News | 5 Things to Know: 2 July 2012

Fueled by steady economic growth exceeding 6% annually, the rise of Indonesia’s middle class and its impact on the hotel landscape were prominent themes at Travel Trends’ No Vacancy conference in Bangkok last week, writes HotelNewsNow.com correspondent Susan Cunningham.

Of the 248 million people in Indonesia, 50 million, or approximately 20%, are middle class, said Sonia Kapoor, client service director for Nielsen Singapore. That group has between $4 and $20 each day to save or spend on leisure activities and will comprise 50% of the population by 2030, she said.

The number of new hotels being built or in the pipeline is unknown. The breakdown of travelers is also hazy, but Scott Blume, group CEO of PT Raja Kumar International, provided an estimate: “At least 25% is probably business travel and the travelers are staying in the 3- to 3-and-a-half-star range hotels. That’s 400,000 to 500,000 rupiah, or about $40.”

The likelihood of a buyout of Red Lion Hotels Corporation remains unlikely in the near-term, according to a research note from Baird Equity Research. The hotel company, whose board announced it was pursuing “strategic alternatives” in March to maximize shareholder value, will not generate significant buyer interest at a value near the current share price. Shares have outperformed the S&P by nearly 11% since the announcement.

Also hindering Red Lion’s appeal on the acquisitions market is the company’s slow progress in its sale of non-core assets and franchise unit growth. “Though management has suggested that buyer interest remains positive on the disposition front, we believe potential buyers are cognizant of the costs and constrained by the lack of attractively priced debt to finance the purchase of assets in secondary markets that are not branded with a major flag,” the note says.

With financing parameters still tight and a dearth of new supply entering the market, finding funding to expand smaller boutique brands can be a daunting task. But the leaders behind some of the segment’s most innovative brands are applying that same creative thinking to fuel expansion, writes HotelNewsNow.com’s Samantha Worgull.

It starts with having a good story to share, said Craig Greenberg, president of 21c Museum Hotels. “We have to spend a lot more time telling our story and educating them about what 21c is and who is behind it and what our performance has been like.”

Boutique brands also employ flexibility in their debt stacks, including funding from private equity, government funding, conventional loans, the EB-5 visa program, fractional sales and co-ops.

Are all channels created equal? Attendees during a workshop at HSMAI’s Revenue Optimization Conference had mixed reviews as they discussed the following five discount models: Backbid, Guestmob, Tingo, Hall St. and Traveltipping.

Guestmob, a semi-opaque channel that allows consumers to buy a rate for undisclosed properties within given “collections,” received the highest marks from attendees. But others, including Backbid, which allows hoteliers to make competing bids for travelers’ business, and Tingo, which automatically rebooks a room in the event that its rate drops, drew ire for their focus on discounts as the key differentiator among room types.

For the first time in five years, the U.S. Independence Day holiday falls on a Wednesday this year, leaving travelers unsure when to celebrate and worrying those who make a living off tourists, reports The Huffington Post.

"The midweek holiday seems to have travelers confused," said Anthony Del Gaudio, VP of hotel sales for Loews Hotels, which isn't seeing the normal July Fourth spike in bookings.

Those who sell vacations say this year's calendar gives Americans more options: Tack on Saturday through Tuesday or Thursday through Sunday to the holiday, or just take the entire week off. But consumers' confidence has been waning. Now, some aren't happy about having to burn an extra vacation day or two to get that long weekend. From 2008 through 2011, the work holiday fell on either Friday or Monday, so employees and their families got an automatic three-day weekend, similar to Memorial Day and Labor Day.

Compiled by Patrick Mayock.