HVS Hospitality Enews - W/e 8 March 2002

A geographically balanced and diverse portfolio helped soften the blow of the events of 11 September and consequently allowed Accor to exceed its own expectations and those of most analysts and record a good set of results for its full year ending 31 December 2001. Pre-tax profit was up 0.9% to euro 758 million: Accor's prediction in September was a figure of between euro 700 million and euro 750 million. Revenue for the full year was up 4% to euro 7.29 billion. Although the company expects RevPAR at its European business and leisure hotels and its US economy hotels to be depressed by 4.7% and 5.9%, respectively, for the first quarter of 2002, it is optimistic for the year ahead. By the second half of the year, Accor predicts that RevPAR will rise by 2.4% at its European business and leisure hotels, by 3.6% at its European economy hotels and by 0.3% at its US economy hotels. This optimism has also spilled over into Accor's expansion plans, with the company aiming to open 224 hotels, some 25,116 rooms, in 2002. Accor has already taken one small step on the way by investing a reported euro 7.9 million in the construction of a 150-room, four-star hotel in the northern Moroccan city of Fès. The hotel should be open by the end of 2003.

NH Hoteles has signed agreements to operate two hotels in Barcelona, thereby bringing its hotel count in the city to 15, a total of some 1,470 rooms. The euro 6 million 78-room, three-star NH Cornellá has already opened and will be followed at the end of 2003 by the euro 7.8 million 100-room NH Express Sant Just Desvern. Meanwhile, Amancio Ortega, who recently bought a 4.5% stake in NH Hoteles for a reported euro 63.61 million, has paid a reported euro 6 million for the 149-room, four-star Peregrino hotel in Santiago de Compostela. Mr Ortega is looking to Hesperia Hoteles to manage the hotel, although it is reported that Hesperia would do so only if Ortega provides money for the hotel's renovation.

Orient-Express Hotels has seen its September predictions on full year net income come true, as the effects of the events of 11 September caused net income to tumble 25% from the previous year to US$29.9 million. Revenue for the full year fell 5% to US$261.3 million. The company's four properties in the US and its 21 Club restaurant in New York were worst affected, with RevPAR in the fourth quarter down by 15%. RevPAR for the year at all 40 of the company's hotels worldwide was down 9%. Nevertheless, company Chairman James B. Sherwood has seen a month-by-month recovery in demand since September for its leisure products and expects to add another property to the hotel portfolio soon. This property, together with Orient-Express's recent acquisition of Le Manoir aux Quat'Saisons and La Residencia hotel in Majorca will represent a total investment of US$47.5 million. The company is also to invest US$30 million in renovation work this year, work which will include the addition of eight suites to the Villa San Michele near Florence, bringing the number of suites there to 23.

A combination of the effects of the events of 11 September, the general economic slowdown and the outbreak of foot-and-mouth disease in the UK left its mark on the results posted by Queens Moat Houses (QMH) for its full year ending 30 December 2001. The group saw trading profit before exceptionals slip 10.3% on a like-for-like basis to £101.1 million, with group turnover also falling, by 3.1% on a like-for-like basis to £334.9 million. Full year occupancy across the group's 90 hotels in the UK, the Netherlands and Germany fell 0.9 percentage points to 72.0%, and RevPAR fell 0.5% to £42.46. The group's hotels in Germany fared worst, recording a 10.3% fall in turnover to £79.5 million and a 19% drop in trading profit to £24.7 million. QMH is considering rebranding its 24 German hotels, and to this end it is in talks with Six Continents, which already franchises the Holiday Inn brand to 11 of QMH's German hotels, and a number of USbased operators. QMH's Chief Executive Andrew Coppel expressed his confidence that the company's focus on revenue generation and customer service would allow it to take advantage of any improvement in trading conditions. The group has been trading in line with its expectations for the first two months of 2002.

The aftermath of the events of 11 September, the outbreak of foot-and-mouth disease in the UK and the already difficult economy conspired to produce disappointing final results for Thistle Hotels. Pre-tax profit for its year to 30 December 2001 fell 28% to £49.1 million, with turnover down 5.9% to £305.3 million. Overall RevPAR fell 5.4% to £50.56, a decline exacerbated by an 8.8% fall at the company's 22 London hotels to £60.61. Turnover in the first eight weeks of Thistle's new financial year is down 10% on the comparable period in 2001, leading the company's Chief Executive Ian Burke to remain cautious about forecasting trends for the coming year.

Six Continents has sold the 191-room Manchester Posthouse Hotel to Britannia Hotels for an undisclosed sum off an asking price of £6.5 million. This latest disposal means that seven of the original nine Posthouse hotels that Six Continents put up for sale have now either been sold or are under offer. Meanwhile, Corus and Regal Hotels has sold the third of seven hotels it put up for sale in October last year. Miras Leisure, which is based in the West Midlands, has paid an undisclosed sum, off an asking price of £1.8 million, for the 45-room Star Hotel in Worcester. Elsewhere, Luxury Hotel Management has taken over the ownership of the 20-room Westbourne Hotel in London's Notting Hill after the management contract was transferred to its Alias Hotels subsidiary from Zoo Hotels.

According to a report in The Business newspaper, Sir Rocco Forte, Ken McCulloch and Orient-Express Hotels are among those eyeing up individual properties from the 25-strong Ciga Hotels portfolio, which was put up for sale in January by Starwood Hotels & Resorts. The report claims that the hotels of interest to Rocco Forte Hotels are the 233-room Hotel Danieli in Venice, the 107- room Sheraton Diana Majestic in Milan and the 44-room Santa Maria de El Paular near Madrid, which, according to the newspaper, are together worth approximately £95 million. The newspaper added that Hilton, Le Méridien and Marriott International had not expressed an interest in the Ciga Hotels portfolio.

Radisson SAS has signed a 20-year agreement with development group Hungaria Golf to manage a golf and 'wellness' resort to be constructed at the Birdland Golf and Country Club near Bük in western Hungary. Work on the 200-room hotel is set to begin this spring and should be complete in August 2003. Meanwhile, in neighbouring Austria, the 62-room, five-star Radisson SAS Hotel Altstadt in Salzburg is one of four hotels that has been acquired by the private Karl Wlaschek foundation from insurer Wiener Staedtische. Talks between the two parties on this hotel and the 130-room, four-star Hotel Europa, also in Salzburg, were reported in December. These hotels have now been supplemented by the 140-room, four-star Hotel Lassalle in Vienna and the 228- room Vienna Plaza; the four properties are worth a reported euro 75 million.

Luxury hotel operator Conrad Hotels, which is part of Hilton Hotels Corporation, has signed an agreement to manage and market the hotel and conference facilities at the Mount Juliet golf estate at Thomastown in Ireland. The facilities will be marketed under the name Mount Juliet Conrad. Meanwhile, Conrad Hotels will also be extending its presence in the Middle East after Hilton announced that its new hotel on the Palm Island development in Dubai will take the Conrad brand.

Guy Crawford has resigned as Managing Director of Macdonald Hotels, having reportedly expressed a desire to pursue his own interests. His place will be taken by Gerry Smith, who will retain his position as Deputy Chief Executive. Also parting company after only nine months together are JJW Hotels and Resorts and its Chief Operating Officer David Wright.

The share price benefited from investors reportedly backing leisure-related stocks after better-than-expected air traffic figures were released.

The company's good full year results and its optimistic outlook have won the approval of many analysts. Lehman Brothers retains its 'Buy' rating on the stock.

Lehman Brothers has upgraded its rating on the stock to 'Market Perform'.