (ESA) are pushing their way into urban locations with higher barriers to entry, as well as Canada and Mexico. Although ESA is not pursuing opportunities outside the States, Marriott has several in the works in Canada and at least one in Mexico, and Bass Hotels & Resorts, London, is developing Staybridges in Toronto and São Paulo. But in the United States, no one foresees overbuilding or a market downturn having a significant impact in the near term.
“Even in the bad times during the early 90s, there was only a blip in the occupancies of extended-stay,” says Steven Romaniello, president and CEO of Hawthorn’s parent U.S. Franchise Systems. “As long as the demand is there and the properties are offering a unique value proposition, these hotels will do OK.”
Grupo Poma Takes The Fast Track In Central America
EL SALVADOR Every few months, it seems, Grupo Poma and its strategic partner, Bass Hotels & Resorts, London, inaugurate a 5-star property in yet another Central American capital. In January, the two announced the opening of the 157-room Inter-Continental in Tegucigalpa, Honduras, followed in July by the inauguration of Nicaragua’s newest luxury hotel, the 157-room Inter-Continental Metrocentro Managua. And in October, the 239-room Inter-Continental in Guatemala City debuted. That’s quite a vote of confidence in a region once known mainly for civil wars and kidnappings.
Risking Nicaragua
Fernando Poma, managing director of Grupo Real, which is Grupo Poma’s hotel division, says the Metrocentro Managua represents a US$20-million investment. Grupo Poma owns 68% of the new property, with the remaining 32% owned by Nicaraguan businessmen Leonardo Somarriba and René Morales. Corporate rates start at US$130 per night.
“We own between 60% and 100% of our hotels, depending on the specific property,” Poma says. “We try to form strategic partnerships with companies or groups that can bring some sort of strategic value to the venture.”
Grupo Poma, one of El Salvador’s largest conglomerates, signed a strategic alliance with Inter-Continental Hotels, now a division of Bass, in 1996. Its first hotel venture was the Hotel Camino Real Inter-Continental San José, which has 260 rooms and is 85% owned by Grupo Poma. At present, Grupo Poma owns eight hotels and is building at costs between US$110,000 and US$130,000 per room. Grupo Poma owns the Camino Real brand name for all of Central America except Guatemala, which is unrelated to the Camino Real chain in Mexico.
Market Strategies
“We have two strategies, the upscale strategy and the mid-scale strategy,” Poma says. “The idea is to develop the best hotel in each key Central American city with the Inter-Continental brand. These properties generally are built as part of a large project. All of them include shopping centers, to take advantage of synergies.
“Once we have the upscale market, we’ll pursue our mid-scale strategy, which is to open Comfort Inns throughout Central America,” Poma continues. “We already have two franchisees: Viva Clarion Suites in Guatemala City and the Quality Colón in San José. Our plan is to open between eight and 10 more Comfort Inns in key Central American cities, and have maybe 10 or 12 more under management contract in secondary cities.”
Chuck Bedsole, Latin America practice leader for Ernst & Young’s Hospitality Services Group in Dallas, says the Bass-Poma co-branding relationship has both positives and negatives. “Bass has some good products in Central America, and their co-branding strategy will probably differentiate them from their competitors,” he says. “It also adds the benefits of having an affiliation with an established local brand. But it also can cause some confusion, both among hotel guests, as well as investors and developers.”
“We want to expand, we just haven’t analyzed where yet,” Poma says. “After doubling in size in just more than a year, what we want to do now is consolidate our operations, making sure all the hotels are working perfectly. At some point, we also want to do joint ventures with Salvadoran entities like Grupo Taca and Banco Agricola Comercial, joint marketing agreements and programs to help us obtain customer loyalty.”
WHERE HAVE ALL THE HOTEL DEALS GONE in the United States? This was one of the more interesting questions raised at the 6th Annual Lodging Conference held at the Arizona Biltmore in mid-September.
Perhaps the most revealing answer came from Michael Medzigian, president and CEO of Lazard Freres Real Estate Investors, New York, who says industry performance is so good that it is hard to expect even better returns from the sector to get excited about investment. In addition, with the uncertainty of a pending “economic event,” which many have been expecting, investors get nervous about an industry so susceptible to problems.
Roy Smolarz, senior vice president of investment banking for The GMS Group, Philadelphia, says while there is no abundance of equity at the corporate level, there is opportunistic investment happening at the individual project level. Paul Novak, in the process of building equity to reposition 25-year-old hotels for Bedrock Partners, Dallas, agrees with Smolarz, saying there is a huge amount of capital out there. The problem, he says, is investors are not willing to go into markets other than selectively, and they want single deals or trophy assets. “Deals with 15% unleveraged returns, as required, do not exist. What equity is searching for is a very small market.”
HEALTH AND WELL BEING have become competitive drivers for some hotels. The legendary 857-room La Quinta Resort & Club, La Quinta, California, partnered with preventive medicine specialist Daniel Cosgrove, M.D., to open the WellMax Clinic in an effort to offer its guests a serious medical component to complement the extensive Spa La Quinta treatments, and world-renowned golf and tennis facilities. Comparable to such clinics as Mayo and Cooper, WellMax offers a variety of diagnostic tests, from measuring hormone levels and oxidative stress, to ultra-sound imaging of major organs and blood vessels, as well as nutritional and physical fitness evaluations. The clinic opened in October, taking over the hotel’s sports bar, at a cost of US$1 million. Stand-alone clinic packages range from US$350 to US$8,800 per person.
Orient-Express’ Westcliff Hotel in Johannesburg, South Africa, and Mount Nelson property in Cape Town have teamed up with Surgeon & Safari to offer personalized programs of cosmetic surgery in complete privacy, combining surgical and/or non-surgical procedures with recuperation packages featuring pampering health and beauty treatments in opulent surroundings. A three-day non-surgical package starts at US$1,515, while a seven-day program with two surgical procedures starts at US$3,800.
And the114-room Jalousie Hilton Resort & Spa on the Caribbean island of St. Lucia is combating mild guest maladies with the healing powers of locally grown herbs, available at the resort’s all-natural drugstore, which is complemented by a 7-sq.-ft. (.65 sq. m) rainforest drugstore garden. And if an herb can’t cure what ails guests, the hotel will gladly make appointments to meet with the Island Bush Doctor, Daniel Cherubin.
CORONADO, CALIFORNIA The legendary Hotel del Coronado, affectionately known by most as Hotel Del or as simply The Del, is the epitome of elegance and grandeur undaunted. Built in 1888 on the Coronado peninsula, overlooking Coronado Bay and the city of San Diego, the 680-room grand dame has stood the test of time, war and financial depression, making a name for itself as a world-class hotel and historic landmark. And although the hotel has undergone minor touch-ups and additions over its 113 years, it only just recently unveiled the dramatic dressings of a two-year comprehensive preservation and restoration, costing US$70 million.
The most striking change is the creation of the Windsor Lawn. In an effort to reconnect the hotel with the sea, four of the Del’s seven hard-top, ocean-front tennis courts were torn down and replaced with an expanse of grass, garden and walkways that stretch 1,500 sq. ft. (140 sq. m) from the beachside façade of the hotel’s picturesque Victorian building all the way to the edge of the Pacific. The US$7-million feature has restored romance to the Hotel Del by enhancing views from the guestrooms, improving circulation across the grounds, and providing ample terrace seating with giant fireplaces and dramatic vistas for the Sheerwater and Prince of Wales restaurants, both of which have been completely reconceptualized. The restored lawn also gives the original Babcock & Story Bar, dating back to the hotel’s opening and in continuous operation ever since, a spectacular front-row seat for viewing daily sunsets.
Further adding to the hotel’s romantic allure, the infamous Windsor Cottage was relocated to the lawn, anchoring the site at one end. The Del’s only private cottage is the place where Wallis Spensor Simpson, who later became Duchess of Windsor, was living when she was said to have met the Prince of Wales during his 1920 visit. Sixteen years later, Prince Edward would give up the throne to marry the divorced Mrs. Simpson.
Michael Hardisty, the hotel’s managing director, today refers to the Grand Lady by the Sea as “a national treasure with a storybook past, restored, refurbished and brand new. For guests who return,” he says, “they are in store for some fresh new elements and some refreshed historical ones.”
MIDDLE EAST
Prior to the recent return to violence, tourism in Bethlehem was enjoying signs of a healthy recovery in the glow of a potential peace settlement. Pope John Paul II made a pilgrimage to the town, an event which was witnessed by a record 450,000 people in the first five months of 2000, compared with 226,000 for the same period last year.
In 1999, Bethlehem’s 14 most prominent 3- and 4-star hotels (comprising 1,200 rooms) are estimated to have achieved 65% occupancy with an average room rate of US$60. This was an improvement of some five occupancy percentage points on the previous year, but with similar average room rates. Pre-October 2000 performance was strong. However, a strong finish is less certain in light of recent events.
Organized group tour business accounts for approximately 95% of the business mix in Bethlehem. Average tour operator rates per person, including bed and breakfast, are between US$20 to US$35. Yields are boosted by a double occupancy factor of around 2.5 with room rates known to double during special occasions, such as Easter.
While there are many planned additions, the most notable new entry is the 250-room, 5-star Al Jacir Palace Inter-Continental, representing a new product standard and market appeal in Bethlehem and is positioned to compete with top hotels in Jerusalem. A 130-room Mövenpick hotel also is slated for a mid-2001 completion. Currently under construction is the Solomon’s Pools Hotel and Convention Center complex, as well as a 240-room, 5-star development, the promoters of which are reportedly in discussions with international operators.
EUROPE
Recent oil industry strikes in France, UK, Germany and Belgium, among others, are having an effect on hotels. In the UK, the pumps ran dry and motorists had to make alternative plans, such as travel by train. The fact that people were unable to make firm plans may show a discernible pattern in September results.
The weakening British pound should add further value for U.S. visitors, which is good news for the buoyant European market, particularly if the position were to hold through the critical pre-booking period for next summer.
Some 200 industry leaders attending the PKF Forum 2000 took part in a vigorous debate about branding. The conclusion: independent hotels do offer better quality of service, value for money and customer satisfaction.
ASIA
The anticipated sale of Asian hotels has commenced with Malaysia’s National Asset Management Company, Danaharta, offering for sale by tender a hotel and leisure asset portfolio comprising 11 properties with 1,800 rooms throughout Malaysia.
In Australia, developers in the resort town of Palm Cove in north Queensland are planning a world first—the development of a luxury resort specifically catering to people with disabilities. Developers anticipate completion in 2002.
Accor Asia Pacific has launched a timeshare business in Australia/New Zealand. Headed by Joe Sita, Accor’s partner is local developer Becton.
Hong Kong property magnate Li Ka-Shing’s Hutchinson Whampoa Ltd. is launching a high-end resort brand, “Our...” followed by the name of the property. First is the US$400-million casino/1,350-room hotel, Our Lucaya, located on Grand Bahama Island. Room rates will start around US$145.
Rumors of Simon Wan leaving his post as CEO of Park Plaza Kemayan (PPK) follows PPK’s announced proposal to acquire Century International Hotels Ltd. The US$34.5-million merger would add 25 management contracts to PPK.
Meanwhile, Starwood Hotels & Resorts’ Director of Development Todd Wyne-Parry has moved to Australia’s largest serviced apartment operator, Medina Apartments.
Having undergone a tough 12 months, the publicly listed Sundowner Group has its sights set on restructuring to improve operational performance. The Group is reported to have short-listed four proposals for restructuring, including internalizing its management rights.
LATIN AMERICA
Brazil is booming, and the biggest news is the Sauipe Resort. Sauipe is Brazil’s first integrated, self-contained resort destination. It contains five hotels, six pousadas, one 18-hole golf course and a commercial center, all situated on a beachfront site approximately one hour north of Brazil’s first capital city, Salvador. The destination, owned by PREVI (a local pension fund) and constructed by Odebrecht SA, has been in planning for nearly seven years. It is opening this November with approximately 1,600 hotel rooms branded as a Marriott, Renaissance, Sofitel Conventions, Sofitel Suites and SuperClubs. Everyone is carefully focused on the success of this development, as many other integrated resorts are planned throughout the country, particularly in the northeast.
São Paulo also is experiencing a development boom. The newest area is Marginal Pinheiros, where the predominance of hotel, office and retail space is under development. Hotels under construction include a Grand Hyatt, Hilton, and Kempinski, in addition to a luxury property within the Birmann SA development. Can it be Brazil’s first Four Seasons? Planned hotels include a Marriott and Ritz-Carlton.
Aparthotels in Brazil now total 10,000 rooms, up from 5,000 in 1995, with an additional 16,500 rooms currently under construction. These apart-hotels are no longer limited-service, independently owned and operated. They now offer larger units, increased services and amenities, and have professional management and affiliations such as Blue Tree Towers (Cheiko Aoki’s new brand), Accor, Sol Meliá and Choice.
Rio de Janeiro also is experiencing its fair share of development. With increased privatization and improved city image, hotel performance has improved considerably. Much of the change in Rio has been renovation, such as the Sofitel’s recent affiliation with the Rio Palace, the acquisition of the Caesar Park by Grupo Posadas, and the acquisition of Le Meridien by PREVI. However, Marriott is developing a new hotel in Rio, which should open in February 2001.
Many of the new development deals for Rio are occurring in the Barra da Tijuca area, near the international airport or in the downtown corridor. The 300-room Blue Tree Park in downtown is funded by FUNCEF (the second largest pension fund in Brazil) and is scheduled to open in 2002. Furthermore, with changing regulations relative to aparthotel development, several projects were recently offered in Rio, including the 308-room Sheraton Suites in Barra da Tijuca.
- Paul Hanley appointed president and CEO of the 541-room Regent Las Vegas, Nevada...
- U.K.-based Bass Hotels & Resorts appointed John Sweetwood president of its mid-scale hotel group, North America...
- Swissôtel Hotels & Resorts, Zurich, named John Jeakins vice president (VP), Asia...
- Choice Hotels International, Silver Spring, Maryland, appointed Wayne W. Wielgus senior VP of marketing...
- Radisson Hotels & Resorts, Minneapolis, appointed Jack Geddes regional VP of operations...
- Outrigger Hotels & Resorts, Honolulu, named Cynthia “Sam” Hoffman director of marketing...
- Fairmont Hotels & Resorts, Toronto, appointed John Williams executive VP of operations...
- Alberto Blanca Retamero named general manager (GM) of the 245-room Meliá Zaragoza, Spain...
- Holger Hirle appointed GM of the 214-room Beaufort Hotel and Conference Centre, Sentosa, Singapore....
- Brian Moodie named GM of the 197-room Century Benoa Resort Bali...
- Antonio Marson appointed GM of the 253-room Presidente Inter-Continental Cozumel, Mexico...
- Christoph Schmidinger appointed GM of the 244-room Four Seasons Hotel Atlanta...
- Barbara Kiger named GM of the 119-room Hampton Inn, Morehead City, North Carolina...
- Art Krieger appointed GM of the 519-room Radisson Plaza State Guest Hotel, Beijing.
Jean-Paul Foerster continues to have the interests of New York Stock Exchange-listed Orient-Express Hotels in mind until he leaves the company to become CEO of Geneva-based Richemond SA. “Orient-Express has been approached with a number of opportunities in São Paulo that are currently being pursued,” he says. He sees potential for expansion in Brazil generally, although he feels opportunities are limited.
Off the coast of Ecuador, AutoTrader magazine multi-millionaire John Madejski is supporting a 39-room eco-hotel being developed in the Galapagos Islands. Madejski’s many interests already include one hotel, the 140-room Millennium Madejski Stadium, an integral component of the stadium he built for his Reading Football Club in the UK. The Millennium is managed on his behalf by Millennium & Copthorne.
Former Millennium & Copthorne Director UK, Peter Taylor, has joined Hanover International plc, coincidentally headquartered in Reading. Hanover is led by Peter Eyles, who learned about the hotel business from his former mother-in-law, the late Lady (Max) Joseph. But whereas Lady J favored such bijou properties as the Lotti in Paris and the Carlton in Cannes, the Eyles and Taylor team is going hard after mid-level properties throughout the UK that specialize in the conference and training markets.
In Ireland, the luxury sector is looking at country-house projects within two hours driving time of Dublin. Will the Ritz-Carlton, Rosewood and Starwood (on behalf of its St. Regis brand) develop former castles into deluxe country resorts? Amato Ramondetti, former chairman of the hotel federation of Italy, and founder and ongoing group chairman of Turin-based Turin Hotels International of Italy, is looking for more properties in Italy and across Europe. He may consider a stock market listing.
Edgar Rosenmayr, London-based director of property, tourism and shipping for the European Bank for Reconstruction and Development, says the big need across the former USSR is for mid-level hotels. There is a particular opportunity for 2-star properties in second-tier cities.
Will Nick Jones, the London-based entrepreneur who runs the Soho House Club in London and Babington House in the wilds of the English Somerset countryside, succeed in his dream of transporting his concepts across to the New York area? Built in the 18th century and with a working chapel still on its spacious grounds, Babington House is now the weekend mecca for an international jetset market attracted by modern art, a scarlet-covered pool table, bistro food, the latest technology and a super-spa blended with an elitest bohemianism.
Mark Davis, director of Manchester UK-based Gabriel Davis Ltd., is looking for management contracts for two 400-room, 5-star resorts he is developing in Trinidad. He has one mile of private beach, and he also plans golf. Rothschild is said to be handling financing.
Jasminder Singh, the Nairobi-born accountant who owns 86.6% of Edwardian Hotels, is planning to spread his wings outside the perimeter of London’s M25 highway. His 10 hotels, all co-branded Radisson Edwardian, are all within this confine. Singh is now said to be eyeing the vast expansion of the business classes in India, and he plans Edwardian hotels at least in Delhi and Mumbai.
Brands are going out of fashion in the UAE, says Dubai-based managing director of Roya International Hospitality and Leisure, Ahmed Ramdan. He sees big potential for individual properties and for brands not already prolific throughout the area.
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