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The Daily Lodging Report Asia�Pacific

The Daily Lodging Report - Asia Pacific for 5/24/07-5/29/07
Alan R. Woinski, Editor
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Once again Thailand tourism is under pressure from more terrorism as a series of explosions in Hat Yai has been reported to have had an immediate effect on tourism.   Travelers from Singapore and Malaysia have cancelled trips while those from Australia and the Middle East are considering postponing, according to The Nation in Thailand.  Singapore and Malaysia are the region's biggest markets and the number of local meetings and conferences had already been declining due to political uncertainty in the South.   Average hotel occupancy had already been below 40%.   The Association of Thai Travel Agents reported business as usual at tourist destinations such as Phuket, Samui and Krabi.  The Hat Yai and Songkhla Hotels Association reported a bleaker picture, saying by Monday morning, all the tourists were gone.  Hotel occupancy is less than 20% and could even go below that.  As for what the Thai government is going to do about it, they are busy arguing over who is responsible.   The Bangkok Post reported that the Council for National Security and the acting police chief were at odds with the Special Branch over who was behind Sunday's bombings.   One side refuses to rule out a political motive while the Special Branch is confident that 7 explosions were linked to the southern insurgency.  How about doing a better job in making sure it doesn't happen again instead of arguing about who was responsible?   Another bomb went off at a market in Saba Yoi district early yesterday while they were arguing over who was responsible.    No matter who is responsible, chances are there will be a lot of hotels in Hat Yai closing down if the situation in the city does not improve soon.
Jones Lang LaSalle Hotels expected RevPAR at upper-tier hotels in Beijing to end 2007 with a 10% year on year increase and is confident that Beijing's tourism and hotel sectors will continue to enjoy strong growth post-Olympic Games.     JLLH said that every hotel investor serious about Asia is keen to ride the growth in mainland China.  Beijing is already benefiting from the wave of interest from international investors and hotel brands.  The emerging MICE sector, in particular, is expected to become a key source of demand for the hotel industry while an accelerated infrastructure enhancement program will support business and leisure tourism growth in the long term.  The hotel sector is expected to directly benefit from the projected growth in business tourism in the long term.  The firm forecasts Beijing's upper-tier hotels will continue to grow in 2007 for the 4th consecutive year since the lows registered in 2003 from the SARS outbreak.  Occupancy in 2007 is forecast to hit 76%, up 0.9 percentage points from 2006.  Year to date through April has occupancy in Beijing at 71.4%.  Room rates are expected to rise 8.9%.
Jones Lang LaSalle Hotels also is forecasting RevPAR for Shanghai's upper tier hotels to resume its uptrend in 2007.  They are expecting a 10.4% increase in RevPAR with occupancy to rise 2.6 percentage points to 72.5%.  JLLH noted that several international brands have used Shanghai as a launch pad into China.
The Leela Palaces-Hotels-Resorts has embarked on an aggressive three year expansion plan which will double its room capacity by introducing 6 new world class properties to bring the total to 10.  The new properties will be in Gurgaon Delhi NCR, opening in Spring 2008; Udaipur, opening Winter 2008; Chennai, opening in Winter 2009; South Delhi opening in 2010; Hyderabad, opening in 2010 and Pune, also opening in 2010.  The total investment is $300 million.  Leela's flagship hotel in Bangalore has the highest average room rate in the country at $450 per night and maintains 70% occupancy.
Macao's Lands, Public Works and Transport Bureau announced that in the first quarter of the year, some 23 hotels were under construction with another 36 hotel projects under official assessment in the quarter.  The total 59 hotel projects are expected to create a maximum of 38,254 guestrooms and 13,861 parking lots.   Macao recorded 80 hotels, including 11 five-stars, at the end of 2006 and the number of guestrooms stood at 13,049.
There is some concern about Macau following the stricter visa application process in Guangdong province.   Details are somewhat sketchy but it appears this will make it tougher to make repeated day trips visits to Macau and Hong Kong.   Lehman Brothers reported that this is most likely a crack down by the Chinese Government on senior government managers who are going to Macau.  Why cut off your nose to spite your face then?  Why not just limit senior government managers' trips to Macau?  Guangdong residents can now only apply for a visa to visit Macau and Hong Kong every 10 days, versus 3 days previously and can only make one visit per visa versus two visits previously.  Guangdong accounts for 40% of the visitation to Macau and 50% to Hong Kong so there is room for concern.
Hong Kong visitor arrivals rose 2.3% in April to 2,176,854 bringing the cumulative total to 8,792,671, up 5.3% in the first 4 months of the year.  Hotel occupancy in April was 82%, down 4 percentage points from last year.   Room rate at HK$1,410 was 11.5% higher than in April, 2006.  In the first 4 months of the year, average hotel occupancy was 84%, down 3 percentage points while average hotel room rate is up 13.4% to HK$1,232.

Abacus Property Group has exchanged contracts to acquire the Swissotel Sydney for A$85 million.  Jones Lang LaSalle Hotels negotiated the sale of the first class, 359 room, international standard Sydney CBD hotel on behalf of Fairmont Raffles Holdings International.   This is the second major Sydney CBD hotel sale in two months as JLLH also negotiated the $115 million sale of The Avillion Hotel.
IGB Corp BHD is planning to develop a third Cititel Express hotel in Penang soon while construction of the second Cititel Express hotel in Sabah is expected to begin later this year.   Cititel Express, the company's second Cititel brand, is scheduled to launch its first hotel in Kuala Lumpur today.  The second Cititel Express in Kota Kinabalu will have 270 rooms and is presently awaiting approval from local authorities.
In Singapore, the landmark Hotel Phoenix is expected to temporarily cease operations in August for a major refurbishment that will take some 390 rooms off the market for possibly more than a year.  The four star hotel is accepting bookings only until the end of July.  It is unclear when the hotel will re-open, with nobody knowing if it will re-open in time for the Formula One street race late next year.  With no new rooms in the Orchard area to be added until the St. Regis hotel opens at year's end, room rates, already strong, are expected to get even stronger.
South Korean hotels will be exempted from value-added tax on room and other services for foreign tourists beginning in July.  The move will affect more than 600 hotels across the country and will be in effect until December of next year.  The move is partly aimed at drawing more foreign tourists as the 2008 Beijing Olympics draws near.  The change will cost South Korea about $96.6 million in lost taxes a year but should decrease charges for tourists by about 9.1%.  The tax break is expected to boost the country's total tourism income by $121.2 million.
Best Western International is planning to set up 100 hotels across India through a master license agreement with Cabana Hotel Management, founded by B B Patel.  Cabana is incorporated in India and operates 8 BW hotels in the U.S.   Cabana will represent the Best Western brand in India and provide hotel management services.  The Cabana group intends to invest over $1.2 billion in 100 BW brand hotels over 10 years.   The company is financing the investment through its own resources and a combination of equity and debt.  It will look to raising private equity in the future for expansion purposes and will look to acquire hotels in tier-two cities as part of the plan to have 100 hotels.  The Cabana Group plans to convert hotels and lend the Best Western brand at 3-4 star levels or above.  They already have 6 hotel properties under construction in Bangalore, Bhubaneshwar, Ooty, Rameshwaram, Kanyakumari and Jaisalmer.
Real estate developer Unitech Ltd. is bringing the super luxury chain of hotels, Ritz Carlton to Kolkata's Royal Calcutta Golf Club.  The club will be giving Unitech six acres on perpetual lease for building the hotel.  Unitech is planning to use half the land for the hotel and the rest for serviced apartments.  The 200 room hotel and serviced apartments will require an investment of Rs 500 crore excluding the cost of the land.  Construction for the hotel will begin this June and will be completed by 2010.  The realty company has acquired sites for 28 hotels.  Unitech is currently developing four hotels, which will be managed by Marriott Courtyard.

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