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ROOM for excitement

By Adèle Gautier

Friday 31st January 2003

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The five most exciting players in the hotel and accommodation sector are:

* Sky City Hotel, top-performing hotel in Auckland and investing $60 million in a new venture;

* Top Ten Holiday Parks, changing the nature of the holiday camps, yet preserving the unique Kiwi feel;

* Mitchell Corporation, managers of rapidly growing Mainstay Hotels and accommodation pass pioneers;

* Stonehurst Accommodation, achieving top occupancy rates in central Christchurch with an eclectic mix of accommodation; and

* Scenic Circle Hotels, opening up provincial New Zealand for tourists.

Why they rated

Sky City Hotel was the best-performing hotel in Auckland last year, for the third year. Its occupancy rate of 88% was up from 83% the year before, and hotel and conference revenues were up 9% to just under $19 million. The five-year-old hotel is in the middle of a three-year refurbishment. The Sky City complex won the Supreme Tourism Award in 2002.

The company is also building a hotel and convention centre across the road from the existing facility. The new hotel will be five-star and has a capital cost of $60 million. It is scheduled for completion in December and will increase bed numbers from 344 to 600.

Sky City general manager group marketing Heather Shotter says the company works hard to market across different groups. "We're always looking for new geographic markets, ensuring we don't rely on just one market," she says.

The company claims to have targeted the domestic leisure market ahead of all other large hotels and is unusual in that it advertises the hotel on TV. Sky City gives its sales managers responsibility for different geographic areas. Managers are based in New Zealand but spend much of their time travelling to their target market.

The excitement in Sky City is tied up in the brand, Ms Shotter says. "It's a hotel in the middle of an entertainment complex, there's so much that guests can do, and it's a huge advantage."

Sky City puts a high emphasis on service ­ all staff, not just the front-line, participate in a customer service incentive programme, and receive six-monthly bonuses if service levels, measured through face-to-face interviews with customers, are met.

Low-level resorts next

The stringent standards Top Ten Holiday Parks applies to members have turned the traditional, basic Kiwi motor camp into a high-quality holiday park ­ and the next step is low-level resorts.

Although the Top Ten brand has been around for more than 20 years, it only became a private franchise business six years ago. Under an unusual co-operative structure, each of Top Ten's 49 park owners has a one forty -ninth share of the management company, so each is franchisor as well as franchisee. This ensures park owners work together for the good of the group.

Setting up the new structure was not without pain. "We had to part company with three parks that weren't prepared to put the time and money into [attaining the standard] but we picked up 14 more members as a result," says group general manager Kevin Gough. "If I was doing it again, I would do it harder and faster."

Members had to agree to stay with the group for three years. "We knew it would take that long to get the benefit," Mr Gough says. "Although actually, it took less than two."

Top Ten was the first holiday park group to apply for Qualmark certification. "We've pushed the quality angle very hard," Mr Gough says. The organisation demands that each of its parks must be the best in its area and must be rated four stars by Qualmark.

Top Ten members have consistently topped the New Zealand Tourism Awards in their category for so long that the category has now been scrapped.

The parks offer a variety of accommodation from tent sites through to motel units. But Top Ten aims to retain the neighbourly Kiwi holiday feel. "It's the kind of low-key interaction you can only otherwise get at top-end B&Bs and lodges," Mr Gough says.

The group will do 2.6 million guest nights this year. "The next biggest wouldn't even do 1.5 million," Mr Gough says. Revenues are up 8% over last year.

Mr Gough says holiday parks are now heading toward low-level resort status. "We'll be at the forefront of that. We have a lot more potential yet ­ the next five years will be doubly exciting."

Go Kiwi pass

Mitchell Corporation is experiencing double-digit growth when many others are stagnating. Its strong performance is thanks to a synergistic business that combines the Mainstay hotel brand with an innovative distribution strategy ­ selling accommodation passes that offer flexibility to free independent travellers, yet encourages them to stay at Mainstay hotels (Mainstay is the marketing and management company for 42 independently owned three- or four-star hotels, mostly in the 50-100-room range).

Mitchell Corporation developed the Go Kiwi hotel and motel pass 15 years ago and the Golden Chain pass seven years ago. The passes are an important means of attracting independent travellers to the Mainstay Hotels. Mitchell Corporation's Go Koala pass, launched in Australia mid-2001, means the company is a one-stop shop for wholesalers, given many overseas travellers visiting New Zealand also take in Australia. Mainstay is looking at other opportunities in Australia.

Mitchell Corporation's distribution approach is unusual, in that it works with inbound operators and offshore wholesalers at the same time, general manager Anton Wilke says. The company's executives travel constantly, spending hundreds of thousands of dollars each year visiting their target markets. Mitchell Corporation has invested heavily in an in-house, advanced on-line reservations system for wholesalers.

The company has had double-digit growth year on year for the past three years. Mainstay Hotels have gained share in the group series market, and the pass business has gained between 5-10% market share in some markets, such as the UK, in the past 12 months.

Envy of the industry

Stonehurst Accommodation has achieved occupancy rates that are the envy of the industry. Its emphasis on planning, marketing and targeting new markets has seen its central Christchurch mixed-range accommodation thrive.

Stonehurst mixes backpackers with superior accommodation. Its 91 rooms range in tariff from $20 per night in a backpacker dormitory to $240 a night for a three-bedroom apartment. With 1ha of land and a swimming pool, it is unique as a city-centre operation. Stonehurst has an on-site grocery store and there are fridges in all rooms, including dormitories.

"We have taken backpackers' accommodation to a new level of quality, in the types of room and the services we offer, such as travel bookings," owner Russell Glynn says.

The company is active in taking the backpackers' concept to a new generation ­ the over-50s. "We advertise in Older & Bolder and spend a lot of money in that area," Mr Glynn says.

The Glynns invest heavily in marketing, taking full-page ads in relevant media. They have prepared a manual for travel agents and wholesalers, something they claim no other independent operator does. Stonehurst has developed strong links with youth travel agencies in Australia, thanks to its "starter pack" product, which gives travellers the security of an airport pick-up, their first night's accommodation, a one-day tour and somewhere to store their bags. Stonehurst is now the preferred supplier for some Australian operators.

Stonehurst's backpackers' accommodation has a 4.5 star Qualmark rating. It achieved a four-star rating for its motel units but asked to be awarded only three and a half, so it could exceed customer expectations.

Stonehurst Accommodation won the backpackers category of the Tourism Awards in 2001-02 and 2002-03. Its occupancy rate since last April has been 91% and the company employs 26 full-time equivalents.

Stonehurst has lodged plans to expand from 265 beds to more than 400 across the whole mix of accommodation and is awaiting consent.

Appealing to wholesalers

Scenic Circle Hotels has helped open up provincial areas such as the West Coast and Napier to tourism by providing accommodation that is appealing to wholesalers. The hotel group comprises 17 properties in the two-and-a-half to four-star market. The company owns eight hotels and manages the other nine. In the past few months, it has bought hotels in the Bay of Islands and Blenheim. Coromandel is the next target region and the company has also identified a need for a hotel in Kaikoura.

Managing director Brendan Taylor attributes much of the group's success to the efforts it makes with its people. Hotel managers are chosen on the basis of best fit for a hotel's clientele and are encouraged to stamp their own personality on the business.

As a New Zealand company, Scenic Circle has had the consistency of personnel and style to establish strong relationships with wholesalers, building an atmosphere of trust and loyalty, Mr Taylor says.

Scenic Circle is increasingly emphasising the free independent traveller (FIT) sector and the company would like to expand into Australia. Before September 11 and, more importantly, the demise of Ansett, revenues were growing at 20% per annum. This year, they are expected to grow 10%.

Lessons learned

Innovation ­ Sky City is investing heavily in a new hotel and conference centre and its innovative customer satisfaction programmes involve the entire staff. Mitchell Corporation is tackling the Australian market with its Go Koala pass with the aim of offering wholesalers a one-stop shop. Top Ten Holiday Parks has led the way in raising standards for holiday parks and Stonehurst Accommodation has done the same for backpackers' accommodation.

Creating networks ­ Top Ten Holiday Parks has created a national network of parks based on stringent standards, with all park owners having a stake in the future of the chain. Mitchell Corporation's accommodation passes allow the company to reach independent travellers through wholesalers around the world and the company invests heavily in visiting its target markets. Stonehurst Accommodation has developed a manual for travel agents and wholesalers, unusual for an independent provider. Scenic Circle's long-term relationships with wholesalers have built a level of trust that has enabled the company to establish successful hotels in the provinces.

Growth ­ the top performers are setting their sights on expansion. Sky City is building a new five-star hotel and conference facility, Stonehurst Accommodation has applied for consents for a big expansion of its property, Scenic Circle Hotels is continuing to acquire new properties and Mitchell Corporation has extended its accommodation passes to Australia.

Industry growth ­ One of the key reasons Sky City was rated so highly by its peers was its commitment to building an international-class conference facility. It believes it will attract significant, new, high-value tourism business to New Zealand, benefiting other hoteliers as well. Top Ten Holiday Parks also scored highly. By driving up the standard of the lower end of the market, the campground, it is seen to be increasing quality for a large segment of the industry.

Short-listed companies for this month's survey include: Terrace Downs High Country Resort, Accor Hotels, Ridges, Blanket Bay Lodge, Tussock & Beech Ecotours, Heritage & Character Inns, Anchor Inn, Mirvac Hotels, Royal Hotel, Trekkers, Four Canoes Hotel, Wharekauhau Lodge, Treetops Lodge, The George, CDL Hotels .

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