 |
 |
 |
 |
|
 |
 |
seasonality, particularly in South Island. Local capital markets were recovering from the
problems of the late 1980s. The New Zealand authorities had recently introduced
concessions for hotel investors which would provide up to a million dollars interest free
over a 15 year period.
Philippines. The Philippines had one of the most rapid tourist visitor growths in the Pacific
with a year on year growth of 17 per cent from 1987 to the early 1990s. Occupancy rates
in central Manila had risen to over 80 per cent by the end of the decade. An additional
5000 hotel rooms were planned in the capital or in nearby tourist resort complexes. As part
of the economic liberalisation, the percentage of local ownership had been reduced, and
foreign exchange transfer problems reduced. The Philippines authorities had recently
announced a government subsidy of up to 60 per cent of hotel construction costs,
providing the external investor was prepared to commit to a 10 year investment.
Singapore. By the end of the 1980s Singapore hotels had seen the problems of the middle
of the decade replaced by growth in visitor numbers (up to around 4 million), and a steady
improvement in occupancy and room rates. The opening of the new Changi Airport was
likely to support this steady improvement, though the planned opening of another 3000
hotel rooms during the early part of the decade might cause problems for room rates. The
continuing economic progress of Singapore had meant currency stability, low interest
rates, and a strong local capital market. There were no restrictions on overseas ownership
or on the transfer of foreign exchange.
Thailand. Thailand had one of the most rapidly growing economies in the area, though
political and currency instability had created problems in the late 1980s. The Phuket
complex was one of the most successful tourist ventures in the entire Pacific Rim. It was
expected that tourist numbers would continue to grow at a rate of 15 per cent per annum,
even though the climate created some fluctuation in demand during the summer. The
government had moved to reduce the local investment requirement and to liberalise the
foreign exchange controls, though there remained barriers in both areas. The local capital
market was growing rapidly.
Vietnam. Economic growth in Vietnam was likely to substantially increase the number of
visitors to the market, especially when US trade barriers were finally removed. At present
the hotels had high occupancy and good room rates, with a mainly business clientele.
Local shareholding restrictions and foreign exchange barriers both existed, and there was
access to local capital.
Market opportunities
The board of Freemantle had identified a number of options for the future development of
the group.
Cost centre investment. The three areas that the company had identified as possible
investments consisted of energy management, administration, and promotion, three areas
in which Freemantle had higher costs than the competition. Energy costs could be reduced
by 50 per cent with the introduction of sophisticated room controls which would reduce air
conditioning costs, and a central system which would involve a heat pump system
integrating heat and power. This would cost around $250,000 per hotel. The higher
administration costs were largely a result of the hotel transport system. Installing a bus by
demand telephone network, could reduce administration costs by 20 per cent. The
estimated cost for such a system would be $300,000 for the entire hotel network. Another
alternative was to subcontract the bus service. This would reduce administrative costs by
 |