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FANTINI’S GAMING MORNING REPORT

FANTINI’S LODGING REPORT

The Lodging Investor’s Daily Newspaper…

Without the Paper

June 8, 2010

Frank Fantini - Editor & Publisher

Simona Gallegos - Writer




TOP NEWS

DELOITTE 2015: CHINA, INDIA AND TRAVELING BOOMERS

LE’S ASIA PIPELINE

HYATT HEIR BACK

MORE HOTEL TRANSACTIONS

GULF COAST UPDATE

STR FORECAST

HOT ROUNDUP

WYN BUYS TRYP

H TO BUILD MORE ANDAZ HOTELS

INVESTORS

MARKETS

GOING GREEN

ACCOR, CONCEPT, KIMPTON, HOT

BUYING, BUILDING, OPENING

US PUBLIC: MAR, PEB

US PRIVATE: BELLSTAR, CARLSON, HILTON, SATCHITANAND

INTERNATIONAL: SOL MELIÁ, REZIDOR

SHORT AND TO THE POINT

HOTELS: REGAL HOTELS INTERNATIONAL/EVERGREEN

SERVICES & SUPPLIERS: PROJECT INTERACTIVE, FLIP.TO

ALL AROUND THE WORLD

USA: NY

INTERNATIONAL: THAILAND

PEOPLE ON THE MOVE

HOTEL PROMOS

ET AL

INVESTOR EVENTS

CONTACT US

TOP NEWS

DELOITTE 2015: CHINA, INDIA AND TRAVELING BOOMERS

The seven key factors that will drive success in lodging are emerging markets, demographics, brand, talent, technology, sustainability and crisis management, according to Deliotte’s report Hospitality 2015.

China and India will continue to hold strong as emerging markets, with tourism growth outdoing markets in the UK, France and Japan, according to the report.

With boomers expected to account for 60 percent of the wealth in the US and 40 percent of spending, they will become a key demographic, along with the emerging middle classes in China and India.

Social media offers a new outlet for feedback and the growth, or dissipation, of brand loyalty.

High employee turnover poses a problem to hoteliers who need to find ways to hold on to key talent.

Proprietary websites are just the tip of the technology iceberg. If hotels want to keep up, creating applications and websites for mobile devices will meet consumer demand.

Sustainability practices will become a reality, with hotels finding it difficult to operate without them as population rises and resources become scarce, Deloitte predicts.

Surviving the unexpected successfully will require hotels come up with appropriate responses, protocols and risk management programs in advance.

The full report can be accessed at www.deliotte.com.

LE’S ASIA PIPELINE

With most brands looking to Asia for growth it’s no surprise the region has outpaced the US for the second straight quarter in rooms in the pipeline -- 457,944, with 74 percent of those under construction, the largest amount in the world, according to Lodging Econometrics.

• China leads globally with rooms coming on the market this year and next, with 85,703 rooms in 463 new hotels and 83,235 in 274 hotels, respectively. Most of the rooms come from economy brands, 201 projects, followed by upper upscale, 150 projects.

The rate of growth could slow down to a moderate size as the Chinese government aims to slow down real estate development.

• India will add 17,202 rooms in 106 hotels, giving it a third place standing globally for rooms entering the market. Next year the numbers taper off, with 9,374 rooms at 57 hotels.

Upscale projects make up most of the rooms, with 108 projects. The Indian group Taj leads with the most projects, 61 with 8,994 rooms.

• Southeast Asia and other areas of the region should see 95 hotels open this year with 20,118 rooms, with most of the supply in Thailand, Singapore, Indonesia and Malaysia.

More information can be found at www.lodgingeconometrics.com.

HYATT HEIR BACK

John Pritzker, who’s family built the Hyatt chain, is back in the hotel business after leaving Hyatt in 1988, buying a majority stake in Joie De Vivre Hospitality - a Hyatt competitor - for an undisclosed price, the Wall Street Journal reported.

Pritzker also established a $150 million fund for buying small hotels. His majority stake in Joie De Vivre, which is less than 60 percent, only includes its hotel management brand.

Joie De Vivre manages 33 small upscale hotels in California, and owns 14 of them.

Pritzker, through his company, Geolo Capital, plans to invest $300 million to $500 million in small hotels with Joie De Vivre within three to five years. The move could expand Joie De Vivre’s hotel holdings to 50 and double it annual revenue of $240 million, WSJ said.

MORE HOTEL TRANSACTIONS

US hotel transactions could hit $6 billion by the end of the year, surpassing the $3.5 billion forecast by Jones Lange LaSalle, Reuters reported.

Hotel investments accounted for about $2.2 billion by May, with mostly REITS involved in the deals. Trusts have bought 71 percent of the hotels sold this year.

As recovery appears eminent, hotel prices are up and investors are paying more than they anticipated for some properties. For example, Raffles L’Ermitage-Beverly Hills was expected to go for $30 million and sold at $45 million in March, Reuters noted.

So far, distressed hotels have accounted for about half of all transactions this year, bringing in $1 billion.

GULF COAST UPDATE

Sixty percent of Gulf Coast hotels have suffered group cancellations because of the oil spill — that’s 18 percent more than reported two weeks ago, according to a survey by The Knowland Group.

Sixty-two percent of the hotels said the oil spill was having a negative impact on business, with 39 percent reporting Memorial Day weekend cancellations because of the spill.

Bookings three to six months out are taking a 45 percent hit. Immediate bookings are down 34 percent.

More information can be found at www.knowlandgroup.com.

Meanwhile, clumps of oil began washing up on Pensacola Beach in Florida over the weekend, and hotel officials are reporting it’s not cancellations that worry them but the lack of reservations, Bloomberg reported.

A large sheen of oil has been spotted about six miles off of the beach’s shoreline.

But a little oil isn’t enough to stop Jimmy Buffett. He still plans to open his $50 million, 162-room Margaritaville Hotel this week in Pensacola, MSNBC reported.

STR FORECAST

Demand is expected to drive industry recovery, according to Smith Travel Research’s latest forecast.

STR projects 5.7 percent demand growth coupled with a 2 percent supply growth, meaning occupancy and revenue per available room increases.

Occupancy could jump 3.6 percentage points, ending the year at 56.7 percent, and revPAR could rise 3 percent to $55.13.

It will be another year before ADR turns positive. It should remain stagnant ending the year at a 0.6 percent decrease at $97.26, but could jump 3.9 percent by the end of next year to $101.05, STR said.

Occupancy and revPAR should continue to improve into 2011, with occupancy forecast at 58.1 percent and revPAR at $58.70 by the end of next year.

Meanwhile, supply and demand are expected to rise 0.6 percent increase and 3.1 percent.

More information can be found at STR’s site www.hotelnewsnow.com.

HOT ROUNDUP

Starwood opened the first of two of its Luxury Collection hotels in Costa Navarino, Greece, that will open this summer. W is also in the works there.

The Romanos Resort, opened under a partnership with Temes SA, will feature 321 rooms and suites, 121 of which will include Infinity pools, and butler service accompanying suite rentals.

The hotel is part of Navarino Dunes, a mixed-use development that includes a signature golf course.

The Westin Resort Costa Navarino is slated to open July 1, and a W branded hotel is scheduled for 2012 in Athens.

• Orlando now has its sixth Sheraton, Sheraton Orlando Downtown Hotel, which is part of a $6 billion revitalization campaign to expand the brand with 50 hotels and 20,000 rooms over the next three years.

The new Sheraton, opening Tuesday, has 290 rooms. Turnberry Associates will run the hotel.

WYN BUYS TRYP

Wyndham is expanding its international hotel portfolio with the $43 million cash purchase of Tryp hotels from Sol Melia.

Tryp gives WYN a mid-market brand of 91 hotels with 13,000 rooms in cities such as Madrid, Barcelona, Paris, Lisbon, Frankfurt, Buenos Aires, Sao Paulo and Montevideo.

WYN is signing a licensing agreement with Sol Melia, which will continue to manage the hotels.

WYN, which said the acquisition is part of its international growth strategy, has 7,100 hotels and 593,300 rooms in 65 countries under 11 brands.

H TO BUILD MORE ANDAZ HOTELS

Hyatt has announced three more Andaz hotel projects, saying the brand that emphasizes their locales is a key to its expansion strategy.

The hotels will be in Sunny Bay on Hainan Island in China, Dehli in India and the Turks and Caicos islands.

There are 11 hotels in the three-year-old Andaz collection with a New York property to open later this year and others under construction in Austin, TX, Amsterdam and Papagayos, Costa Rica.

The Sunny Bay property, built between mountain and beach, will have 183 rooms and will complement nearby 196-room Park Hyatt Sanya, H said.

The Dehli Andaz will have 323 rooms and 118 apartments. Andaz Turks & Caicos will have 170 rooms and 76 condominiums.

INVESTORS

MARKETS

Closing averages for Tuesday:

Hotels & Resorts -3.47 percent

REITS -1.55

Casino Hotels -5.92

Lodging Suppliers -4.26

Fifty-two week closing lows:

Dover Downs down 2.69 percent to $ 2.95

Chesapeake Lodging Trust 1.88 percent to $16.71

Pebblebrook Hotel Trust 2.23 percent to $17.95

Five percent movers:

Wynn

-5.28 percent

Supertel Hospitality

-5.86

YTB International

-5.88

Penn National

-6.15

Melco Crown

-6.23

Pinnacle

-6.26

Las Vegas Sands

-6.31

7 Days Group Holdings

-6.37

Gaylord Entertainment

-7.09

Great Wolf Resorts

-7.93

FelCor Lodging Trust

-8.40

Sonesta International

-8.91

Isle of Capri

-8.97

MGM Mirage

-9.23

Agilsys

-9.56

Boyd

-9.57

GOING GREEN: ACC, CONCEPT, KIMTON, HOT

• ACCOR won the Tourism of Tomorrow award for its sustainability practices. The award is given out by the World Travel and Tourism Council.

• CONCEPT AMENITIES has created a line of biodegradable guest amenities, such as soaps and shampoos.

• KIMPTON’s The Muse in New York City along with its Seattle properties, Alexis Hotel, Hotel Monaco, and Hotel Vintage Park, have all earned Green Seal certification.

Kimpton wants to be the first lifestyle boutique hotel company in the US to have all of its properties Green Seal certified. So far, 46 of its 50 hotels have met Green Seal standards.

Its Seattle hotels are the first in the state to attain the certification.

• STARWOOD has implemented sustainable meeting practices at all of its North American hotels, which includes among other things paperless meetings, sustainable menu choices, bottled water alternatives, and a meeting impact report that lets businesses see the environmental impact of their meeting.

HOT plans global implementation of the model by 2011.

BUYING, BUILDING, OPENING

US PUBLIC: MAR, PEB

• MARRIOTT INTERNATIONAL’s Crestline-managed Courtyard by Marriott Virginia Beach has completed a total hotel renovation and upgrade.

Among the changes are flat panel TVs, a communal table in the lobby for work and meetings and a poolside tiki bar.

• Texas. The Connecticut-based hospitality investment firm, HEI Hotels & Resorts, bought the 258-room Le Meridien Dallas North in Texas for an undisclosed price.

• Virginia. Hotel Squared will own and manage the Aloft Winchester, VA, a just-opened 99-room property near Shenandoah University.

• PEBBLEBROOK acquired the Doubletree Bethesda Hotel and Executive Meeting Center near Washington, DC, for $67.1 million.

The 269-room property will continue to be managed by Thayer Lodging Group.

US PRIVATE: BELLSTAR, CARLSON, HILTON, SATCHITANAND

• BELLSTAR HOTELS added Solara Resort & Spa in Canmore, Aberta.

Bellstar plans to complete the resort based on the original design, with 214 suites, 38,000-square foot amenities area, a pool, spa, and fitness center, to be complete within the year.

Bellstar will also install a convention and meeting center.

• CARLSON. Seneca Hotel Group bought the 55-room Country Inn & Suites in Anderson, NC, which serves Clemson University.

The group plans cosmetic renovations to the hotel, while keeping the Country Inn & Suites brand.

• HILTON WORLDWIDE. Embassy Suites Hotels opened its newest property Monday – the Embassy Suites Raleigh-Durham Airport/Brier Creek, in NC, in a partnership with Winwood Hospitality Group.

The hotel has an environmentally friendly design and features the states first Flying Spoons restaurant.

• SATCHITANAND acquired the 160-room Cabot Lodge in Tallahassee, FL, from Prism Hotels & Resorts and its affiliate, Hospitality Receiver.

INTERNATIONAL: SOL MELIÁ, REZIDOR

• SOL MELIÁ will add its first hotel in the United Arab Emirates, the 167-room Meliá Dubai, when it opens at the beginning of next year.

• REZIDOR HOTEL GROUP signed a deal with Linstow, a Norwegian real estate developer, to manage 10 Reval branded hotels in Latvia, Estonia, Lithuania and Russia.

Six of the hotels will be rebranded to Radisson Blu and the rest will become Park Inn hotels. The hotels add 2,367 rooms to Rezidor’s portfolio.

SHORT AND TO THE POINT

HOTELS: REGAL HOTELS INTERNATIONAL/EVERGREEN

• REGAL HOTELS INTERNATIONAL/EVERGREEN. Evergreen International has joined Regal’s Regal Circle of Alliance program that links independent hotels to share resources.

SERVICES & SUPPLIERS: PROJECT INTERACTIVE, FLIP.TO

• PROJECT INTERACTIVE, a digital marketing service for independent hotels created by Open Hospitality co-founder Brian Dass, has been launched with headquarters in London and satellite offices in New York, Barcelona, and eventually Singapore.

• FLIP.TO has launched a pull marketing service that uses social networking sites, such as Facebook and Twitter, as a branding tool for the hospitality industry.

ALL AROUND THE WORLD

USA: NY

• NEW YORK. Illegal hotels are causing problems for the Big Apple, the New York Daily News reported.

The hotels operate without licenses and often market to backpackers and international students. Many of the hotels do not pay the 5.8 percent hotel tax.

The state is waiting to amend a law that will tighten regulation on the hotels after a court ruling last year found the law banning them too vague.

The city temporarily shut down about a dozen hotels, but some merely pay the fines and continue renting rooms, the newspaper said.

INTERNATIONAL: THAILAND

• THAILAND. It’s been two weeks since violence ceased on the streets of Bangkok, and so far, the United States, Britain and other countries have either gotten rid of or eased travel warnings to the country.

It is estimated $1.9 billion to $2.2 billion has been lost in tourism revenue and it could take up to four years for room rates to get back to where they were prior to the protests.

Some tourism groups are asking hotels to offer promotional deals to draw visitors, but the Thai Chapter of the Pan Asian Tourism Association has criticized the idea.

PEOPLE ON THE MOVE

• GAITHERSBURG MARRIOTT WASHINGTONIAN CENTER hired Andrew Gould as executive chef at its Waterside restaurant. Gould was executive sous chef at Baltimore Marriott Waterfront Hotel.

• CARLSON HOTELS hired Federic Deschamps as vice president of global revenue optimization globally and for the Americas.

In his role, DesChamps will be in charge of pricing strategies, demand forecasting, program development and hotel revenue optimization.

Deschamps has held roles in revenue management, international marketing and sales as well as finance and administration.

• JONES LANG LASALLE. Al Calhoun will be managing director of the firm’s national select service division.

Calhoun was brought on board to expand client service capabilities in the mid-tier hotel sector.

Calhoun cofounded the advisory group ThomsonCalhounFair, which was bought by LaSalle in 2005.

• INTERSTATE HOTELS & RESORTS promoted Sean McCurdy to vice president, strategic accounts and global sales after serving as global director of worldwide sales.

HOTEL PROMOS

• AMERICA’S BEST is launching a Best Rest rewards program that offers one free night for every nine stays at any of their 300 franchised properties, which include America’s Best Inns & Suites, Budgetel Inns & Suites, Country Hearth Inns & Suites, Vagabond Inns & Suites, and the upscale 3 Palms brand.

ET AL

INVESTOR EVENTS:

WEBCASTS AND PRESENTATIONS:

• GOLDMAN SACHS LODGING, GAMING, RESTAURANT & LEISURE CONFERENCE: June 8. http://www.gs.com/events/lgrl2010/attendee

- PRESENTATION. 12 noon ET. Case Study - Global Growth Opportunities

- Marriot International. 12 noon. www.marriot.com/investor

- Wyndham Worldwide. 1:00 pm ET.

- Interval Leisure Group. 2:00 pm ET.

- Choice Hotels. 2:45 pm ET

CONFERENCE CALLS AND WEBCASTS:

• HOSPITALITY PROPERTIES. June 9, 11 am ET. Via webcast at www.hptreit.com

• VAIL RESORTS. June 9, 11 am ET. Phone: 1-480-629-9724 and via webcast at www.vailresorts.com. Replay available through June 16 at 1-303-590-3030; pass code 4304093 and archived on the website.

CONFERENCE CALLS AND WEBCAST REPLAYS:

• AGILSYS. Replay archived at www.agilysys.com

• GAYLORD ENTERTAINMENT. Replay archived at http://ir.gaylordentertainment.com

CONTACT US:

Morning Report Research Inc.

Fantini Research and Fantini's Lodging/Resort Report

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Frank Fantini, editor and publisher. FFantini@FantiniResearch.com

Dee Wild, associate editor. DWild@FantiniResearch.com

Laura Briggs, coordinating editor. LBriggs@FantiniResearch.com

Simona Gallegos, writer. SGallegos@FantiniResearch.com

Katie Kazimir, writer. KKazimir@FantiniResearch.com

Matt Bellia, senior researcher. MBellia@FantiniResearch.com

Amanda McCandless, office assistant. AMcCandless@FantiniResearch.com

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