Posted on: Friday, July 11, 2003

Tourism rebounding in Asia

By Linus Chua
Bloomberg News Service

HONG KONG — Free Swedish massages, Rolls-Royce rides and dining vouchers are helping to refill hotel rooms in Asia, prompting investors to buy stocks such as Marriott International Inc. and Starwood Hotels & Resorts Worldwide Inc.

Hotels from Hong Kong to Singapore and Indonesia are offering incentives to bring customers back after the Bali bomb attack in October, the Iraq war in March and SARS virus outbreaks in April and May prompted companies and tourists to cut travel, causing Asia's worst tourism slump and emptying hotel rooms.

Since the war ended and SARS subsided, hotel occupancy in Hong Kong has risen to about 40 percent from less than 10 percent in April, according to the city's hotels association.

Hotel stocks have surged.

"There's no question earnings are going to be hit this year, but the market looks ahead six months, if not a year, and you want to be buying these things when they're down," said Mark Mobius, managing director of Templeton Asset Management Ltd.

Morgan Stanley Capital International Inc.'s World/-Hotels, Restaurants & Lei-sure Index has gained almost a third since the end of March. Shares of Marriott, the largest U.S. hotel company, have risen by a fifth since the start of the year to a 13-month high. Starwood, which owns the Sheraton and Westin chains, is up more than a quarter.

Hong Kong's Peninsula hotel, the city's most expensive by room rates, offered local residents a two-night package for $378 that includes a free Rolls-Royce ride and dinner for two. UBS Warburg estimates the package to be worth $1,667.

The Pan Pacific hotel in Singapore offered guests packages priced at $125 a night that include free Swedish massages, dining vouchers and a room upgrade.

Some "hotels have not brought the room rates down but offered other packages," said Ong Choon Fah, head of research at DTZ Debenham Tie Leung, a real-estate consultant and broker of properties. "Once you lower the rates, it's harder to raise them again."

Most of the guests that have begun to return to the region's hotels are business travelers, hotel managers said.

"Business travelers who shelved travel plans are coming back in full force," said Aveline Chan, who helps manage $600 million in Asia for Commerzbank Asset Management Asia Ltd.

John Mims, Asia-Pacific vice president of sales and marketing for Starwood, said occupancy in Bali, Indonesia, has risen to as high as 60 percent from as low as 10 percent after the bomb attack, while in Thailand the Westin Bangkok is full again.

"Companies are saying they're ready to rebook," Mims said. "People have to get on with business — they've been delaying trips, but you can only postpone a meeting for so long."

Hong Kong's Hotels Association, which represents 79 hotels in the city, also predicts the recovery will gather momentum.