Volume 221, Number 1 A QUESTEX PUBLICATION

HotelThe Leading Newsmagazine of the Hospitality Industry since 1875 www.HotelMotel.com / hmm@questex.com

Global Hyatt ups its anteCompany banks onvertical integrationto bolster portfolio

By Jeff HigleyEDITOR-IN-CHIEF

O (K Ac;()— A year after launchingits vertical-integration strategy,(ilobai Hyatt Cxirp. has scratchedits way onto the roster of giants inthe lodging industry.

Wirh the addirion of the HyattPlace Itornierly AnieriSuircsl andSiinimerfield Suites brand to itsportfolio, Glolxil Hyatt's reach ex-tends from luxury and upscaleproperties (Hyatt Hotels) to high-end limited-service hotels (Hyatt

Please turn to page 58

Global Hyatt portfolio

Properties °/o of portfolio Guestrooms % of portfolio

Hyatt (Americas)

Hyatt (Asia Pacific)

Hyatt (Europe, Africa& Middle East)

Hyatt Place*

Microtel Inns

Hawthorn Suites

Summerfield Suites

129 172

53 71

31 4.1

146 19.5

259 34.6

98 13.1

21 2.8

62,559

20,605

9,179

18,038

18,623

9,317

2.982**

44.0

14.5

6.5

12.7

13.1

6.6

2.1

Timeshare

TOTAL 142,033

'formerly AmeriSuites, "estimate based on H&MM research

Source: Global Hyatt Corp., H&MM research

Chicago-based entityflush with brandsafter Summerfield deal

By Jeff HigleyEDITOR-IN-CHIEF

CuiCACd—Giobai Hyatt Corp.'slatest acquisition solidifies its strat-egy to become a multisegmentedlodging company.

'1 he Chicago-based companyin hue November acquired theSummerfield Suites extended-staybrand h'om partnerships betweeniiffiliates ofrhc Blackstone Croup,Cencom Group and LehmanBrothers. The deal, which was ex-pected to close Jan. 5, includes

Please turn to page 58

Hilton buys HiltonU.S., international companies reunite after 40 years

The combined Hilton Hotels Corp. and

Hilton Group portfolio will comprise 2,800

t)otels, including the Hilton Sao Paulo

(Brazil) Morumbi.

By Jeff HigleyEDITOR-IN-CHIEF

BEVERLY HIELS. CAEIR AND

LONDON—Hilton HotelsCxjrp.'s pending S5.7-billion ac-quisition of the lodging assets ofHilton Group pic opens newfrontiers for what the companycalls its select-service brands.

The deal, which was an-nounced Dec. 29 and is expect-ed to close during the first quar-ter of 2006, will allow brands-uch as Hampton Inn, HiltonGarden Inn, Homewood Suitesand Embassy Suites to seek de-velopment projects overse;is forthe first time, according to ex-ecutives who participated in aconference aill held ;ifter the ;in-nouncement of the deal.

"... Aside from bringing theHilton company together, that's

Please turn to page 54

Deal to help Host hoisthroader range of flagsBy Heather GunterASSOCIATE EDITOR

BETHESDA, M D . AND WHITE

Plj\lNS, N.Y.—A $4.1-billiontransaction with Host MarriottCorp. will forward Starwotxi Ho-tels & Resorts Worldwides ttans-formation from a real-estate com-pany with several hotel brands toa company with an emphasis on

branding lifestyle hotels.In a defmitivc agreement be-

tween the companies. Host Mar-riott will acquire 38 propertiesfrom Starwood, comprising18,964 guestrooms, which Star-wood will continue to tnanagefor up to 40 years.

Following the close of the deal.Please turn to page 56

January 9, 20Q6

NEW CONTACT INFO• HOTEL & MOTEL

MANAGEMENT'S and HOTEL

DESIGN'S new mailing address

is 600 Superior Ave. East,Suite 1100, Cleveland OH44114. Our new toll-freephone number is (800) 669-1668, the main number is(216) 706-3700, and our newfax number is (216) 706-3711.

BREAKINGneWS• Choice Hotels Internation-al extended its employmentagreement with Charles A.Ledsinger Jr., president andc.e.c, for four years.Ledsinger's contract nowruns until December 2009.He joined Choice in 1998.

• Dieter Huckestein, chair-man and c.e.o. of ConradHotels and president of theHilton Global Alliance, bothof which are part of HiltonHotels Corp., is retiring after35 years with the company.The move will be effectiveearly this year. Huckestein'sduties with Conrad Hotelswill be assumed on an inter-im basis by Matthew J. Hart,Hilton's president and c.o.o.

• Jerry Herman, former pres-ident and c.e.o. of ArlingtonHospitality, and real-estateand hotel investors Williamand Robert Lipnick formedBJB Hotels LLC. It will own ,

develop and manage hotels.

• The average revenue peroccupied room that comesfrom a U.S. hotel's spa in-creased $6.14 percent in2004 to $40.09, accordingto a study conducted byspa consulting companyHealth Fitness Dynamics. A10,000-square-footto20,000-square-foot spa ex-perienced the largest in-crease, jumping $13.06,compared with increases of$1.29 for smaller spas and$6.93 for larger spas.

N e w s

HiltonContinued from page 1probably the hi^est opportunitywe see—taking Hampton Inn,Hilton Garden Inn, EmbassySuites ... and taking them to mar-kets we find partictilarly anractive,like India, perhaps China," saidMatthew Hart, president andc.o.o. of Hilton Hotels Corp.

Tom Keltner, executive v.p.and president of brand petfor-

H&MM January 9, 2006

mance and development, said de-termining wbicb areas best fitwhich brands will be the first sig-nificant step for the company.

"Once we figure out wbatareas and what brands, and there'sa lot of opportunities fot us, thenwe can figtire out wben we wantto m a n ^ , when we want to fian-chise, or are there some otherstructures that make sense inIcountries such as] India or Chinathat would allow us to grow[more] rapidly than just individ-

ual franchises but without com-mitting a lot of our capital," hesaid. "We're going to be open to alot of different things as long astbe brand still stands for some-thing and we control the qualityand maintain tbe performance."

The deal brings together acompany that was separated in1964 when founder Conrad N.Hilton spun off Hilton HotelsCorp.'s international business toshareholders. The business ulti-mately was acquired by Ladbroke

Grotip pic, wbich operated it as asubsidiary called Hilton Interna-tional, which is another name fotHilton Group.

The deal includes 40 corpo-rate-owned properties, 200 leasedhotels, 160 fee contracts and 80Living Well Health Clubs. HHCalso will acquire full ownership oftbe Hilton HHonors guest-loyal-ty program and Hilton Reserva-tions Worldwide—botb of whichhad been joint ventures betweentbe two entities before the deal.

Hospitalitij Air SolutionsCarrier

PTAC / Heat Pumps / Window Units / Mini-Splits Systems / Roof Top Units / Cooling Towers/ / Chillers / Automation Systems

New Construction- Hotels, Motels, Resorts, Strip Plazas, Dry Cleaning Plants, Office Buildings

Contact our experienced Heating & Air Conditioning consuitants.1-888-379-HVAC (4822) FAX: 1-688-343-4881

16500 Westgrove Dr. Addison, TX 75001www.SmartAirCentrai.com

•I AHfiCHllitil&LDiIgiiigHSIBGllllllll

HotelMotel.com

Tbe company's beadquarters willremain in Beverly Hills.

Once tbe deal is fmalized,Hilton Hotels Corp.'s portfoliowill include about 2,800 boteiscomprising 475,000 guestroomsin 80 countries. Tbe combined de-velopment pipeline of both com-panies comprises about 575 hotelscomprising 78,000 guestrooms.

"The strategy tbat Hilton In-ternationiJ bas been taking is sim-ilar to ours, and tbat is to empha-size the fee part ofthe btisiness,"Hart said. "They've been sellingsome of theit boteis and main-taining long-term managementcontracts much the same that wehave."

Bob La Forgia, HHCs seniorv.p. and c.f o., said tbe assets tbecompany is acquiring are strongperformers, particularly in theUnited Kingdom and Europe.

He also said the companywould be willing to pan with theownership of those assets.

"Part of our strategy is to lookfor opportunities to sell those as-sets at very good prices," La For-gia said. "[In 2005] we sold overa billion dollars of our domesticassets at exttemely good pricesand we hope to execute a similarstrategy internationally after weclose this transaction."

Moving onFollowing the completion of thedeal, which is subject to govern-mental clearance and the approvalof Hilton Group shareholders,Hilton International will be re-named 1-adbrokes pk. It will op-erate as a gambling and bettingbusiness.

The fmal acquisition pricecould cbange based on excbangerates at the time ofthe dosing.

Hart said the timing of rhedeal was perfect in several ways,including favorable financial mar-kets and low interest rates.

"One of tbe things tbat has al-ways beld us back is thar our in-vestor base never really consideredus to be a glohal company anddidn't have some opportunitiestbat others had," Hart said. "Now,with this deal, we have tbose."

Ian Carter, c.e.o. ot Hilton In-ternational, will become executivev.p. and ce.o. of HHCs interna-tional business.

The company wiil refer toCarter's international side ofthebusiness as Hilton Internationalbecause it will operate as a whol-ly owned subsidiary.

jhigley@(juestex. com

• Online For an extendedversion of this article, visit

www.HotelMotei.corrfs Online

Extra section.