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What to watch for when buying distressed debt on timeshare and developments.

Hotel Lawyer with some advice for investors in distressed notes and receivables involving timeshares, fractionals and vacation clubs. How to buy vacation ownership notes and receivables.

One of the most profitable endeavors for savvy lenders has been acquisition and development loans and consumer receivable financing for vacation ownership projects -- timeshare, fractional and vacation club projects.

For various reasons that have little to do with the continuing sound fundamentals and continuing consumer demand for such project, the biggest lenders in this area have essentially stopped lending to deal with their other problems. And recently, some opportunistic investors have sought our advice on some potentially exciting loans being sold at a fair discount.

Due diligence is the caveat. (See What have we learned from "The Crash of 2008"? There are no shortcuts for due diligence! There is great opportunity here, but also significant risk that can be ferreted out and analyzed to provide great confidence about the investment. In this article, my colleague and timeshare lawyer David Sudeck, a senior member of JMBM's Global Hospitality Group? shares some of his insights on this subject.

In many ways, the issues are similar to those involving condo hotels (read our Hotel Law Blog articles on these topics at http://hotellaw.jmbm.com/condo_hotels ) in that both vacation ownership and condo hotels involve not only an operating business but also third party stakeholders and their expectations (and their attorneys). (Click here for 100 Questions you should ask when looking for distressed condo hotel opportunities.

Navigating through the maze requires expertise, a solid plan, and an experienced team.

How to buy distressed notes secured by vacation ownership projects

Opportunities and pitfalls in buying debt on timeshare, fractional or other vacation ownership

A Good Time to Buy, But Proceed with Caution!

By David Sudeck, Hotel & Timeshare Lawyer - JMBM Global Hospitality Group

A wide variety of loans secured by vacation ownership real estate are in distress as receivables financing lenders have pretty much cutoff most time-share, fractional and private residence club developers, leaving limited carry-back financing options to offer to consumers.

At the same time, consumer confidence has been beaten down by the prolonged economic downturn and unemployment.

We are Seeing Timeshare and Fractional Loans Trade!

While there may be signs of recovery (see, for example, "Increase in Asset-Backed Securities Signifies Robust Recovery for Timeshare Market" ), we are seeing more timeshare developer construction loan defaults. In this distressed economic environment, a lender with a non-performing mortgage loan is faced with difficult choices. It may elect to pursue foreclosure, but this process can be long and expensive (especially if the borrower files bankruptcy).

Furthermore, most lenders lack the desire or the expertise to own and manage a timeshare or fractional project or the related interval sales. In addition, many do not want to assume the liabilities and obligations of ownership, including real property taxes, environmental liability, and obligations to existing owners. Furthermore, if the lender has written-off some or all of the loan, then selling the loan may reflect favorably on the lender's books. As a result of all of the foregoing factors, some lenders are selling off loans secured by timeshare, fractional and other vacation ownership developments at meaningful discounts.

Other lenders are selling portfolios of loans that are performing because the lender has decided to exit the business or the market segment. In many cases, the decision to sell performing debt has nothing to do with the debt itself - the lenders may be focused on other problems that they or their affiliates have. For our clients with liquidity and patience, this means opportunity!

Due Diligence Is Critical When Purchasing a Loan Secured by a Vacation Ownership Property

The purchaser of a loan secured by any commercial real estate should conduct due diligence in connection with the loan (including the borrower under the loan) and the property that secures it. Conducting loan purchase due diligence is usually difficult because (1) the lender has often kept poor files, (2) the lender is hesitant to provide full access to its files to avoid claims of misrepresentation and in support of the "as-is, where-is" nature of the sale, (3) the borrower is uncooperative, and/or (4) the third party management company or broker responsible for handling project management and sales is, for one or more reasons, uncooperative.

When you include all of the issues that are specific to a vacation ownership property, completing due diligence becomes a major undertaking.

Ask the right questions!!!

It is critical that a loan purchaser asks the questions below and understands the answers or that the purchase price of the loan has been risk-adjusted if these questions have not been answered:

• Are the loan documents enforceable? How much is owed?
• Do the borrower(s) and/or guarantor(s) have any claims against the selling lender?
• What is the financial condition of the borrower(s) and guarantor(s)? Have the guarantor(s) been released?
• What percentage of the project construction is complete? What remains to be done? How much will it cost to complete construction? How long will it take to complete construction?
• Do any contractors or other parties have rights to lien the property that are prior to the subject loan?
• Are there potential construction defect claims?
• Are there purchase contracts for intervals that will expire before the units can be completed?
• What commission obligations are there in connection with pending sales?
• Was the property sold in compliance with applicable laws? If not, what are the statutory rights of rescission of the timeshare/fractional interval purchasers?
• What representations and promises (e.g., promises of future benefits or amenities, guaranteed buybacks, exchange affiliations, etc.) were made to the interval purchasers?
• Were there any sort of violation or misrepresentations by the developer could result in a potential claims against the current and successor owners of the development or that may adversely affect public relations for the development or mire the project in litigation?
• Is the project phased? Are there any obligations or opportunities to construct future phases?
• Is the project operating? Are sales continuing?
• What approvals are necessary from state regulators under state timeshare registration laws where the project is being sold and where the project is being marketed for sale? Is there a temporary exemption for foreclosing lenders in the state where the project is registered?
• Has control of the Timeshare Owners Association been turned over to the purchasers?
• What rights are there to continue to sell timeshares on the property?
• Have assessments been paid on sold and unsold units? Does the borrower have a bond in place to protect the interval owners from its failure to pay assessments or subsidies on unsold units?
• Are existing interval owners facing foreclosure? If so, how will the shortfall from their unpaid assessments be funded?
• Is the current budget sufficient to fund the operations and maintenance of the project? If the lender forecloses on the property, how any deficiencies be cured?
• Can the property, after foreclosure, be modified based on the governing documents? If it is repositioned, will the current budgeted assessments be sufficient to pay for the operations and maintenance of the repositioned property?
• Who manages the association? What are the terms of the management agreement? Can the management agreement be terminated? See below regarding issues involving the lender's right to terminate the management agreement.
• Is there a rental program in place? Does it comply with applicable securities and real estate laws?
• Is the property affiliated with the right exchange company(ies)? Can the affiliation agreements be terminated upon foreclosure or deed-in-lieu of foreclosure?
• Does the property and its operations comply with the Americans with Disabilities Act and applicable state access laws?
• Are the interval owners complaining or threatening litigation? Can relations with the interval owners be improved through clearer communications?
• Can the sold intervals be repurchased at a discount that makes sense and that would allow the lender to completely reposition the property after foreclosure and interval buyback? What would incentivize the interval owners to sell their intervals back if desired?
• Will the loan purchaser continue selling intervals post-foreclosure? If so, can the intervals be sold without seller financing? Are there sources of receivables financing available to the property?
• If the loan purchaser intends to change the use of the property, do applicable zoning laws allow for the intended use? Will the planning department support the change in use?
• Is the property adequately insured for losses and liability claims?
• Would the loan purchaser benefit from the appointment of a receiver pending foreclosure to take immediate possession of the property's cash flow, if any, and secure the property?

Negotiating the Loan Purchase Agreement

We intend to cover the key terms of a Mortgage Loan Purchase Agreement or its equivalent in a separate article. We have significant experience from this downturn and previous downturns negotiating loan purchase agreements.

Needless to say, because most lenders did not intend to be in the business of selling loans and because the sellers perceive these sales to be at highly discounted prices, the loan purchase agreement tends to be seller-oriented (as-is, where-is, etc.).

Nonetheless, to the extent possible, we try to mitigate, through the provisions in the agreement, certain of the risks associated with purchasing a loan secured by a complex and regulated collateral like a vacation ownership property with intervals for sale.

Challenges Associated with a Bankrupt Borrower Involving a Vacation Ownership Project.

Another wildcard that a loan purchaser may need to deal with is a borrower bankruptcy before foreclosure is complete.

Unfortunately, bankruptcies involving timeshare or vacation ownership properties are particularly challenging. They have a lot of stakeholders (e.g., receivables and other lenders, individual timeshare interval owners, management companies, brokers, and vendors), and the property, with its wide variety of components, may be very difficult to classify as a "Single Asset Real Estate" proceeding for purposes of securing an expedited relief from stay (to allow the lender to proceed with its pending foreclosure) pursuant to Section 362(d)(3) of the Bankruptcy Code.

For a detailed analysis of this issue, read "Hospitality Lawyer - 'Speed bumps' in the road to bankruptcy for hotels and resorts. - Can a hotel ever be a "single asset" for bankruptcy purposes?" (from that article "The classic cases for single asset real estate involve a single office building or apartment house passively held for income. Properties involving an operating business, like hotels, are more problematic").

When there are many creditors, a borrower may be able to not only significantly delay the relief from stay, but it may be able to successfully secure bankruptcy court approval of a "cram down" pursuant to which the loan terms can be modified in a way that is unfavorable to the loan buyer as the new lender.

Understanding Obligations to Third Party Management Companies

Whether or not a timeshare or other vacation ownership property is operated sold using a branded affiliation, most such properties are managed by a management company.

If a loan purchaser intends to foreclose on the property after buying the loan, that purchaser must be certain that the original lender/seller has not signed a non-disturbance agreement. If so, then it may not be possible to terminate the services of the management company except pursuant to the terms of the management agreement itself.

For a detailed analysis of this issue, read our blog article on the topic "Hospitality Lawyer: Hotel Management Agreements: SNDAs or Subordination Agreements."

What does it all mean?

Through careful due diligence and drafting, much of the above risk can be eliminated. However, in order to truly understand the nuances of a property and avoid the delays and costs associated with a borrower bankruptcy, it is best to have the full cooperation of the borrower. How can that be achieved? Sometimes an offer of guaranty relief or walking away money can result in a "friendly" transaction.

If the borrower is cooperating, then a concurrent transfer of the property to an affiliate of the loan purchaser will also eliminate much of the risk of borrower bankruptcy during a foreclosure.

For a detailed analysis of this issue, read "Hotel bankruptcy? Distressed hotel loan mortgage? Restructuring hotel debt? Troubled hotel asset? How about an Enhanced Note Sale?".

The hotel lawyers at JMBM's Global Hospitality Group?have a rich library of free information on dealing with distressed hotels, vacation ownership and condo hotels correctly.

This is Jim Butler, author of www.HotelLawBlog.com and hotel lawyer, signing off. We've done more than $60 billion of hotel transactions and have developed innovative solutions to unlock value from troubled hotel transactions. Who's your hotel lawyer?

Our Perspective. We represent hotel lenders, owners and investors. We have helped our clients find business and legal solutions for more than $60 billion of hotel transactions, involving more than 1,000 properties all over the world. For more information, please contact Jim Butler at jbutler@jmbm.com or 310.201.3526.

Jim Butler is a founding partner of JMBM and Chairman of its Global Hospitality Group? Jim is one of the top hospitality attorneys in the world. GOOGLE "hotel lawyer" and you will see why.

JMBM's troubled asset team has handled more than 1,000 receiverships and many complex insolvency issues. But Jim and his team are more than "just" great hotel lawyers. They are also hospitality consultants and business advisors. For example, they have developed some unique proprietary approaches to unlock value in underwater hotels that can benefit lenders, borrowers and investors. (GOOGLE "JMBM's SAVE?program".)

Whether it is a troubled investment or new transaction, JMBM's Global Hospitality Group?creates legal and business solutions for hotel owners and lenders. They are deal makers. They can help find the right operator or capital provider. They know who to call and how to reach them.

The law that turned Arizona into a pariah state - Illegal Immigration

Draconian new bill to target suspected illegal immigrants is instead driving away tourists. Guy Adams reports from Phoenix

They were looking forward to a busy weekend at the Arizona Inn, a historic boutique hotel set in 14 acres of lush gardens in central Tucson. Genteel holidaymakers typically pay upwards of $300-a-night to lounge by the sun-drenched pool, drink tea on the patio, or dine under the desert stars, enjoying the delicate tinkle of a grand piano. But then the angry emails started to arrive.

"We cannot come to Arizona any more," declared Joy Mann, who had been planning a road trip from her native Idaho. "I am of Mediterranean heritage, and very concerned. I don't carry papers that indicate I am an American citizen, as I was born here... this is a very scary situation. The police can now come up to you for no reason and ask for papers. My son is a construction worker and very suntanned, I would fear for him."

In all, 20 guests have so far cancelled stays at the upmarket hotel, citing either fears of, or anger about, a draconian new law which aims to combat illegal immigration from Mexico. They are part of a growing consumer boycott that aims to turn the Copper State into a modern-day equivalent of Apartheid-era South Africa. And if they were hoping to worry the locals, they have certainly succeeded.

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"It's just upsetting to read these e-mails," says Will Conroy, the hotel's president, who says he started receiving cancellations last Friday, a matter of minutes after Arizona's right-wing governor, Jan Brewer, signed a contentious new immigration bill into law. "People love the Inn, but they are putting their feelings about Arizona first. And they won't be coming back, they say."

The new measure, Senate Bill 1070, instructs police across the state to stop and question anyone they "reasonably suspect" of being an undocumented immigrant. If that person cannot provide documents proving they are entitled to be in the US, they will be arrested and fined. If their immigration status cannot subsequently be confirmed, they will be swiftly deported.

Supporters of the bill – a comfortable majority of Arizonans – believe it is the only way to deal with an estimated 460,000 foreigners estimated to be living illegally in their state. Opponents say it smacks of racism, will legitimise police harassment of the Hispanic community, and destroy a grassroots economy that relies on undocumented workers to clean Arizona's swimming pools, mow its lawns, pick crops, and support its fast-food restaurants and neighbourhood supermarkets.

The spiralling row has sparked nationwide soul-searching, and brought thousands of protesters to the State Capitol in Phoenix. Yesterday, they were banging drums, saying prayers, in Spanish around a makeshift Catholic shrine, and brandishing placards with slogans like: "Stop the hate," and "Work is not a crime."

"Under this law, I will live in fear," said demonstrator Enrique Diaz Martinez, who has lived in the United States for 25 years. "I have an American wife, and children who were born here so are US citizens. I work hard and pay my taxes. But now, if I'm driving to work and the cops stop me and ask for my papers, and I don't have them, I will be committing a crime. This will destroy families."

High-profile critics of 1070 include Barack Obama. He says the draconian law underlines the importance of fulfilling his election pledge to reform the immigration system, which has left America with an estimated 10 million illegal residents. The US President has called the Arizona law "misguided", said it will lead to racial profiling, and has ordered lawyers at the Justice Department to review whether it is constitutional.

His Mexican counterpart, Felipe Calderon, said this week that 1070 will "open the door to intolerance, hate, discrimination and abuse". The Latino singer Shakira is due to declare her opposition at a speech in Phoenix today, while the Reverend Al Sharpton is rumoured to be coming to town this weekend, and has already likened the battle against the bill to the Civil Rights struggle.

"Most undocumented people here are of course from Mexico, or look like they're from Mexico, so the police are going to focus their efforts on Hispanic people," says Daniel Pochoda, a lawyer for the American Civil Liberties Union, which is challenging the law. "You're going to see a lot of people, who are legally here, being detained for walking down the street, just because of the colour of their skin. What could be more totalitarian than that?"

Hard-scrabble Arizonans are happy to endure a bit of condemnation, particularly from the political Left; but they are less willing to be hurt in the pocket. And that is exactly how opponents of the illegal immigration law are now hoping to overturn it. On Monday, San Francisco's Mayor, Gavin Newsom, suspended all travel to the State by city employees. LA's city council is considering a formal boycott of Arizona businesses. Mexico has advised its affluent citizens not to holiday there.

These are ominous moves, because hotels and conference centres are Arizona's biggest single economic engine, providing jobs for 200,000 people. The Hotel and Lodging Association said yesterday that most of the state's upmarket golfing venues and spa resorts are now reporting a small, but growing trickle of cancellations. In Phoenix alone, at least six planned business conferences have been axed.

"Our members are getting a lot of feedback about this," said a HLA spokesman. "It couldn't have come at a worse time, to be honest. We really suffered during the recession, and were starting to see some green shoots of recovery. Now this. The irony is that a boycott particularly hurts the Hispanic community. General managers of hotels aren't going to lose their jobs, their hourly workers are. They're the ones whose shifts are going to be cut. Our industry is one of the biggest employers of minorities and by boycotting us, you hurt them."

Many hoteliers can still recall an eerily-similar tourist boycott which hit Arizona in the late 80s and early 90s when the state's then-governor refused to pass a law creating a public holiday on Martin Luther King Day. The protest cost the local hospitality industry hundreds of millions of dollars and prompted the NFL to move a planned Superbowl to California. Eventually, in 1992, the state backed down and now MLK's birth is celebrated in Arizona every 18 January.

An occasionally-ugly history of race relations is largely an accident of Arizona's geography. Its largely-unfenced southern border is one of the best-trodden routes for immigrants from Mexico to cross to the more prosperous US. As a result, around 30 per cent of the state's population of 6.5 million are Hispanic. The Department of Homeland Security says roughly 460,000 of those are thought to be illegal immigrants – although the recession has seen their number decline by 100,000 since 2008.

Most studies conclude that undocumented aliens contribute as much, in tax, as they cost to support. But populist right-wingers still blame them for increasing the battle for places in public schools, and clogging up free beds in emergency wards. They also moan about new arrivals failing to integrate by learning English; many of the advertising billboards in Phoenix are written in Spanish.

The big issue, however, is crime. Mexico's spiralling drug war has seen a huge rise in kidnappings and murders linked to the Hispanic community and spawned endless ugly headlines about Latino gangs. Tensions spilled over last month, when a white rancher whose property sits near the Mexican border was murdered, apparently by illegal immigrants.

"The public wants something done. They're tired of it," said state Senator Russell Pearce, who sponsored 1070, which also makes it an offence to carry an illegal immigrant in your car, or to hire one as a day-labourer. "They've seen the ineptness and the malfeasance on the part of the government, and they're frustrated."

It is no coincidence that Senator Pearce's bill was timed to take effect in roughly 90 days, just before the state holds what are expected to be closely-fought elections. The bill has high-profile supporters in local resident, Senator John McCain, as well as Joe Arpaio, the self-styled "toughest sheriff in America" who just happens to be considering a run for governor.

Mr Arpaio presides over Maricopa County, which includes much of Phoenix, and has been a constant presence on the airwaves in recent days, arguing that enforcing draconian immigration laws needn't be a drain on resources.

Yesterday, he boasted that a "posse" of his officers had just arrested 22 people at a fast-food restaurant. "I just opened 22 jobs for people here legally," he declared, gleefully. Most locals have been smiling with him. But if the consumer boycott starts to bite, and 1070 starts costing Arizona jobs, hunting down illegal "aliens" may not end up being such a vote-winner.

Big Hotel Chains Aim to Dominate Europe After Conquering U.S.

Europe is the new battleground for the world’s largest hotel companies as they look for sources of growth outside the saturated U.S. market.

Four Seasons Hotels Inc., Starwood Hotels & Resorts Worldwide Inc. and Marriott International Inc. are stepping up expansion efforts in Europe, where about 34 percent of hotels fly chain flags, Otus & Co. estimates. In the U.S., they already control about 70 percent of the market, according to Smith Travel Research Inc. of Hendersonville, Tennessee.

The chains can build market share in Europe by appealing to visitors from the U.S., China and India who are likely to seek out internationally recognized brands when traveling, said Rod Taylor, chairman and co-founder of hotel consultants Taylor Global Advisors Ltd. in London. Within the next five to 10 years, the branded chains may increase their market share in the region by 5 percentage points, according to Patrick Scholes, a New York-based analyst at Friedman Billings Ramsey & Co.

“The U.S. hotel chains have a high penetration rate in North America,” said Bernie Williams, who helps manage $44 billion for San Antonio-based USAA Investment Management Co. He didn’t specify which hotel shares he holds. “As the sector starts to recover, Europe’s very fragmented market offers far more opportunities.”

Hotel owners have struggled to attract customers in the past two years as the recession deterred vacationers and forced companies to cut travel budgets. A lodging industry recovery is occurring more quickly in Europe than in the U.S.

Hotel occupancy in Europe climbed in February to 57 percent from 54 percent a year earlier and average daily rates increased to $127 from $119, according to London-based STR Global. North American occupancy stayed little changed at 53 percent, while rates dropped 3 percent on average to $98.

Hyatts Abroad

Hyatt Hotels Corp., the chain controlled by Chicago’s Pritzker family, expects to have a higher percentage of rooms abroad than in the U.S. within 10 years, Chief Executive Officer Mark Hoplamazian said in January. He said the company was seeking acquisitions in Italy and Spain.

Four Seasons, based in Toronto, has 14 hotels in Europe and another seven slated to open in the next three to five years. Blackstone Group LP’s Hilton Worldwide operates about 184 hotels across Europe. It had 18 openings in the past year, which included takeovers of independent hotels and franchise agreements. That compares with 12 in both 2008 and 2007.

Starwood had 159 European hotels at the end of 2009 and 20 in the pipeline. Bethesda, Maryland-based Marriott said last month that it expects to double its 40,000 rooms in Europe by 2015 with such brands as the Ritz-Carlton and Bulgari Hotels & Resorts. It plans about 30 projects in the region, including in Moscow, Budapest and Ankara, Turkey.

‘Stronger Presence’

“Europe overall may be still dominated by small independents, but in some markets chain operators are already having a much stronger presence,” said Jonathan Goldstein, deputy CEO at Heron International Ltd., a London-based real estate development company.

Heron is developing the Heron office tower in the U.K. capital and the adjacent Four Seasons hotel, slated to open in 2014. It will be the chain’s third hotel in the London metropolitan area.

About 15,000 hotels with 1.8 million rooms spread through 49 European countries are run by chain brands, according to London-based Otus, which advises companies including Starwood, Marriott and Hilton.

Accor SA, based in Evry, France, is the largest chain operator in the region. The top 10 also include Windsor, England-based InterContinental Hotels Group Plc, and the Dubai- owned British hotel chain Travelodge.

Loyalty Programs

The chains’ global reservation systems, marketing reach and loyalty programs give them an advantage over independent, “boutique” hotels and are helping them secure financing for expansion, company executives say.

“Right now, banks are more likely to back a Hilton brand, knowing it’s got wide distribution, than they are an independent brand,” said Simon Vincent, Hilton’s area president for Europe.

One hurdle for the chains is the limited amount of land available for building in Europe, analysts said. That is leading them to try to take over independent hotels or let them operate under a chain’s brand in exchange for a fee.

In the major European markets, “there are plenty of hotel rooms, and the challenge is to break into an existing market in a meaningful way,” said Ian Gamse, a director at Otus. “This can only really be done by doing big deals, either by acquisition or franchise.”

Waldorf Astoria

Hilton, based in McLean, Virginia, in the past year converted the Trianon Palace Versailles in France into one of its Waldorf Astoria properties. It has flagged seven independent hotels under its Doubletree brand across the U.K. since 2008. Hilton also converted three U.K. hotels formerly operated by Real Hotel Group, whose business went into administration last year, into its Hampton economy brand.

Not all independent hotels are eager to strike deals with the global brands. Investors in London’s 3 1/2-year-old Hoxton Hotel, including Pret A Manger co-founder Sinclair Beecham, are confident they will be able to open other locations in the U.K. and wouldn’t consider selling to a chain, General Manager David Taylor said.

Starhotels, a Florence, Italy-based group of 22 four-star hotels in Italy, Paris and New York, has rebuffed approaches from U.S. chains to manage its properties, said CEO Elisabetta Fabri.

Ultimately, the quality of service will determine a hotel’s success, regardless of whether it’s an internationally recognized brand, said Taylor from Taylor Global.

“Many independent, boutique owner-operators provide a guest experience that is second to none,” said the consultant, a former head of Barclays Plc’s hospitality & leisure finance team. “Branded or unbranded, let your customer down and they are unforgiving. Get it right and they’ll keep coming back.”

By Nadja Brandt and Armorel Kenna

Source:: Bloomberg

Gordon Brown comitted political suicide - Bigot-Gate -

Well I do not whether to dance up and down with joy at the way the wolf in sheep's clothing, Gordon Brown, let his guard down and revealed to the world what a lying, obnoxious toe rag he really he is or laugh at the amazement of the woman involved, at discovering that her idol had feet of clay and was in fact nothing more than a giant turd.

But OK, let us follow the events.  Gordon Brown is approached by life long labour supporter Gillian Duffy who had already filled in her postal ballot form in favour of the arrogant and unelected Prime Minister.

Like many people would wish to do, she expresses her concerns to the Prime Minister about the effects of mass immigration on Our Country and she expressed herself in a polite and orderly manner.

The Prime Minister gives a polite and reasonable response, explaining that some immigration is good and that the questioner should remember that almost as many people are leaving Our Country as are coming in.  He does not say that those leaving are white people who are no longer prepared to live in a fascist state where freedom of speech is stamped on and where they felt that because of mass immigration they had become Strangers in Their Own Land. 

The woman then walks away and the Prime Minister steps into his car and drives off.  But he has forgotten to deactivate his radio microphone and rebukes his staff  before accusing the woman questioner as a "Bigot".  And Bingo - we have a news story that will run for days and it is a story of how the leader of the Labour Party put his big foot in his big mouth and lost tens of thousands of votes for the Labour Party.

The woman is then interviewed for her response and naturally she is a little upset, because as far as she is concerned she was only asking a question that millions of British People wanted to see the Prime Minister asked.  Well welcome to the World of the BNP darling because  the BNP is vilified in the same way for asking the same question.

Because what Brown has done now is to show to the entire world the contempt he feels not only for the British People but also the supporters of the dying Labour Party whose coffin he had just hammered home another nail.

Not good enough Brown, not good enough

Afterwards, Brown is seen holding his hands to his head - probably trying to decide where to put the barrel - as the full impact of what he said sinks in.  His apology is not good enough.  Neither will his attack on the media for recording what he considers a private remark cut any ice with the people.  He should do the honourable thing and resign today.  Having no honour, he will carry on and no doubt we will soon read that the woman is in fact a "Bigot" and the Prime Minister was in fact correct.

Gordon Brown’s ‘Bigoted Woman’ Gaffe, Apologizes - UK Elections

Prime Minister Gordon Brown forgot to turn off his microphone before he described a loyal Labour voter, Gillian Duffy, as a bigot for asking about immigration.

Brown, who is on campaign trail for UK elections on May 6, blamed advisers, particularly, Sue, for putting him up against Duffy, 66, and said it was a “disaster” ahead of next week’s election.

“That was a disaster, they should never have put me with that woman. Whose idea was that? It’s just ridiculous,” Brown was heard saying with the microphone still on in his ears.

Asked what Duffy had said to upset him, Brown told the aide: “Everything. She’s just a sort of bigoted woman.”

Brown’s gaffe was immediately broadcast on major UK TV channels and he was then grilled about it on a televised radio show. Slumped over with his head in his hand, Brown said he realized he had made a mistake and regretted the remarks.

Brown rushed back to the voter’s house to beg her forgiveness claiming he was a “penitent sinner”.

The gaffe, which some observers are calling a debacle, has created a massive setback for Labour Party’s Gordon Brown on the eve of the last TV debate ahead of the May 6 vote. Brown and his party depend on immigrants’ votes to carry the edge against the Conservatives but have been lately wooing the not so liberals and the independents to bring him back to power.

Duffy, who is a grandmother, met with Brown at a campaign stop and questioned him about the influx of immigrants, specially eastern Europeans, who have come to Britain. Brown satisfied her query but ended up with a gaffe that has made him lose the point he had tried to score on the campaign trail.

According to published reports, many Britons are angry that immigrants are taking jobs at a time when Britain’s unemployment level is soaring.

More than 1 million eastern Europeans have moved to Britain since the EU gained new members like Poland, Bulgaria and Romania.

Brown had a previous gaffe last year when he sent a handwritten note to a mother whose son was killed in Afghanistan. He had misspelled the soldier’s name and was forced into an embarrassing apology.

Your Hotel May Not Be as Nice as You Think

As anyone who has ever tried online dating knows, there is a big difference between what people look like on the screen and when they're sitting across from you in a restaurant. The same is true of hotel Web sites. Those sunsets, beaches, rooms, and fitness centers may not look quite so appealing without the benefit of heavy photo retouching. So the next time you book a hotel you've never visited before, don't be surprised if what you saw isn't always what you get.

As digital photo editing software becomes more affordable and widespread, it is easier to transform a drab image into a more alluring one—and travelers are feeling ripped off. A visit to the comments pages on such travel Web sites as TripAdvisor and Yahoo! Travel reveals numerous complaints about misleading photos and information on hotel Web sites.

For example, in 2007, a contributor wrote on Yahoo! Travel of a hotel in Narragansett, R.I.: "The Web site photos of the hotel are misleading, the hotel is separated from the beach by a large parking lot and a busy street. Ocean views if you don't mind leaning out your window, craning your neck, and squinting through one eye."

And in 2008, user Kevin Hin wrote of a hotel in France on hotel reservation site Venere.com: "Beware the very misleading 'hotel front view' photo," pointing out that "the hotel is the small, almost invisible building by the sea that looks like a shack with a barely distinguishable 'hotel' sign, the more attractive 2-story building behind it is actually across the main road that runs behind and [has] nothing to do with it—a very clever camera angle."

Blog Rants

Oyster Hotel Reviews, a startup travel Web site based in New York City, says it has noticed an increase in inaccurate representations on hotel Web sites—and is calling the hotels on them. In a series of blog posts called "Photo Fakeouts", Oyster has identified more than 20 hotels that use marketing photos portraying an experience that is different from what reviewers find when they arrive. The discrepancies are subtle and often lie in the details—for example, a wide angle lens may make a room look larger, and unsightly signs or obtrusive buildings next door may be cropped out or even digitally removed.

According to Oyster Hotel Reviews Editor Jennifer Garfinkel, the photo fakeouts project started last year as a humorous rant on the blog and quickly became one of the site's most popular features—as well as a platform for consumer advocacy. Oyster.com expects to get 150,000 unique visitors this month.

Are these misrepresentations serious? "Some of these things will not make or break your trip, while others definitely will," says Garfinkel. "We want people to be aware of this; we want them to be smart consumers."

But while the practice might be somewhat misleading, it's not outright deception.

Improving on Reality

"The pressure is on to create ultra real or surreal images," says Rick Lohre, an outdoor lifestyle photographer in Newport, Ky., who formerly worked at Procter & Gamble in new business development. His personal rule: "We shouldn't add more than what is really there or subtract more than what would reasonable not be there."

Andrew Ptak, a Toronto hospitalities photographer of 30 years, says portraying an improved version of reality is a photographer's job. Ptak can charge more than $30,000 for an assignment, depending on the level of complexity, and he makes no apologies for rearranging chairs and adding flowers, as long as it does not change consumers' expectations, he says.

Hospitality photography is advertising, "and advertising is an embellishment," says Ptak. "We're making a two-dimensional representation of something that you experience with all of your senses. You can't hear the ocean waves breaking or smell flowers around the pool. I try to represent what it's like to be standing there."

Hotel marketers say that while they want to their properties to look their best, they do not try to set unrealistic expectations. "We keep our photographs authentic, with just a few touches or props," says Michele M. Vasquez, corporate director of marketing at Ayres Hotel in Los Angeles.

Says Katie Rackoff, public relations manager for Hyatt Hotels & Resorts (H): "Our hotels around the world hire photographers who work to cast our properties in the best light—capturing in a visual snapshot what a traveler can see when he or she ventures to that location."

Manipulating Enhancements

As long as there is no intent to mislead, deceive, or slander, the industry standards on how much an image can be manipulated are blurry. Photo manipulation is part of the trade: Sunsets and clouds are borrowed from other places, and buildings and people are removed. Lohre says it is also common for photographers to use materials that enhance the featured product. For example, in a cereal advertisement, paint or glue may substitute for milk.

"Modifying images in advertising is common practice," says Peter Dyson, a writer for the American Society of Media Photographers. Many photographers now spend a majority of their time in front of the computer editing and retouching—up to 80% of the time for Lohre and 90% for Ptak. This is not a new phenomenon, but jobs previously done by film retouchers can now be handled by a single person. "Now we have more say in the final image," Lohre says.

According to Ptak, this process makes images more compelling. "I use enhancements to recreate the experience because people don't have the other [senses] at work when they are relying on sight," he says.

In accurate photos, great places will look great and bad places will look bad, says Elie Seidman, Oyster's co-founder. "You should be able to see what you will get before you go."

Click here to see examples of hotel photo fakeouts.

By: Venessa Wong

Source:  Bloomberg Businessweek

Jumeirah Group sees sales soar, reaffirms growth strategy and names new brand

- Average occupancy rates reach over 92% in Dubai beachside properties
- Robust growth in business hotels in Dubai, New York and London
- Contemporary lifestyle hotel brand VENU Hotels will launch later in 2010


Dubai Jumeirah Group, the Dubai-based luxury hospitality company and a member of Dubai Holding, reported high occupancy in its Dubai hotels in the months of February-April 2010 maintaining a robust average room rate. Encouraged by this and by strong growth in its business hotels, the company is providing an update on its growth strategy, as well as revealing the name of its planned new contemporary lifestyle hotel brand, VENU Hotels, which will be launched later this year.

Strong results

Jumeirah Hotels and Resorts on the Dubai beachfront, which include Jumeirah Beach Hotel and the Madinat Jumeirah, registered occupancy of 92.5% in April and an average of 89% in February and March. Jumeirah Emirates Towers, which celebrates its 10th anniversary this year as Dubais premier business hotel, recorded occupancy of over 75% for the February-March 2010 period, reflecting an upturn in the business and corporate markets.

In New York, Jumeirah Essex House has secured average occupancy rates of 85% during April, with strong business on the books for the late Spring and Summer seasons. Jumeirah Groups London properties Jumeirah Carlton Towers and Jumeirah Lowndes Hotel - show a similar strength in performance.

32 hotels signed up 10 to open in next 18 months

In addition to the 11 Jumeirah Hotels and Resorts currently operated by the Group, Jumeirah has 32 management agreements in place to run hotels in key locations across the world. The company expects to open at least 10 new hotels within the next 18 months including Jumeirah Frankfurt, Jumeirah Messilah Beach in Kuwait, two hotels in the Maldives, Jumeirah Etihad Towers in Abu Dhabi, as well as properties in Al Ain, Dubai, Shanghai and others to be confirmed in the coming months.

Jumeirah Group reaffirms its growth strategy of having 60 hotels signed up by 2012. The company also feels confident that it will have 30 hotels open in 2013. A key element of the growth strategy has been the development of a second brand to complement the strengths of the Jumeirah brand.

New contemporary lifestyle brand named

Jumeirah Group is pleased to announce that the name of this new brand will be VENU Hotels. It will be a contemporary lifestyle hotel brand and it will be launched later in 2010 when the company confirms the locations of its first set of hotels. The Group is in advanced stages of negotiation with developers interested in opening VENU branded hotels in the Middle East, Northern Africa, Eastern Europe and Asia-Pacific. Further discussions with developers and investors will take place during the Arabian Hotel Investment Conference on 1-3 May 2010.

Executive Chairman Quote

Gerald Lawless, Executive Chairman of Jumeirah Group, said: The high occupancy rates recorded at our hotels confirms that Dubai has maintained and consolidated its place as the preferred destination for discerning travellers. This, coupled with the robust performance of our business hotels in London and New York, gives us renewed confidence in rolling out our growth strategy and in confirming our plans to introduce a second brand later this year. VENU Hotels will, when launched, fulfil a clear market need and one that is highly complementary to the Jumeirah Hotels and Resorts brand. We are looking forward to a busy and exciting period opening new hotels, attracting new guests and introducing a new hotel brand concept to the world. We very much appreciate the continuing support to our parent company Dubai Holding to achieve our objectives.

Tipping Your Cap (Rate) | Why hotel owners need to pay attention to RevPAR

28 April 2010

Tipping Your Cap (Rate) | Why hotel owners need to pay attention to RevPAR | By Jean Francois Mourier

We're going to change things up a bit today and write directly to all the hotel owners out there. So all you GM and revenue managers- or all of you that don't want to own the place someday- go ahead and put this down, or minimize this window.

Oh, everyone's still here? OK, let's get to it then.

We want to talk about RevPAR (no surprise there), but specifically how it pertains to the capitalization rate of the property. Everyone knows how important RevPAR is to cash flow, and to the net income of the operation, but too often RevPAR's inextricable link to cap rate is overlooked. And this is unfortunate, because in hotels, even moderate increases in RevPAR can translate into spectacular increases in cap rate; if we take for example a 10% increase in RevPAR at a $50 million in revenue hotel can yield a 50% gain in cap rate or more.

An asset- like the real estate and the physical plant of a hotel- is valued based on not only its natural appreciation, but also on the revenue it produces on an annual basis. The basic measure of this revenue production to the original price the asset was purchased at, is its cap rate. Capitalization rate, in specific terms, is defined as the ratio between the net operating income produced or earnings before interest and taxes (EBIT) typically by an asset and its capital cost (the original price paid to buy the asset). The current market value of the asset can also be used as an alternate computation of cap rate. Because of the net operating income aspect of the metric, cap rate often doesn't figure into the valuation of less dynamic assets, but for hotels it figures quite prominently.

And increasing RevPAR is the most direct way to increase cap rate.

On the surface, this is common sense. After all, hotels are developed on a given piece of real estate in order to establish a reliable revenue stream- more reliable than that generated by residential or retail units (something we all learned playing Monopoly). The link between the revenue generated by the property itself and RevPAR is easily understood as well. But the connection between RevPAR and cap rate does not seem to receive as much emphasis as other financial measures. The fact is, an increase in RevPAR directly correlates to an increase in equity and the value of the property.

This correlation is based in the outsized influence RevPAR has on a hotel's net operating income; because of the negligible cost of goods sold associated with room sales, and because room sales can represent as much as 90% of total revenues for a hotel, revenue generated per available room is the single most important contributing factor to a hotel property's net operating income or profit nlike F&B.

To put that into real dollar figures, consider a 300-room hotel with $7.5 million in annual revenue and $1 million in annual profits. This property, originally valued at $10 million, has a cap rate of 10%, which implies the hotel has a RevPAR of $68.49. The next year, this hotel institutes a program that increases RevPAR by 5% (an increase that is legitimately attainable through the use of a sophisticated revenue management program), which in turn increases annual revenues to $7.875 million. Let's assume this hotel runs with a typical variable average room costs and converts every incremental $1 into $0.6 of profit or a 60% conversion of increased revenue into profits. If you were to increase ADR by 5%, your variable cost increase would be minimal and your increase would almost convert into profit at 100%. This increase will correspond to a bump in annual profits of around $225,000 (375,000 x 60%=225,000). The profit for the property this year goes up by 22.5% to $1.225 million; in other words, the 5% increase in RevPAR translates to a 22.5% increase in profits which, at a 10% cap rate, increases the hotel value to $12.25 million! A general rule is that every 10% increase in RevPAR translates into a 45% gain in the value of the hotel and its profits.

Tipping Your Cap (Rate) | Why hotel owners need to pay attention to RevPAR | By Jean Francois Mourier

To achieve high cap rates, then, it stands to reason that maximization of RevPAR should be priority number one for owners and their agents in hotel operations (GMs). With all of the demands placed on owners of hotel properties, it may be easy to lose sight of this particular aim, but if the overarching goal is to increase the value of your property, then the savvy owner will hone in on RevPAR with intensity.

But if RevPAR is the key to high and positive cap rates, then how should owners and their agents go about maximizing it?

Entire textbooks have been written about ways to increase RevPAR- that subject is also often the focus of our articles- and as every hotel property is different, different RevPAR optimization solutions can and should be utilized. We believe that because RevPAR is closely related to both occupancy percentage and average daily rate, then the optimization of room rates (through real time, demand-based rate modification) coupled with vigilant inventory and sales channel management is the best way to increase RevPAR. Furthermore, we believe that this rate optimization/revenue management process becomes more cost-effective (and more effective, period) through automation, and with the help of a comprehensive system that can perform all of these functions accurately. To be clear, the functions that most influence RevPAR are yield management, channel management, competitive pricing, inventory control, rate optimization, GDS distribution, booking pace, and page positioning on third-party websites (like OTAs).

With the proper system in place, a hotel has a better chance of increasing RevPAR over both the short and long term. With higher RevPAR, a property's cap rate will increase, driving the overall value of a property much higher as well.

And that's something that ought to make all the owners out there very happy indeed.

Jean Francois Mourier is CEO & Founder of RevPar Guru, a company that has developed an alternative type of revenue management and real-time pricing solution (combined with automated online distribution) to help hotels maximize occupancy and increase their profits. The company’s Yield Dynamic Price Engine, an integrated revenue management and pricing solution, adds unprecedented power and real-time adaptability to the pricing process, leaving managers more time to run their hotels. You may reach him through www.revparguru.com or by calling +1.786.478.3500.

Organization

RevPAR Guru Inc.
www.RevPARguru.com
311 Lincoln Road Suite 120
USA - Miami Beach, FL 33139
Phone: (+ 1) 786 478 3500
Fax: (+ 1) 786 472 6884
Email: clientservices@RevPARguru.com

Ash cloud disruption brings mixed fortunes to hotels

The volcanic ash-related disruption that has shared the headlines with the election campaign since the middle of April has brought mixed fortunes for the hotel sector.

More than 95,000 flights were cancelled across Europe during the six days of disruption, with only a handful taking off and landing at UK airports. The restrictions were lifted late on Tuesday 20 April.

On the face of it, hotel guests unable to fly home would be an ideal captive audience, but many soon began to run out of money, leading to some unusual activity.

In the midst of the disruption, a cab driver revealed on BBC Five Live that he had just picked up two guests from £350-a-night Claridges and taken them to the nearest Travelodge.

Indeed, five-star hotels were offering some essential – and not so essential – services to help those forced to extend their stay. The Grosvenor House hotel in London provided free laundry for affected customers, while Red Carnation Hotels offered guests at its Rubens at the Palace and Hotel 41 properties free tickets to Wicked at the nearby Apollo Victoria theatre.

An Edinburgh hotel took generosity up a notch, offering 100 free rooms to people stranded in the city. Ten Hill Place, which is owned by the Royal College of Surgeons, sent two members of staff to Edinburgh airport to spread the word about the offer – no doubt a charitable move, but one that also brought positive PR.

Industry experts were split on the impact on hotel trading. Marvin Rust, hospitality managing partner at Deloitte, estimated that the lockdown generated additional revenue of around £500,000 per day for London hotels – largely driven by airport properties. He said the short-term revenue boost from guests who were unable to leave outweighed the effect of cancellations from travellers unable to get to the UK.

But Tony Burnell, relationship director at Lloyds TSB Corporate Markets, said any hopes that the disruption would boost occupancy quickly faded, particularly in the capital.

“Initially, we were seeing a favourable impact, particularly in London, as a number of visitors to the capital were unable to leave when planned. Likewise, hotels near airports experienced an increase in occupancy as a result of the volcanic ash disruption,” he said.

“However, when travellers who had stayed in hotels in central London were able to move, they were not replaced by new visitors to the country.”

Visit London has estimated that the disruption cost the capital £102m in lost tourist spending, with hotel occupancy down by as much as 25%, and theatres, restaurants and shops all seeing a fall in visitors.

An estimated 100,000 visitors who would otherwise have gone home remained in London, but many were cash strapped because of dwindling budgets, the tourist board said.

Early figures indicate that London hotels were attempting to make up for the hit to occupancy by raising room rates. Analysis of rates during the week of 15 to 22 April, by hotel price comparison website Trivago, shows that an overnight stay in London during the airline grounding averaged £205 a night; compared with April’s expected average of £138 – a climb of 49%.

However, major operators such as Marriott and Rezidor insisted they had not raised room rates and Robert Barnard, a partner at consultancy PKF, cautioned that the true impact of the disruption will only be evident later in the year.

“As with many other businesses affected by the cloud, probably the most difficult aspect of the situation was, and still is to an extent, the uncertainty that surrounds it,” he said. “This will impact the April figures – some positively, others not so. Thus we will not really be able to gauge what is happening until May.

“May, of course, is always a tricky month for hoteliers due to there being two bank holidays. Therefore, we won’t really know how hoteliers are faring until we’re halfway through the year.”

By Daniel Thomas

Source:  Caterersearch

Ultra luxury now has a new address - Armani Resort - Burj Khalifa

First Armani Hotel at Burj Khalifa to have positive financial impact on Emaar's performance.

With the world's first Armani Hotel opening, the $1.5 billion (Dh5.5bn) Burj Khalifa, the world's tallest tower housing this designer hotel, is 90 per cent open, according to Emaar Properties Chairman.

"The Burj Khalifa tower is now 90 per cent open," said Mohamed Alabbar, as he inaugurated Armani Hotel Dubai yesterday along with fashion maestro Giorgio Armani. The hotel, having suffered multiple delays, is Armani's first foray into the hospitality business and under the Armani Hotels & Resorts portfolio.

The partnership agreement between Emaar Properties and Giorgio Armani will see at least 10 more Armani hotels opening across the world over a period of 10 years. "Our next Armani hotel destination is Milan. It would be the same philosophy but in a different specification," said Armani.

Other properties under way include the first Armani Resort, planned for Marrakech, and the first Armani Residences villas, for Marassi in Egypt. Further Armani hospitality projects will open subsequently in New York, Tokyo, Shanghai and London, as pr earlier reports. "There is a lot of interest from various cities in the world to have an Armani Hotel. We'll choose meticulously as we move forward," said Alabbar. Asked the impact Armani Hotel is likely to have on Emaar's performance, Alabbar said: "Armani Hotel will have a positive financial impact on the company for years to come."

Emaar last week said its net profit more than tripled to Dh760 million in Q1 2010 compared to last year's Q1 profit of Dh237m.

When quizzed on the impact of the financial crisis on business, both Armani and Alabbar dismissed any concerns. "When you build projects like this, it is built for hundreds of years. Cycles come and go," said Alabbar.

The guest rooms, personally designed by Armani, at the 160-room property, occupying floors concourse to eight and levels 38 and 39 of the tower, will range from Dh4,000 a night for a studio suite up to Dh40,000 for the Armani Dubai Suite (equivalent of a Presidential suite). And 144 Armani Residences are located on levels nine to 16. The hotel also boasts eight restaurants, exclusive retail outlets, spa and a club.