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Hyatt Corporation v. Women's International Bowling Congress, Inc.: Hotel Room Attrition Issues

Toh, R. S., Foster, T. N. — Fri, 24 Jul 2009 11:03:46 PDT

Attrition clauses in hotel group sales agreements are potentially contentious issues for hotel operators and meeting planners. However, an analysis of the classic case of Hyatt Corporation v. Women’s International Bowling Congress, Inc. shows the pitfalls of a poorly drawn agreement. Based on that analysis, the most effective attrition clauses would, among other things, balance the competing needs of the hotel and its clients. Such an agreement would specify the cutoff times for cancellation of the room block and permit slippage of the block. It would also provide for liquidated damages for the loss of business to the hotel for rooms not picked up. While the agreement would allow the hotel to sell rooms not picked up, it would at the same time reduce the attrition charges by whatever profit the hotel realizes from those sales. Likewise, if the hotel shortcuts the block, damages would be reduced. Finally, the contract should address compensation to the group if the hotel must walk group members due to overbooking.

Macao's Casino Industry: Reinventing Las Vegas in Asia

Loi, K.-I., Kim, W. G. — Wed, 17 Jun 2009 14:32:20 PDT

Dubbed the "Las Vegas of the East," Macao is the only location in China with legalized gaming. Before the world economic recession, tourist arrivals, gaming revenue, and hotel room inventory were all rapidly increasing, and growth is expected to resume as the economy improves. Macao faces many concurrent challenges and opportunities, including a narrow market of high-rolling table-game players, an undue reliance on gaming revenues (rather than shopping and lodging), an arrival pattern concentrated in China and Hong Kong, a long-term labor shortage, and a need to adapt some of the Las Vegas–style management strategies without losing its distinctive identity as China’s gaming playground. This comprehensive analysis assesses ways that Macao can capitalize on its opportunitiesandovercomeitschallenges.Suggestions to hospitality policy makers include combining marketing efforts with Guangdong and Hong Kong, developing air traffic from long-haul and low-price carriers, easing traffic congestion with light rail and a new Pearl River bridge, and developing more training and education facilities, as well as inviting expatriate Macao citizens to return for employment.

Hotel Valuation in China: A Case Study of a State-Owned Hotel

Chen, M.-H., Kim, W. G. — Wed, 17 Jun 2009 14:32:20 PDT

This study applies the seven hotel-valuation techniques proposed by Rushmore to estimate the value of a state-owned hotel in China. The dearth of research on hotel real estate in China may be attributed to the fact that the historic data of hotel sales transactions is not available or difficult to obtain. Nevertheless, many international hotel investors are interested in China’s hotels because of its booming tourism business. This study analyzes the extent to which the seven generally accepted hotel valuation techniques might be appropriate for China, since those approaches rely on certain types of data and financial ratios that may not be readily available. Using a single hotel as a case study, the study found that each valuation technique has its own strengths and weaknesses. On balance, the income capitalization approach should work most reliably in China, while a sales comparison approach may be the least reliable technique.