Millennium Grabs Regal U.S. Sites
<B>Millennium Grabs Regal U.S. Sites</B>
By Bruce Serlen
Recognizing the need to be a global player in today's increasingly competitive corporate travel marketplace, London-based Millennium & Copthorne Hotels Plc in late December acquired all 12 U.S. properties of Regal Hotels International, along with a portfolio of non-Regal full and limited service properties.
Included in the $640 million deal are Regals in such U.S. gateway cities as Boston, Chicago, Los Angeles and New York. The remainder of Regal's U.S. portfolio are properties in second-tier business destinations including Cincinnati, Minneapolis, Nashville, Tenn., and St. Louis, as well as a Scottsdale, Ariz., resort. Plans call for the Regal properties eventually to be rebranded as Millenniums.
"In terms of the corporate travel buyer, acquiring these Regal hotels should substantially strengthen our position in the market," said John Wilson, Millennium & Copthorne CEO. The hotel company, which has its strongest presence in the United Kingdom and also is a player in Asia and Australasia, already had one property in the New York market--the Millennium Broadway--but to grow, Wilson said, "it was crucial that Millennium & Copthorne increase its distribution--and visibility--in the United States. Having a presence in key U.S. markets is essential to that strategy."
Wilson acknowledged, however, that Boston, Chicago, Los Angeles and New York hardly in themselves constitute a significant U.S. presence. "It's meaningful, but not yet as substantial a foothold as we eventually would like." Other gateway cities he deemed necessary to become truly global players included Atlanta, Dallas, Miami and San Francisco.
In terms of growth, 1999 was a watershed year for Millennium & Copthorne. The company in April acquired CDL Hotels Asia/Pacific for $750 million and in December acquired the Seoul Hilton Hotel for $228 million. But in Wilson's mind, the year's real coup is the Regal transaction because of the entrée it provides to the U.S. market.
While Wilson had nothing specific to announce about the prospect of future acquisitions, he said that the pace of 1999 activity suggests there's more external development to come. "If we see the right opportunity, we'll take it," he said.
At present, corporate accounts amount to 50 percent to 60 percent of Millennium & Copthorne's business, a number Wilson expects will increase. "As we focus more on the corporate market and start delivering a consistent guest experience across all our properties, we expect the percentage to grow."
Having a deep portfolio of properties strategically situated in business centers worldwide is a competitive advantage in today's market as multinational companies continually expand their businesses globally. "Critical mass enables you to introduce special rates and promotions specifically geared to the corporate buyer," said Wilson. "It simplifies things for the travel buyer and creates more options."
Instead of negotiated rates across the world, Wilson favors a regional approach to negotiation, the regions being Asia, Europe and the United States. "It's a more realistic way of doing business," he said. "The situation I want to avoid is one where we're negotiating rates on individual properties."
Rates aside, of the issues uppermost in the minds of corporate travel buyers--things like single image booking and guest histories--Wilson agreed they are priorities. While he wouldn't commit to a date, he expects to have a global reservations system in place that will put the single image booking question to rest. As for a guest profile system, "we have to improve. This can be a valuable amenity for the traveler and provide us with important data as well."
Wilson is less optimistic on the subject of direct connections between the client and supplier via the Internet. "It probably will happen one day, but that day won't be anytime soon."
The reflagging of Regals into Millenniums won't begin for a year, Wilson estimated. First, he wants to make the capital expenditures necessary to ensure that the Regals are consistent with the Millenniums' level of guest service and décor. Wilson described that level of service as "one notch below the top end," which means providing a consistency of service worldwide, but allowing for regional variations. "Given our presence in Asia," he said, "we prescribe to an Asian approach to customer service, where it is taken very seriously."
While the Regal U.S. transaction was finalized in December, acquisition of the Boston property was deferred temporarily until discussions with a co-owner can be completed.