Hica / Category: Media Coverage

The US has issued a worldwide travel alert for its citizens in response to “increased terrorist threats”.The state department said “current information” suggested the Islamic State [IS] group, al-Qaeda, Boko Haram and others continued “to plan terrorist attacks in multiple regions”.The alert, it said, will remain in place until 24 February 2016.France, Russia, Mali and several other countries have seen deadly attacks in the past month.

A US state department representative told BBC News there was “currently… no reason to believe that US citizens would be specifically targeted”.

Meanwhile Belgium announced the capital Brussels would stay at the highest level of alert for another week over fears of militant attacks like those that killed 130 people in Paris on 13 November.

In other developments

  • An apparent explosives belt was found in a bin in the Paris suburb of Montrouge, which a fugitive suspect is believed to have passed through on the night of the Paris attacks
  • France carried out its first air strikes against IS from its Charles de Gaulle aircraft carrier, newly deployed in the eastern Mediterranean, reportedly hitting targets in Iraq and Syria, including the IS stronghold of Raqqa

The travel alert advises US citizens to “exercise vigilance when in public places or using transportation”.They are also advised to “be aware of immediate surroundings and avoid large crowds or crowded places”.

“Authorities believe the likelihood of terror attacks will continue as members of ISIL/Da’esh [IS] return from Syria and Iraq,” the state department said.

Analysis: James Cook, North America Correspondent
Image copyright Reuters
Image caption Security is tight in New York ahead of Thanksgiving

A US worldwide travel alert is unusual but not rare.

Similar advice, which applies everywhere bar the US itself, was issued twice in 2011 – following the death of Osama Bin Laden and on the tenth anniversary of the 11 September attacks. There was a further warning in August 2013.

The most recent worldwide alert came last Christmas in response to an attack in Sydney, Australia, flagging the risk of “lone wolf” attacks, a warning repeated this time using the less colourful phrase “unaffiliated persons”.

Such broad warnings have been criticised in the past, both for being so vague as to be of little practical use and for doing the terrorists’ job for them by creating a climate of fear in which governments may introduce repressive policies.

But with millions of Americans travelling this week to celebrate Thursday’s Thanksgiving holiday, US officials insist the action is a sensible reminder of the global terrorist threat.

Article source: BBCNews3


Paris tourism worries extend to Brussels: The manhunt for suspected collaborators in the 13 November terrorist attacks in Paris has spread to Brussels, which has been virtually shut down for three days, according to media sources.

The city’s subway system has closed, and major tourism sites such as its central Grand-Place square are almost deserted as police operations continue. Arrests have been made, but there is no indication when the chaos of one of Europe’s most important administrative centers will return to normal, the BCC reports.

STR, Tourism Economics revise 2015 forecast: In their final forecast of 2015, STR and Tourism Economics revised some KPI numbers to reflect the current U.S. lodging environment. For the remainder of 2015, the U.S. hotel industry is predicted to report a 1.7% increase in occupancy to 65.5%, a 4.8% rise in average daily rate to US$120.46 and a 6.5% increase in revenue per available room to US$78.90. During that same period, demand growth (+2.8%) is expected to outweigh supply growth (+1.1%).

“Continued record-breaking demand across all chain scales and regions continues to drive RevPAR performance above the long-run average,” said Jan Freitag, STR’s senior VP for lodging insights. “That said, continued high occupancy did not seem to translate into very strong pricing power, and we have thus adjusted our ADR forecast slightly downward to reflect the ongoing reality in the U.S. hotel industry. RevPAR growth continues to be driven by ADR growth.”

Scandic nears IPO: Scandic is nearing its initial public offering, according to Real Deals. The report claims current owners EQT Partners (86%) and Accent Equity (12%) are getting ready to float the Swedish hotel chain, which operates 224 hotels in seven countries. The company in early November published a prospectus and price range for its IPO.

According Real Deals, Scandic is looking to begin trading on the NASDAQ Stockholm exchange on 2 December, with the IPO giving the company a market capitalization of SEK8 billion ($916 million) Swedish krona. EQT and Accent acquired Scandic from Hilton in 2007.

United States hotel stocks on seesaw ride: Ownership in hotel stocks is proving to be an up-and-down bet. Despite the Baird/STR Hotel Stock Index increasing 10% in October to close the month at 3,470, the index has decreased 10.3% year to date through October.

Randy Smith, chairman and co-founder of STR, parent company of HNN, said that “with revenue-per-available-room growth slowing and weak performance in August, investors appeared to believe the industry’s peak performance was in the past. However, we are clearly moving into a more profitable cycle as the bulk of RevPAR gains now come from room rates—a much more profitable scenario than when it comes from occupancy.”
Spas still major boon for higher hotel ADR: Although other factors come into play in the final calculation of average daily rate, having a spa on property—and in the property’s name—certainly doesn’t hurt when it comes to premium pricing, according to today’s story.

Hoteliers said that return on investment on spas cannot just be calculated on spa charges but should also be analyzed via “revenue the spa generates via room bookings as well as special promotions such as spa packages,” according to Serlen.

Article source: HotelNewsNow

GLOBAL REPORT—The race to 1 million rooms might end not through organic growth but with one of the largest bolt-on acquisitions in the hotel industry’s recent history.

Marriott International’s pending purchase of Starwood Hotels & Resorts Worldwide for $12.2 billion in total consideration will push the combined entity well past the finish line with 1,071,096 rooms in 5,456 hotels, according to the respective companies’ third-quarter earnings statements.

When Hotel News Now first ranked the 10 largest hotel companies by room count in the first quarter, InterContinental Hotels Group was sitting in pole position. The Denham, England-based hotel group now sits at third with 726,876 rooms in 4,963 hotels.

The second largest company is Hilton Worldwide Holdings with 737,922 rooms in 4,480 hotels.

New to the top 10 list is the merger between Jin Jiang International and Plateno Hotel Group, which ranks as the fifth largest hotel company with approximately 640,000 rooms in approximately 6,000 hotels.

Article source: HotelNewsNow

In late July 2015, Ontario taxi cab and limousine drivers filed a class-action lawsuit against Uber seeking over $400 million in compensatory and punitive damages. This marks one of the latest in a long series of opposing activities against this game-changing and rapidly proliferating company. Putting aside personal judgments on this case or any preceding one, I can’t help but think of the parallels this has with Airbnb and its disruptive impact on the hospitality industry.

Even though they exist in mutually exclusive spaces, a snapshot comparison between the two organizations yields uncanny similarities. Both founded around 2008-2009, they now operate on a global scale with valuations in the tens of billions of dollars and strong growth fueled by mounting consumer acceptance and new product offerings. Uber is a usurper to traditional car services while Airbnb challenges traditional accommodations, and yet they are both largely mobile and urban-centric with flawless apps and two-way user review accountability checks.

With so much in common, would it be reasonable to also say that Airbnb’s legal foibles might follow a similar path as Uber? More importantly, what can we, as hoteliers, learn about how traditional car services have fought back against and adapted (or not) to this ferocious new entrant? Can hotel properties coexist with this highly unregulated, free market enterprise or are we on the path of extinction?

Sharing economy or taking economy?
The phrase ‘sharing economy’ is what’s used to describe this new market shift away from traditional forms of service and transaction. In other words, the old rules are out the window, the playing field has been leveled and practically anyone can ‘share’ their goods (cars, apartments, parking spaces and so on) for a profit, all through a simple, user-friendly website and with minimal precedents to entry.

These sharing economy systems, Airbnb and Uber included, let buyers and sellers meet on the open market where decisions can be made on the fly and without serious penalties. To me, this sounds more like the ‘taking economy,’ since it lets consumers say to themselves, “Hey, I’ve got a smartphone and I want everything without lifting a finger, damn the consequences.”

Airbnb (and other companies with this non-traditional modus operandi) now pose perhaps the single greatest threat to the hospitality industry. From quaint beginnings as a website mainly for couch-surfers and backpackers, the company has emerged in the past few years to offer accommodations that rival every hotel in the world. They still have plenty of products targeting the low end, but they also have ultra-luxury houses and condominium units available for booking as well as an impressive corporate travel program.

Think of what you go through to set up and sustain your commercial enterprise: occupancy permits, employee background checks, health inspections, fire alarm testing and so on. Airbnb has almost none of that, serving to disrupt an established system that not only protects the consumer from harm but also employs a lot of people across multiple fields in the process.

Next, consider what your city is losing in destination tax levies as well as state and property taxes. Think about how all that money cycles back through the local economy in the form of infrastructural upgrades, urban renewal, capital for new attractions and support for tourism bureaus. In the short run, endorsing Airbnb may translate into heightened travel to a region due to increased room supply, but thinking long-term (years or decades from now), without large-scale periodic upgrades shepherded forward by governmental institutions, a municipality’s incoming traveler numbers may go into decline.

Yes, left unchecked, we are all expecting significant erosion to the traditional accommodations market as a result of these sharing economy outfits–the model is too enticing not to draw away members of our target consumer set. But there are other, more selfless reasons beyond the four walls of your property for you to join the fight. Neighborhoods need constant repairs, and without proper taxation to spearhead this upkeep, a ‘tragedy of the commons’ situation is likely to ensue. A good first step is to recruit your CVB or local hotel association to see what can be done as a collective on behalf of the district.

Rise to the challenge
While these above paragraphs may appear to be wildly anti-Airbnb, it is better to give this the glass-half-full perspective. That is to say, no matter what courtroom rulings or injunctions occur within the next decade, Airbnb is here to stay–it’s too entrenched and its gig-based exchange structure is too perfectly aligned with our capitalistic systems for it to dissolve.

Moreover, have you tried Airbnb? It’s actually pretty great! The website and app work flawlessly, and they have some truly remarkable rooms available. There’s a reason why it’s passed the billion-dollar valuation mark within the first decade of its existence, and it’s because it gives customers what they want. Try it for yourself to see. And rather than wait for external actions to correct the issue, you best treat this company as a legitimate, bona-fide competitor to your business.

Bringing it back to the current state of affairs for taxis versus Uber, you could make the argument that these cab services have done it to themselves. Uber beat them to the punch in terms of a developing a fluid mobile app that allowed for wallet-less transactions, GPS location tracking, better accountability via a driver-rider rating system and oftentimes cleaner interior vehicle cabins. What have taxi companies done to augment their product offerings since the arrival of Uber? What would compel, for example, a millennial with the Uber app on his or her smartphone to go back to the old ways of calling a cab?

Instead of complaining about Airbnb, this is your opportunity to rise to the challenge. Make your property the best it can possibly be and wholeheartedly authentic to your territory so that there is no question in the consumer’s mind as to who provides the best choice of accommodations. Just as third-party review sites have shined a spotlight on all of our operational deficiencies, so too is Airbnb forcing us to improve our products. In my mind, there’s only one solution to this sharing economy problem, and that is to be better hoteliers.

Article source: HotelNewsNow

When Arne Sorenson was first asked in April about Marriott International’s potential interest in the just-on-the-market Starwood Hotels & Resorts Worldwide, he was noncommittal.

He said the deal didn’t fit Marriott’s pattern of “bolt-on acquisitions” that filled gaps in the company’s geographic footprint without overlapping the existing brand portfolio, as was the case with AC Hotels in Spain (acquired by Marriott in January 2011), Protea Hotel Group in Africa (November 2013) and Delta Hotels and Resorts in Canada (January 2015).

But then, as we now know, he and Marriott’s executive team entered into discussions with Starwood, and that answer began to change.

The first sign of that shift came on 6 May during the Arabian Hotel Investment Conference in Dubai, when Sorenson laid out four possible outcomes for Starwood. The first, not surprisingly, was an acquisition at the hands of Marriott or its chief competitor Hilton Worldwide Holdings.

He said there would be challenges. Not only was there no roadmap for a merger of such size and scope, but Starwood would prove incredibly expensive to buy.

At $12.2 billion in total consideration, Marriott’s planned acquisition of Starwood, announced Monday, indeed is pricey. (It ranks among the most expensive of all time within the hotel sector.)

What I find particularly interesting is how Marriott funded it—and how company executives have been telegraphing the acquisition for most of the year.

It started in the second quarter, when Marriott repurchased more than 9 million shares of its common stock for nearly $715 million, compared to 5.5 million shares for approximately $431 million during the first quarter.

The trend accelerated in the third quarter, when executives acquired even more shares (9.8 million) for the bargain price of $702 million. “We thought it was a stunning buy in Q3,” Sorenson said on a 29 October earnings call with analysts.

During that same call—at a time when the executives in Marriott’s boardroom all knew the Starwood deal was all but certain—one analyst asked about dialing back repurchases to preserve cash for opportunities that might emerge in the consolidation landscape.

“We are by no means over-levered,” Sorenson said. “We still have a machine that produces lots of cash, and we think we’ve got the ability to both be aggressive in buying back stock in the years ahead but also be aggressive in whatever opportunities pop up, if they pop up, to participate in growing our business through our use of capital.”

My, how a few days’ worth of perspective adds new meaning to that response.

In buying back shares so aggressively, Sorenson and the Marriott team weren’t undermining their chances to compete in the consolidation space. They were enhancing it. It was through those efforts they were able to pull the trigger on the Starwood sale, that vast majority of which ($11.9 billion) will be funded by Marriott stock.

All the while, the unflappable Sorenson expertly pivoted through the maelstrom of speculation that surrounded Starwood. True, Marriott didn’t aggressively go after the deal until only recently, but talks persisted on and off for almost seven months. Whenever Sorenson was asked about Marriott’s interest, however, he would highlight the challenges and obstacles and all the reasons why it would never work. And then he would leave the door open, if only by a crack.

During a second-quarter earnings call, for instance, he said executives were not looking for additional conversion brands. “I think in some respects we would continue to say that our brand lineup is reasonably complete,” he said.

But then he added, “We’ll continue to kick all the tires that drive by.”

And kick away Marriott did, all the while avoiding the rumor mill and readying the company for one of the largest mergers in the history of the hotel industry—provided it closes next year as planned.

Now the hard work begins of merging two distinctly different cultures, cluttered brand platforms and complete loyalty programs.

Time for the usual stuff …

What’s making me happy this week?
Seeing the possible conclusion of the race to 1 million rooms. We originally posited the question back in March. At that time, InterContinental Hotels Group was leading the pack with 710,295 rooms, followed by Hilton Worldwide Holdings with 708,268 rooms.

If the Starwood acquisition goes through, Marriott would leapfrog both companies, propelling well past the 1-million room mark. (See stat of the week below.)

Stat of the week
1,071,096 rooms: The combined footprint of Marriott and Starwood, as of the third quarter.

(NOTE: The number does not include Marriott’s timeshares nor residential and serviced-apartment portfolios. It does not include Starwood’s pending 11th brand, which is a co-marketing partnership with Design Hotels, which Starwood majority owns.)

For those keeping score at home, that makes the planned new entity the largest in the world, with Hilton Worldwide Holdings landing a distant second at 737,922 rooms.

Quote of the week
“We’re now the world’s largest hotel operator in every chain scale that matters … the best-in-class company. … Today, size matters, but this is much more than just size, it’s about deep management talent, an impressive global presence … and a business culture that derives results through consistent execution.”
—Adam Aron, interim CEO of Starwood Hotels, during a call announcing the deal.

I wonder if he’ll be sticking around after the merger. I also wonder what the combined entity will be called. Starriott? Marrwood? Marriott Starwood Hotels & Resorts Worldwide International?

Reader comment of the week
“Some thoughts from smaller franchisee’s out there might be: When will we know about our franchise relationship? What about my current license application? Will new company arbitrarily switch flags on my property? Can I expect fees and system related expenses to change? If I’ve been given a target date for a PIP can it be extended?”

Article source: HotelNewsNow