Ritz-Carlton's Visionary Steps Away
By Staff -- HOTELS Magazine, 3/1/2001
- Ritz-Carlton's Visionary Steps Away
- Arasi Succeeds Cole As CEO At Lodgian
- Hilton Specialized Rooms
- Hilton Inks A Real Deal In Mexico
- December 2000 Market Performance, Europe, Asia, & Middle East
- Best Western Gets Better
- Keeping Luxury Alive
- From Deco To Deluxe
- In Brief
- Gostelow Report
- World Watch
- Hoteliers
Ritz-Carlton's Visionary Steps Away
|
ATLANTA Very seldom does the the tenure of any one hotel executive deserve to be labeled an era, but in the case of Horst Schulze, who is retiring as president and COO from the Ritz-Carlton Hotel Company, Atlanta, the label fits like the top sheet of a freshly made bed. After all, Schulze, hired to be Ritz-Carlton’s vice president of operations in 1983, was the first to envision and execute a global, 5-star hotel chain.
“If you think about it, 18 years ago, there was not really, in the luxury end of the business, a company that was truly worldwide,” Schulze recalls. “All the global markets were in the second tier.” Today, following Ritz-Carlton’s lead, there are five or six global companies competing at the 5-star level. In the early-1980s the luxury customer represented 3% of the market; today it is approaching 6%. “I believe that Ritz-Carlton contributed quite a bit to this,” he says. An affiliate brand of Washington-based Marriott International since 1995, Ritz-Carlton now has 38 hotels in 14 countries.
Although Schulze was not the first German hotelier to bring a hands-on management style to the United States, he certainly embodied the essence of quality control. Ritz-Carlton is the only service company to have been a two-time winner of the U.S. federal government’s Malcolm Baldrige National Quality Award.
As Schulze points out, when he was hired away from Hyatt Hotels by Ritz-Carlton, his job was not to uphold a prior reputation but to give the brand a whole new identity. “I was here before there was a Ritz-Carlton as you know it. Eighteen years ago, when we bought the Ritz-Carlton Boston, people laughed at me, they said it was a dilapidated hotel,” he recalls. “But we were thinking about what this was going to be. We created a company with a lot of values. We created in many ways, new standards in the industry, a level of professionalism that is not different from how a scientific company analyzes its processes.”
Winning the Baldrige awards meant Ritz-Carlton as a chain was able to quantify all of its defects and show a trend of eliminating them. Seven years ago, prior to the chain’s first Baldrige award, Schulze identified 50 defects per 1,000 rooms. “Now we are down to one per 1,000 rooms,” he says, with a customer satisfaction rating of 93%. If he were to spend another year or two at the helm, his goal would have been zero defects. “It’s called continuous improvement,” he says. “With good employees and good facilities, you need not be disadvantaged against key competitors.”
Schulze’s Legacy
If there is a distinct legacy left by Schulze and his attention to exquisite details (He coined the chain’s credo: “We are ladies and gentlemen serving ladies and gentlemen”), it is the competitiveness that now rages through the upper end of the full-service segment. If imitation is the highest form of flattery, one need only look at the eruption of 4-1/2-star and 6-star hotels which either approximate or imply to exceed Ritz-Carlton’s 5-star standard. “I have to laugh about that,” Schulze says. “These are short-lasting things and I don’t take them seriously.” A 6-star hotel is based on physical appearance, not service, he argues. “More marble, and not one customer survey will tell you guests judge a hotel by that.”
What Schulze does deem worthy as Ritz-Carlton competitors are the better hotels in the boutique segment, in which 5-star guests can be catered to in smaller settings.
Succeeding Schulze at Ritz-Carlton as its new president and COO is Simon Cooper, who is president, Marriott Lodging Canada, and previously was president and COO, Delta Hotels & Resorts. While no longer overseeing Ritz-Carlton’s day-to-day operations, Schulze will assume the title of vice chairman.
Arasi Succeeds Cole As CEO At Lodgian
ATLANTA Following through on his promise to step down as president and CEO of Lodgian Inc., a management company based here, Robert Cole is turning over his title and responsibilities to Thomas Arasi, who resurfaces after last year leaving Bass Hotels & Resorts, where he was president of the Americas division. Arasi’s appointment is a clear indication that Lodgian’s sale to Edgecliff Holdings is imminent. Edgecliff has been trying to buy out Lodgian for most of the past year. During Lodgian’s last shareholder meeting, Cole said he would step down as CEO at or near the end of the company’s sale process. Yet, Lodgian Chairman Joseph Calabro said in a statement that Arasi will be free to either finalize the sale of the company or to execute a “new, long-term strategic plan.” Lodgian’s portfolio comprises 114 hotels with 21,400 rooms in 32 states and Canada. It was created through the merger of Servico and Impac Hotel Group.
Travel greatly disrupts daily activities, a majority of jet-setters agree. It interferes with sleep schedules, impinges upon exercise programs and heightens stress levels. To counteract the anxiety-inducing vagaries of travel, Hilton Hotels Corp., Beverly Hills, California, developed “Travel Lifestyle Centers,” or TLCs, guestrooms equipped with specialized products and services designed to assist world-weary customers. The Sleep-Tight Room debuted in 1996, and following that successful launch, Hilton introduced the Stress-Less Room (pictured) and the Health-Fit Room in October 1998.
While no ad campaign promotes the product, the 50 TLC rooms located in 10 U.S. hotels consistently achieve 100% occupancy rates. They are the accommodations most requested by Hilton’s most frequent guests, its HHonors members, and reservation agents offer any available TLC rooms to these frequent guests upon check-in, spreading the word about the program.
Further encouraging guests to try out the enhanced quarters, the specialty rooms are available at the standard room rate. And while Hilton garners no additional revenues, the company incurs no costs. All the amenities are sponsored by their manufacturers, who believe road warriors are ideal customers and see the program as an opportunity to target that audience.
Hilton Inks A Real Deal In Mexico
|
LOS ANGELES Not much longer than six months after Grupo Empresarial Angeles (GEA) became the new owner of Hoteles Camino Real did the upscale Mexican chain take another step forward, this time by signing an affiliation agreement with Hilton Hotels Corp., based here.
Effective April 1, 2001, the Camino Real portfolio, encompassing 14 hotels and resorts in Mexico and Texas, will plug into the Hilton global marketing system. Camino Real guests will become members of the Hilton HHonors guest reward program, and Camino Real properties will receive sales and reservations support from Hilton on a worldwide basis.
The deal signals fresh direction for Camino Real under its new owners, GEA, a Mexican company that owns seven hospitals and acts as a supplier to the Mexican medical industry.
Hilton emerges from the bargaining table being able to boast of representing the largest collection of 4-star and 5-star hotels in Mexico. As the Camino Real brand becomes integrated under the Hilton banner, Hilton will have the second-largest chain presence in the country overall, with 21 hotels and 5,190 rooms.
The affiliation agreement is seen as the first step toward turning the Camino Real hotels into fully franchised Hilton properties. One Camino Real hotel in El Paso, Texas, has already been rebranded, says William Fortier, Hilton’s senior vice president, franchise development. He explains the Camino Real hotels will immediately be marketed as “Hilton affiliated hotels,” but post-conversion, they will be co-branded, as in Hilton Camino Real Cancún. “We want to leave the Camino Real name on those hotels because they have so much brand equity,” Fortier says.
GEA, in the wake of the agreement, will undertake a US$40 million renovation project, which will upgrade the main lobby, other public spaces and guestrooms. In some cases, such as the Mexico City flagship, new restaurants will be added on.
|
December
2000 Market Performance,
|
|||
| European Market | Occupancy | ADR US$ | RevPAR US$ |
| London | 70.1% (81.3%) | 167.50 (182.15) |
117.43 (148.17) |
| Berlin | 50.8 (68.8) | 93.02 (94.30) | 47.27 (64.90) |
| Brussels | 57.8 (69.5) | 87.09 (97.89) | 50.36 (68.03) |
| Rome |
64.4 (77.2) |
144.06 (149.23) | 92.73 (115.15) |
| Madrid | 65.3 (80.1) | 126.16 (136.74) | 82.43 (109.58) |
| Vienna | 66.8 (78.7) | 165.35 (168.94) | 110.48 (132.93) |
| Amsterdam | 64.3 (85.8) | 118.18 (133.93) | 76.03 (114.88) |
| Asian Market | Occupancy | ADR US$ | RevPAR US$ |
| Hong Kong Island | 82.7% (82.1%) | 138.99 (127.74) | 114.92 (104.85) |
| Tokyo | 70.8 (81.7) | 96.34 (97.35) | 68.22 (79.53) |
| Singapore | 60.4 (73.4) | 67.46 (73.65) | 40.72 (54.05) |
| Beijing | 69.0 (75.5) | 101.81 (112.79) | 70.20 (85.14) |
| Sydney | 69.0 (75.5) | 101.81 (112.79) | 70.20 (85.14) |
| Kuala Lumpur | 62.4 (65.0) | 43.89 (45.52) | 27.41 (29.58) |
| Jakarta | 34.0 (43.5) | 58.77 (64.44) | 19.97 (28.05) |
| Middle East | Occupancy | ADR US$ | RevPAR US$ |
| Amman | 26.3% (57.0%) | 64.36 (65.65) | 16.90 (37.43) |
| Cairo | 49.7 (74.1) | 92.36 (84.47) | 45.86 (62.58) |
| Dubai | 56.5 (74.4) | 137.53 (126.28) | 77.72 (93.92) |
| Jerusalem | 30.4 (62.8) | 76.89 (111.41) | 23.34 (70.01) |
| Manama | 49.4 (58.9) | 146.70 (106.71) | 72.44 (62.87) |
| Muscat | 49.0 (55.5) | 75.97 (78.33) | 37.19 (43.46) |
| Riyadh | 32.7 (57.1) | 120.09 (122.68) | 39.32 (70.06) |
| Sources: Arthur Andersen Hotel Industry Benchmark Survey | |||
|
PHOENIX Best Western International introduced in January eight quality enhancement initiatives to be adopted by its almost 4,100 member properties in 83 countries by January 2002. In record numbers, owner-operators voted to approve mandatory adherence to a policy by which all properties make “Best Requests” available to customers. Best Requests are amenities and services guests consistently stated they desired when surveyed during Best Western consumer research sessions pursued on three continents among 1,400 travel agents and customers.
Best Request offerings include continental or hot breakfast and bottled or canned water available on property. All guestrooms will contain a coffee/tea maker with complimentary coffee/tea and condiments, an iron and board, a hair dryer, a dataport connection, a clock and music. Guestroom televisions will offer at least one English language channel with international news. A minimum of 10% of accommodations will include a king-sized bed (internationally, a queen-sized bed). Complimentary toiletries, including such items as razors, shaving cream, toothpaste and sewing kits, will be available upon request.
“A brand is our customers’ insurance policy,” says Jim Evans, president and CEO, Best Western International, explaining that guests’ expectations are determined by their perception of the brand, and are reinforced by the offering of consistent products and services throughout the chain. Because Best Western properties are owner-operated and can vary significantly in terms of outward appearance, adherence to Best Requests, as a way to reinforce brand image becomes imperative.
Owner-operators overwhelmingly voted to adopt the Best Requests as a mandatory program. “Once people vote for something, they feel a part of it, and then they get on board,” Evans says. About 70% of properties were compliant by October 2000. In 2000, in a 40% increase over the previous two years, in members voted to remove 100 hotels, those deemed unable or unwilling to meet the brand’s stricter standards, from the system.
Building The Brand
Also guiding owner-operators in their quest to meet brand standards is a virtual hotel prototype program. The proprietary computer-based program enables prospective owners to take 360-degree virtual tours of interiors and exteriors. Four hotel model designs, intended largely for new-builds in North America, were introduced in November 2000. Another four conversion prototypes offer ideas to owner-operators who may wish to convert a branded property into a Best Western. Four prototypes suitable for the international environment (two aimed at Asia and two at Europe) are in the making, reports Simon Sloman, vice president, operations.
“If nobody uses them, that’s okay, too,” Sloman says. The prototypes were intended to be useful guides, not iron-cast molds. They suggest viable models, but allow developers to manipulate plans according to geographical location, lot shape and size and individual preferences. “Individuality has been the cornerstone of our success,” Sloman says. “This program continues that tradition by allowing our prospective owners creative input throughout the entire process.”
|
GENEVA “The question is: How do you make money with luxury hotels?” says Reto Wittwer, CEO, Kempinski Hotels. He’s quick to provide answers. The former CEO of Swissôtel and Ciga, Wittwer believes a successful luxury hotel company concentrates on creating financial credibility and cornering its markets. Intelligent expansion is imperative.
“There’s no point in expanding if the company is not on healthy footing,” Wittwer says, looking back on his tenure at Ciga, which was over-leveraged from growing too rapidly when he assumed leadership. At Kempinski, a steady move toward minority investments (the company is 83% owned by Siam Sindhorn) rather than full ownership of properties allows the company to focus on management of its 26 hotels, concentrated largely in Germany and Eastern Europe.
Controlling The Market
Achieving dominance in cities such as Istanbul helps Kempinski control profitability, Wittwer says. “In luxury, it’s obviously the price that makes the profits,” he says. “If you are the market leader, you are driving the pricing.”
After the devastating 1999 earthquake in Turkey, occupancies at the Çiragan Palace Hotel fell to 20%. But owners and managers agreed to maintain high ADRs, rather than reduce rates in hopes of capturing a few customers from competing hotels. “There’s not much business to be had in the aftermath of something like that,” Wittwer notes. Dropping rates for limited advantage simply wrecks the market, Wittwer says, and results in greater difficulty regaining sufficient rates in the long term.
By maintaining strong rates, the Çiragan Palace was able to avoid laying off employees and adding to the destruction of the local economy. And after an eight month struggle followed by steady improvement, the hotel now sees ADRs of US$500. “We recouped the fruits of our strategy rather than cut prices unnecessarily,” Wittwer says. “If you’re going to make money in a luxury product, you have to sell at a certain rate.”
Coming To America
As he proved in Istanbul, Wittwer thinks long-term. “A hotel is not built for one year,” he says. And a hotel company, in order to last as long as the edifices that compose its portfolio, requires a long-haul plan that includes building a presence in North America’s key markets. “No luxury company can make it if they’re not there.”
With the announcement of Kempinski’s North American marketing alliance, the company’s determination to become a worldwide class leader becomes ever more apparent. As the luxury brand with the home-team advantage when it comes to securing the German clientele who make up the largest outbound travel market in the world, Kempinski promises to be tough competition and an invaluable ally.
The challenge, Wittwer says, will be in communicating a new definition of quality to Americans. “The American definition of quality is standardization,” Wittwer says. “The Europeans, perhaps because of our disparity—we speak different languages, eat different foods—believe more in individuality. And at the luxury end, individuality is the definition of quality. Luxury is not clone-able.”
|
MARRAKECH When a palace-hotel set amidst the former garden playland of an Arabian prince undergoes renovations, certain care must be taken. Such was the case when the Hôtel La Mamounia experienced a US$5 million renovation, its first rejuvenation in 14 years. The hotel, constructed in 1922 in gardens that had been presented in the 1700s to Prince Moulay Mamoun of Morocco as a wedding present, is still a haven for royalty, celebrities and jet-setters.
“It just isn’t appropriate to subject the caliber of guest who comes to La Mamounia to hammering, dust, and odors of paint and varnish,” says Robert Bergé, managing director. So from July to August of 2000, La Mamounia closed its doors, giving free reign to teams of artisans, crafts people, architects, designers, carpenters, carpet-weavers, embroiderers and artists as they set about refreshing 129 of 171 guestrooms. Workers had no fear of disturbing guests while completing their tasks, and the project was finished in less than two months. The 1986 restoration, which transformed and enlarged the still-opened hotel, took nine months to complete.
Heading up the 2000 project was Moroccan-born, Paris-based designer Alberto Pinto, whose clients have included French President Jacques Chirac (Pinto designed Chirac’s private apartments in the Elysée Palace) and the Royal families of Jordan and of Saudi Arabia. Pinto recasted the art deco hotel, giving it a more casual, Moroccan character. Multi-colored carpets, enormous mirrors and vast reproductions of Moroccan masterpieces by John Singer-Sargent accent rooms bathed in muted earth tones. Cream-colored lacquered walls, white bedspreads with hints of brown and gold, and heavy, white wool drapes replace elements such as wall fabrics that boasted the former peach and gray color scheme.
Deco details, however, were maintained. Pinto chose to retain the deep, tub-like, mahogany armchairs that urge guests to relax in their rooms, reupholstering them in brushed velvet Moroccan-style fabrics. Public spaces, including the lobby and restaurants, were untouched, although room corridors were altered so the ambiance of the guestrooms would flow naturally as guests emerge from the elevators. And for those who believe La Mamounia could not be improved upon, the rooms facing the classic panorama of Marrakech’s Koutoubia Mosque remain unchanged, celebrating the classical art deco style that helped to make La Mamounia famous.
EAST MEETS WEST Long employed by Asians to promote harmonious, balanced environments, Western designers, architects and builders began working with feng shui principles in the 1990s to develop chic hotels such as the Las Vegas Mandalay Bay Resort and Casino and London’s my hotel bloomsbury. Now the Loews Coronado Bay Resort, Coronado, California, has introduced the feng shui practice of balancing elements to its meeting services department.
Meeting planners wishing to host events such as conferences, parties, seminars, and even weddings at Loews Coronado Bay receive complimentary consultations with a conference manager trained in feng shui basics. Loews staff will aid planners with the selection of sound systems, colors, lighting, flowers and aromatherapy intended to promote unity and harmony within their specific groups. Planners may also opt to meet with professional feng shui consultant Cathleen McCandless, who will provide a feng shui booklet and compass. Feng shui breaks are available throughout events, complete with soothing music, waterfall, almond cookies and tea.
TWO-IN-ONE HOTELS While few developers would build a resort without at least considering creating a mixed-use property by combining standard blocks of guestrooms with timeshare or residential units, fewer still have considered building hotels with separately branded sections. But Harrisburg, Pennsylvania-based Hersha Hospitality has done just that. In the Philadelphia suburb King of Prussia, Pennsylvania, Hersha constructed a single property with two wings, one a Sleep Inn, the other a MainStay Suites.
“It’s a unique idea, and it’s a good idea,” says Jay Shah, managing director, Hersha Hospitality. “But it doesn’t work everywhere.” Working with long-time partner and franchisor Choice Hotels International, Silver Spring, Maryland, Hersha selected a location with large business and leisure customer pools, a city where markets were deep enough to prevent competition between the two branches. Careful site selection enabled the Sleep Inn and MainStay Suites wings to maintain brand integrity and ADR differentials, with MainStay rooms garnering an ADR of US$85-US$95 and Sleep Inns averaging US$75.
The conjoined properties achieve economies of scale by sharing public spaces: the lobby, fitness center, pool and business lounge. A single housekeeping and front desk staff serves both branches, with employees trained to distinguish between Sleep Inn’s leisure and MainStay’s business customers and rooms, providing the appropriate services to each. The building itself was designed to accommodate both brands’ signature items, including the Sleep Inn clocktower porte-cochere and two-story atrium and the MainStay business center.
VIRTUAL LOANS Minneapolis-based Country Inns and Suites By Carlson has launched an online financing center page on the brand’s Web site enabling potential franchisees worldwide to source commercial real estate loans, business loans and equipment financing from US$100,000 to US$500 million via the Internet in a lender-competitive auction marketplace. The site, launched in November 2000, offers franchisees access to 75 types of applications that can be completed online and submitted to a secure, paperless “vault.” Irvine, California-based Oinke, providers of the auction technology behind the bidding process and the network of financiers, guarantees that a minimum of five lenders will view each financing request and at least two lenders will submit bids.
Nancy Johnson, senior vice president, development, Country Inns and Suites, says the site is “merely a tool that provides another advantage” to Country Inns and Suites in its efforts to attract potential licensees. The process aims to make the borrowing process easier, offering access by a single application to the more than 150 financing institutions operating within the site’s confines. It saves customers trips to countless banks to fill out application forms, and increases the likelihood that they will find competitive rates that enhance their business and their impressions of their relationship with the Country Inns and Suites brand, Johnson says.
Johnson anticipates adding other franchisee amenities to the brand’s Web site, which last year experienced a 250% increase in traffic. Any processes that involve a bidding process would be natural additions, she says, suggesting that online procurement could be next.
Theo Heyliger, commissioner of tourism, economic affairs, harbor and energy for the island territory of St. Maarten, says now is the time for overseas investors and brands to look seriously at his Caribbean country. St. Maarten, already a popular cruise destination, is heavily into tourism development, he says. Until now, ships have had to anchor off shore and tender passengers ashore, but on January 29, a cruise port that will allow four large ships to berth at any one time officially opened. There is more than sufficient airlift to cope with increased tourist arrivals into St. Maarten. Labor laws have been relaxed, and although the government cannot guarantee funding, Heyliger is working with the Economic Development Corporation to try to facilitate loans.
The Radisson, a reflagging of the former Oyster Bay Beach Resort, is St. Maarten’s first major branded hotel. Since 43.5% of all arrivals to St. Maarten are from the United States, Heyliger would like to see Hilton, Hyatt or Marriott enter the Mullet Bay area. Canada is St. Maarten’s third biggest market, and Heyliger hopes Fairmont might favor St. Maarten. He leaves the targeting of European-based companies to his French counterpart in St. Martin, with which St. Maarten, part of the Netherland Antilles, shares an island.
Sir Rocco Forte, chairman RF Hotels, London, hopes to announce a Venice project soon. He already has hotels in Florence and Rome, and he hopes to take his six-strong portfolio up to 20 by the year 2006. Currently, no European luxury groups have good transcontinental coverage, Forte says.
On a more mundane level, Hanover executive chairman Peter Eyles, executive chairman of Hanover International Plc, based in Reading, UK, will be looking throughout Europe in a year or two. Meanwhile he sees his expansion in conference-heavy hotels, minimum 100 rooms, throughout the UK.
Delhi-based Indian Hotels Co. Ltd, parent of the Taj group, is pinning its hopes on the re-branding of part of its Crowne Plaza, London, as 51 Buckingham Gate, a superior all-apartment hotel. Taj’s chief operating officer, Rajiv Guiral, says it is important for his company’s stature to expand, specifically into the United States.
Holiday Inn Express and other budget groups have a tremendous future in China, says Willi Kollmann, director for development and hotel operations, New World China Land Ltd, Hong Kong. There is potential for thousands of such hotels across the country. At upper-star levels, he still sees room for growth in Beijing and Shanghai. Real estate and construction costs will soar in the next few years, Kollmann anticipates. His own company is on the point of signing Le Méridien to manage one of its two current Shanghai projects, a 520-room hotel to be designed by Bob Bilkey.
Looking ahead, will we see a multi-brand company launching a boutique brand, even more deluxe than the company’s current top name? And will a non-branded deluxe group expand into casinos?
Asia
The Singaporean Thakral family intends to dispose of their approximate 40% stake in the Australian-listed tourism and property group Thakral Holdings, the third largest hotel ownership company in Australia with 12 hotels and 2,934 rooms. The portfolio includes the All Seasons Premier Menzies in Sydney and the Courtyard Marriott Great Barrier Reef Resort. While sources have identified Australand, CapitaLand and Hai Sun Hup as possible contenders for the stake, my view is Accor will be a front runner to protect its contracts on the vast majority of the portfolio. But watch out for competitors like Bass Plc and Starwood Hotels & Resorts, who will salivate at the opportunity to gain such an attractive portfolio in one acquisition.
With Sydney Olympic fever over, investor interest is once again on the rise. Having acquired the debt on Park Hyatt Sydney, Maritz Wolff, Dallas, looks set to convert its debt to equity as the company secures full ownership of Australia's most prestigious hotel. Additionally, the 431-room Wentworth Hotel recently sold for A$108 million to a local investor and several other hotels currently being offered are attracting renewed interest from predominately U.S.- and European-based purchasers.
Asia is still conspicuous by the lack of open market transactions. The Rhiga Royale Hotel in Japan is being offered for sale by its owners Royal Hotels of Osaka, while the Indonesian Bank Restructuring Agency has converted debt to take a 51% equity stake in the PT Bakrie Nirwana Resort, owner of Le Meridien Bali hotel and resort.
Europe
Guy Hands is becoming a household name in the UK hotel industry. The head of Nomura International's Principal Finance Group has acquired the 17-unit Principal Hotels group of the UK for £255 million. The portfolio consists of 14 hotels in the UK, two in Copenhagen and one in Amsterdam. At the same time, Hands is leading Nomura's charge to acquire Granada Compass' Forte Hotels portfolio, which at press time was still up for grabs at a going rate of £3 billion. Bass Plc and Marriott International were also considered on the short list. And if that was not enough, Macdonald Hotels, with which Hands has a strategic relationship, could be in line to manage the Posthouse chain if private equity buyer Nomura triumphs in the auction for Forte Hotels. A name and face more familiar to the hotel industry, Jurgen Bartels, has been appointed chairman of Principal Hotels. Analysts read Bartels' appointment as a sign of Nomura's strong appetite to grow its hotel holdings.
While merger and acquisition activity in Europe is moving at a fast and furious pace, PricewaterhouseCoopers splashed a bit of water on the face of Britain's hoteliers by forecasting a return to negative hotel growth next year. It says RevPAR will grow 4.9% this year but slip to 2.7% in 2002, especially if the predicted economic slowdown materializes. PWC expects average room occupancy to be almost flat at 76% next year and the achieved room rate to increase 2.5% to £78.72.
Among the hot rumors making the rounds is Swissair's desire to dispose of its Swissôtel group to focus on its airline business. Moevenpick Hotels & Resorts was the first name mentioned as a potential suitor.
Finally, Ireland's Jurys Doyle Hotel Group says it plans to expand further in Britain, focusing on the budget Inns business in the West Midlands. It also wants to target Poland, which CEO Pat McCann says is at a development stage that resembles Ireland in the 1970s and '80s. McCann also wants to expand the brand in the U.S. and is targeting East Coast gateways such as Boston, New York, Baltimore and Philadelphia.
Latin America
At the Latin America portion of the UCLA conference, Radisson Hotels & Resorts Worldwide said it wants to acquire and manage several hotels in Mexico, is active in Central America and franchising in the Caribbean. Radisson has 18 hotels and hopes to double in size by focusing on the Country Inns & Suites brand in Mexico and Brazil.
Francisco Zinser of Chartwell de Mexico, who operates Hilton Garden Inns and his own Krystal Express brand, says he plans to double his company’s size in Mexico by focusing on secondary markets.
Rosewood Hotels & Resorts President Jim Brown is very busy in Mexico and the Caribbean, finishing due diligence work on three properties. He says Belize is ripe for development, but adds it would be ashamed to spoil the fragile eco-system. Roland Mouley of Radisson like Los Cabos, Mexico, for development, while Zinser favors the undersupplied Baja Peninsula of Mexico.
Middle East
The Kingdom of Saudi Arabia is looking toward tourism to create needed employment and improved economic opportunities. Perhaps the least controversial, religious tourism is the first target. In 2000, the religious period of Hajj is estimated to have attracted two million pilgrims with an additional three million Umrah pilgrims frequenting the Holy cities of Makkah and Medinah during the remainder of the year. As a preliminary measure, government authorities have announced plans to relax traditionally inflexible visa regulations for pilgrims traveling to the holy cities of Makkah and Medinah in an effort to increase both the number of pilgrims and the length of their stays. The recently formed Saudi Commission for Tourism is a clear sign of the seriousness with which the government is approaching the tourism sector.
The Makkah hotel market is extremely unique with the peak seasons comprising 18 days of the Hajj pilgrimage and the last 10 days of Ramadan and contributing up to 70% of annual revenue for some hotels. During this period, most hotels and furnished apartments transform themselves to cater to this unparalleled surge in demand providing mattress market style accommodation, fitting six people or more per room. During the peak season, proximity of a hotel relative to the Haram dictates achievable room rates with some hotels able to command extreme premiums at full occupancy.
The bulk of accommodation in Makkah caters to the budget pilgrim, with 5-star hotels representing only 10% of registered hotel supply. While the Grand Hyatt, Hilton, Inter-Continental and Sofitel have been in the market for some years, they are soon to be joined by a new Inter-Continental and Le Meridien hotels with other projects in less mature stages of the development cycle. Five-star hotel performance in Makkah has been on the increase with full year results for 2000 recording an occupancy and average room rate of 51% and US$157, compared to 48% and US$157 for 1999. This trend is expected to continue, particularly in light of eased visa regulations, plans for improved logistics and additional accommodation provision. Saudi authorities are targeting 10 million visitors per year to Makkah alone. This goal, however, is unlikely to be realized in the short-term due to immense logistics requirements in terms of access, accommodation and security.
|
- Simon Cooper named president and COO of The Ritz-Carlton Hotel Company, LLC, Atlanta. Cooper succeeds Horst Schulze who will retire and become vice-chairman...
- Alan Benjamin named president of the International Society of Hospitality Purchasers, New York...
- Jerry Oenning joins Baymont Inns & Suites, Milwaukee, Wisconsin, as director of development, Western region...
- Frank Rodriguez appointed general manager (GM) of the 189-room Hotel Monaco, Seattle, Washington, and director of hotel operations for the Pacific Northwest region for Kimpton Hotel & Restaurant Group...
- Sam-Erik Ruttmann appointed GM of the 226-room Dusit Laguna Resort, Phuket, Thailand...
- Hugues Jaquier named GM of the 311-room Le Méridien Chicago...
- Olivier Hick appointed GM of the 300-room Grand Hotel Mercure St. Paul’s Bay, Malta...
- Dermot De Loughry appointed GM of the 96-room Colony Club Hotel, Barbados...
- Richard Teo named GM of the 440-room Copthorne Orchid Hotel Singapore.... Victor Mills appointed GM of the 468-room Peabody Hotel, Memphis, Tennessee...
- Frank Beck named GM of the 156-room Sheraton Senggigi Beach Resort, Lombok, Indonesia. Beck replaces Shane Cunning, now GM at the Westin Plaza, Manila.
View All Blogs
