The Future, Explores the Explosive Growth and Implications of E-Commerce and E-Business in the International Lodging Industry

NEW YORK --June 4, 2001-- Findings Indicate That Despite High General Levels of Connectivity in the Hospitality Industry, Only 58 Percent of Hotel Organizations Surveyed Have a Formal E-Business Strategy; Asia Pacific Leads EMEIA and the Americas in E-Business Strategy Development

Arthur Andersen Sales and marketing functions, including virtual property tours, loyalty programs, guest history and sales force automation will be among the most significant web-enablement initiatives implemented by the hospitality industry in the coming years, according to a major international study released today by Andersen, the New York University School of Continuing and Professional Studies, Preston Robert Tisch Center for Hospitality, Tourism and Travel Administration, and Hospitality Financial and Technology Professionals (HFTP).

The study, Hospitality eBusiness; The Future, also indicates that data warehousing, yield management, procurement, executive information systems and reservations will also be aggressively implemented. With regard to the volume of reservations being taken online, survey respondents reported that their current 4.9 percent ratio of Internet-based reservations should more than triple to 15.4 percent over the next three years.

Remarks Roger Cline, a partner at Andersen and co-author of the study, One of the main attractions of online distribution for hospitality companies is the opportunity to reduce the high costs of distribution they have historically faced. These expenditures are typically related to travel agency commissions, GDS fees, switching costs and the costs of their multi-faceted distribution systems. Twenty-seven percent of hospitality company executives surveyed estimated that their costs will decline by up to ten percent, and 23 percent suggested this decline might range from 11 to 20 percent.

Fifth in a series of global studies sponsored by Andersen, the New York University School of Continuing and Professional Studies, Preston Robert Tisch Center for Hospitality, Tourism and Travel Administration and HFTP, Hospitality eBusiness: The Future, examines some of the critical issues the hospitality industry will face in this new millennium. The research methodology consisted of a broad-ranging review of literature and a survey of hospitality executives from Europe, the Middle East, India, Africa (EMEIA), the Americas and Asia/Pacific. Following is an overview of other findings.

-- While the hospitality industry has historically been a comparatively slow adopter of the new and innovative, it is actively embracing two key areas of e-business: e-distribution and e-procurement.

-- The types of intranet platform used in the hospitality industry vary. Those that provide connectivity within hotels are reported by 59 percent of respondents; intranets that enable connectivity between hotels are reported by 44 percent; intranets that establish connectivity between hotels and a corporate office are used by 73 percent.

-- Approximately one third of hospitality organizations have an extranet that connects their organization to other businesses, such as suppliers or customers. Predictably, the ratio tends to be higher in larger organizations (42 percent) than in smaller ones (26 percent).

-- Only 58 percent of hotels surveyed have a formal e-business strategy. Of these companies, larger organizations report a higher incidence (69 percent) than do smaller ones (51 percent). From a geographic perspective, Asia/Pacific is much more proactively planning its e-business future. More than 70 percent of respondents in Asia/Pacific indicated that they have e-business strategies, followed by 66 percent in EMEIA and 55 percent in the Americas.

-- By function, sales and marketing lead the way in terms of the degree of integration into the e-business environment, followed by distribution, recruitment and procurement.

-- Seeking to access customers through the Internet, one-third of respondents reported both current and planned e-distribution relationships with portals such as AOL, Yahoo and Amazon. As to the effectiveness of these arrangements, both large and small organizations report a slightly higher than average effectiveness ratio.

Concludes Dr. Mark Warner, director for graduate programs, New York University School of Continuing and Professional Studies, Preston Robert Tisch Center for Hospitality, Tourism and Travel Administration, This study, as with the other Hospitality 2000 series reports, serves as milestone research to industry providing the current and future strategic view of hospitality e-business. We at the Tisch Center, believe that the areas of the evolving New Economy, e-distribution, e-procurement and e-knowledge are so important to our industry that we have added an entire four-course concentration on Hospitality e-commerce to our graduate hospitality program beginning Fall 2001.

Andersen is a global leader in professional services. It provides integrated solutions that draw on diverse and deep competencies in consulting, assurance, tax, corporate finance, and in some countries, legal services. Andersen employs 85,000 people in 84 countries. Andersen is frequently rated among the best places to work by leading publications around the world. It is also consistently ranked first in client satisfaction in independent surveys. Andersen has enjoyed uninterrupted growth since its founding in 1913. Its 2000 revenues totaled US$8.4 billion.

The Preston Robert Tisch Center for Hospitality, Tourism and Travel Administration is an academic unit within the School of Continuing and Professional Studies at New York University. Established in response to the need for higher education and training in the emerging professions of hotel management and tourism administration, the Tisch Center offers a comprehensive complement of undergraduate and graduate programs, including a two bachelor degrees and four masters degrees (two on-site and two online).

As the authoritative information source for hospitality finance and technology information, HFTP is the professional association for financial and IT personnel in the hospitality industry. The association provides continuing education and networking opportunities to more than 4,000 professionals around the world. In addition to producing the annual Hospitality Industry Technology Exposition and Conference (HITEC), HFTP also administers the examination and awards the certification for the Certified Hospitality Accountant Executive (CHAE) and the Certified Hospitality Technology Professional (CHTP) designations. HFTP was founded in 1952 as the National Association of Hospitality Accountants.

CONTACT: Arthur Andersen
Gina Marie Gralnik, 619/699-6940
Anvernette Hanna, 212/998-7073

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