Mega Chains Look To Capture, Reflag Deluxe Flagships

<B>Mega Chains Look To Capture, Reflag Deluxe Flagships</B>

By Bruce Serlen

The re-branding this month of deluxe hotels in New York and Hong Kong by Hilton Hotels Corp. and Bass Hotels & Resorts, respectively, confirmed that these hotel companies believe that trophy properties in prime locations are even more attractive to travel managers than before, due to the continuing soft economy. It also is evidence that hotel companies still value having a flagship presence in key gateway cities around the world, almost as a hedge against deteriorating market conditions.

For corporate travel buyers, location remains a high priority in choosing properties to add to a hotel program, particularly when travel budgets are being cut and hotels are seeking greater assurances that volume projections will be met. The closer the proximity to the address where a company's travelers are conducting business, after all, the greater the chances they'll comply with the travel policy.


<B>TOP-TIER OCCUPANCY DROP</B>

According to Smith Travel Research, the deluxe segment of the industry hardly has been immune to the softening in demand and room revenues that has marked the industry overall this year. April, for example, saw U.S. occupancies in the top tier fall 8.3 percent, compared with the same period a year earlier, the steepest decline of any category.

In New York, Hilton announced that the Waldorf Towers, a separate hotel within the Waldorf-Astoria, has been re-branded a Conrad Hotel.

Conrad is Hilton's deluxe brand, but up to now has not had a presence in North America.

"As we look to build the Conrad name worldwide, New York was the logical U.S. destination to start with," said Dieter Huckestein, president of hotel operations of Hilton Hotels. "The hotel, which now will be known as the Waldorf Towers, a Conrad Hotel, has long been recognized for its service levels and residential ambiance. These same qualities distinguish the Conrad brand in Europe and Asia." The 14 Conrad Hotels outside of North America include properties in Brussels, Cairo, Hong Kong and London.

The New York property's Midtown location off of Park Avenue is considered highly desirable for business travel. The 180-room flagship occupies the 28th to 42nd floors of the Waldorf-Astoria and has its own separate entrance. Since November 2000, Conrad has been a joint venture between U.S.-based Hilton Hotels Corp. and U.K.-based Hilton Group Plc.

In Hong Kong, Bass acquired the 514-room Regent Hong Kong Hotel and re-branded the property the Inter-Continental Hong Kong. The property, which is centrally located at the tip of Kowloon Peninsula, was purchased by Bass from New World Development Co. Ltd. Similar to Hilton's strategy on behalf of Conrad, Richard Hartman, Bass managing director for Asia/Pacific, described the property as "brand-defining," meaning that the purchase supports the company's long-term strategy of enhancing its "global brand presence." The price Bass paid, $346 million, was considered high by industry analysts. While the Regent brand is owned by Carlson Hospitality Worldwide, the property was managed by Four Seasons Hotels & Resorts, as is the case with other Regent properties in Asia.

Bass has been the subject of considerable speculation in recent months that it was about to make a major hotel acquisition. Speaking at the NYU Hospitality Investment Conference in New York earlier this month, Tim Clarke, CEO of Bass Plc, Bass Hotels' parent company, said that while "a major acquisition remained a possibility, a series of 'one off' acquisitions, like the Hong Kong property, might be what actually occurs." Four Seasons, meanwhile, announced it will return to Hong Kong with a Four Seasons-branded property in 2004.