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					       The Great Potential of Pacific Travel & Tourism

                     Remarks by Richard R. Kelley
                  Island Business Opportunities 2009
                             April 6, 2009

Good morning and Aloha!

I am truly honored to be with you today to discuss two of my

favorite topics: Tourism and the Pacific Islands.

In my 75 years on earth I have learned a couple of things about

both of these.

                          ---------------------

To give you a bit of an idea about where I am coming from, I

would like to start by sharing a few personal memories.

I was born here in Honolulu in 1933 during the Great Depression.

My mother was a secretary.

My father was an architect.

                          ---------------------

(Slide: RRK & ELK by lily pond)

Our first family home was a bungalow with a little lily pond in the

front patio. It was located just two blocks from here.

                          ---------------------
(Slide: 2270 Kuhio Ave. Building)

Around 1940, we moved into a new home across the street.

My father had his office on the ground floor and our family lived

upstairs.

                         ---------------------

(Slide: Pearl Harbor bombing)

On December 7, 1941, we stood on the third-floor lanai of that

home and watched the bombing of Pearl Harbor. I can still

remember seeing the planes dive towards the huge cloud of

smoke rising into the sky.

When a stray bomb or anti-aircraft shell blew up the intersection

just two blocks away and shrapnel fell onto our lanai, we ran for

shelter and found it behind some old steamer trunks located in a

basement across the street.

                         ---------------------




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(Slide: Islander Hotel @ 351 Seaside Ave.)

When the war was over, my parents built this five-story walk-up

hotel, The Islander, just off Kalakaua Avenue.

My sisters and I learned the basics of the hospitality industry

there by helping with the laundry and serving a breakfast of

sliced pineapple, rolls and coffee to guests sitting under the

umbrella on the lanai.

Rooms were about $7.50 a night.

Sometimes, I was given a 25- or 50-cent tip when I hauled guest

luggage to the upper floors.

                         ---------------------

(Slide: RRK at OWK front desk)

Some 25 years later, in 1970, after following my dream of

becoming a physician, I found myself back in the hospitality

industry in Hawaii.

I also became interested in Travel & Tourism beyond Hawaii.

                         ---------------------




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(Slide: Air Mike aircraft)

A friend told me that Continental Airlines had recently

established Air Micronesia to serve many of the Pacific Islands

and was building hotels at some of its destinations.

It was like the Union Pacific Railroad building the Sun Valley

Resort or Matson Navigation building the Royal Hawaiian Hotel.

The theory was that available hotel beds would generate

demand for railway passenger cars, steamship cabins and

airline seats –– and vice versa.

It was not easy, as you know.

I admire those travel industry pioneers.

On the hotel side, Continental had difficulty attracting

experienced managers for these “off the beaten path” hotels.

Keeping the managers was even more challenging.

Legend has it that when one new manager arrived at Truk,

now called Chuuk, he quickly toured the town and the hotel and

hopped back on the plane that brought him before it took off

again.

                             ---------------------




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Things got better when Continental Hotels hired a part-Hawaiian

hotelier named Bill Charlock, who had managed a number of

properties here in Hawaii.

He had both the skills and cultural sensitivities needed for

Continental‟s hotels in Truk, Guam, Saipan and Palau.

When Bill invited me to bring my family for a visit to his

properties, I jumped at the chance.

I used a pool in one of our Waikiki hotels to give my kids scuba

lessons, and when summer vacations came, we began the first

of a number of trips to many Pacific islands over the next

decade.

                          ---------------------

(Slide: Continental Hotel Truk)

Our first stop was the Continental Hotel in Truk.

It was a magnificent experience.

                          ---------------------

(Slide: Kathy diving under deck gun)

In Truk Lagoon we dove on the World War II wrecks with the

legendary Kimiuo Aisek, owner of the Blue Lagoon Dive Shop

                          ---------------------



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(Slide: Kathy in seat)

My daughter Kathy sat in the cockpit of a Japanese Zero some

60 feet deep.

                          ---------------------

(Slide: Bitsy & bullet)

While snorkeling on Saipan, my daughter Bitsy found some

bullets left over from the war.

                          ---------------------

(Slide: Palau family photo)

On Palau we floated with the tides surrounded by unbelievable

schools of fish.

We had many other great experiences when we visited the

Solomon Islands and the many islands off New Guinea.

                          ---------------------

Even in those days, I could see the potential for the development

of Travel & Tourism in these areas, and I was delighted when

several decades later, our company was able to help realize that

opportunity and manage hotels on some of the same islands.

                              ---------------




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(Slide: Travel & Tourism logo)

What I have learned from over 60 years in business is that, done

in the right way, travel is one of the best ways to bring economic

development and job opportunities to an area.

                           ---------------------

(Slide: SIC Categories)

The full economic benefits of Travel & Tourism are often

overlooked.

That may be related to the fact that when economists first set up

the Standard Industrial Codes, no code was established for

Travel & Tourism.

The economic activity generated by Travel & Tourism is

scattered across many S.I.C. categories. For most people it is

lost … not counted, not considered … at best, a footnote.

So Travel & Tourism was off the radar screen for a long time.

                           ---------------------

(Slide: Rodney D. photo)

To paraphrase comedian Rodney Dangerfield,

“We got no respect!”

                           ---------------------



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(Slide: Iceberg)

The economics of Travel & Tourism remind me of an iceberg.

On the surface, you can see a certain amount of activity, such as

people arriving at the airport or on cruise ships. However, there

is an unbelievable amount of economic activity going on behind

the scenes that are needed to keep a visitor housed, fed and

entertained.

                            ----------------

(Slide: Satellite Accounting graphic)

More recently, the World Travel & Tourism Council, Oxford

Economics and top international economists have developed

and improved the concept of Satellite Accounting that

aggregates the true and total economic impact of Travel &

Tourism.

(Slide: World T&T Impact)

Satellite Accounting has become the recognized standard by

which the economics of Travel & Tourism are evaluated.

Worldwide, Travel & Tourism represent about 10 percent of all

GDP and over 8 percent of all employment.




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In the some of the islands represented in this room Travel &

Tourism is far more important to the economy.

                          ---------------------

(Slide: Hawaii T&T Econ. Impact)

In Hawaii, we have commissioned several Satellite economic

studies of Travel & Tourism. They all found that the industry

accounts for at least 25 percent of Hawaii‟s GDP and one job out

of every three in these islands.

That is a huge impact, an enormous benefit to our state.

                          ---------------------

(Slide: USVI Numbers)

It is even more so in the U.S. Virgin Islands where Travel &

Tourism is estimated to account for approximately 32 percent of

GDP and 37 percent of employment as of 2004.

                          ---------------------

(Slide: Oceania numbers)

Travel & Tourism in Oceania overall currently represents about

13 percent of the economy and 14 percent of the jobs.

                          ---------------------




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(Slide: Guam numbers)

It is more significant in Guam where Travel & Tourism

represents about 21 percent of GDP and about one job in every

three.

I great opportunities to improve on these figures in the future.

                          ---------------------

The huge impact of Travel & Tourism on our economies is why I

so often out speak out and beat the drum to remind everyone

who will listen that “Tourism Is Everybody‟s Business.”

                          ---------------------

Another benefit of Travel & Tourism is, contrary to popular

belief, the job opportunities in this industry are broad, going far

beyond entry level to advanced technology, top management

and much, much more.

                             -------------

It‟s also important to remember that the dollars earned from

Travel & Tourism are export dollars.

When people talk about exports, they generally visualize

manufacturing a product and shipping it overseas, as, for




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example, China does for so many things from TV sets to

clothing.

Few people understand that the Travel & Tourism industry is

also producing and selling an export.

We sell an experience to visitors around the world who bring in

new money that supports our local infrastructure, small

businesses, individual employees and, of course, significant tax

revenues.

                                ------------

(Slide: Fiji pool scene)

As I said earlier, I am very pleased that our company has been

able to expand in the Pacific and play a positive role in the future

of many of the places I love.

We have generally been successful because of our own island

tradition and our history of working well in a variety of cultures.

Basically, we have applied many of the same principles I grew

up with or learned in Hawaii from people like my parents and Bill

Charlock.

                             -------------

(Slide: Ke „Ano Wa‟a team)



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Our philosophy is first and foremost to honor the culture and

traditions of the area and not try to import a culture from another

country.

                         ---------------------

(Slide: Ke „Ano Wa‟a values)

We practice that here in Hawaii and have integrated Hawaiian

values into a hospitality program we call Ke „Ano Wa„a,

which roughly translates as “the Outrigger Way.”

Our employees have developed their own set of Island values

and ethics, which are communicated to all, practiced daily and

frequently reinforced through meetings, publications, rewards,

recognition and examples of leadership at all levels.

These values include Flawlessness, Equality, Sharing,

Hospitality, Respect for the environment of this Place, Family

and Love.

                         ---------------------

One of the ways these values are expressed is in the

encouragement given to employees to share what they know

and value about local culture and Hawaii‟s history with our

guests.



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There are several reasons for this, but one of them is that when

employees talk to guests about the place they call home, it

becomes not “just another beautiful island” – the world has

thousands of those – but a destination with a real personality.

We believe this makes a significant difference in the quality of

the guest experience.

                             ---------------------

(Slide: Guam pool)

In Guam, we have blended these “Outrigger Way” concepts with

Chamorro values in a program called Inafa`maolek ––

The Spirit of Hospitality.

So perhaps it should not be surprising that our Outrigger Guam

Resort was recently honored as the 2008 recipient of the All-Star

Award given by Guam Hotel & Restaurant Association.

                             ---------------------

(Slide: Bali Oc-E-An Resort)

In our Fiji and Bali resorts, a similar adaptation to the local

values of those cultures has been equally rewarding.

                             ---------------------

(Slide: O. Serenity building)



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Our newest property, Outrigger Serenity Terraces, opened in

Phuket, Thailand, just four days ago.

                            ---------------------

(Slide: O. Serenity team)

I can‟t wait to visit there and meet our staff personally.

They are fine people who have established their own set of

principles based on the Thai spirit and values of friendship

called Mittrapab.

                            ---------------------

(Slide: Mittrapab Values)

Their list includes Integrity, Proud, Teamwork, Respect and

Acceptance.

                            ---------------------

It effect, these are all “Human Values,” but each Pacific culture

has developed its distinctive adaptation, which is one of the

things that makes Travel & Tourism such a wonderful industry.

                            ---------------------




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(Slide: Fiji Chefs)

One more point –– one of the most exciting things about our

operations in the Pacific are the opportunities for many fine

young people to hone their skills and develop new ones, …..

and to advance in their careers.

This has happened in all of our Pacific properties.

For example, in Fiji, our chefs have developed some

extraordinary talents and are winning culinary competitions

thousands of miles from home.

                            ----------------

As I approach the end of my remarks, I would like to offer a few

words of advice rooted in my decades of hospitality experience.

As most of you know, developing a visitor industry is no easy

matter, particularly on islands scattered across the Pacific,

which are thousands of miles from major population centers.

                           ------------------

(Slide: Make the internal sale)

The first sale has to be the “Internal Sale.”

Local residents are an essential part of the process.




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If they are not “sold” on the benefits of the industry, issues will

sooner or later arise that will be hard to reverse.

The visitor industry has to be a partnership between the private

sector, labor and government.

As I pointed out earlier, relatively few truly understand the

economics of Travel & Tourism.

You will need an ongoing educational process.

Everyone who will be involved has to visualize the effort needed,

what will be required and the potential risks and rewards.

                               -------------

(Slide: Don‟t Discriminatorily Tax Visitors)

Here‟s another bit of advice – a red flag.

Don‟t discriminatorily tax visitors.

It‟s so easy to start down that path because visitors arrive and

depart but – it is easy to think – they don‟t vote.

                           ---------------------

(Slide: Don‟t Tax You . . .)

There‟s an old saying attributed to the Louisiana politician

Russell B. Long that goes something like this:

“Don‟t tax you. Don‟t tax me.



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Tax that fellow behind the tree!”

Visitors too often are seen as “That Fellow Behind The Tree.”

But visitors do vote.

Not at the ballot box, but with their pocketbooks and their feet.

Particularly in today‟s Internet world, information about high,

rip-off taxes directed at visitors is flashed around the globe in

milliseconds, and is then followed by blogs and articles in

dozens of travel websites that more and more visitors consult

when even thinking about spending their hard-earned dollars on

travel.

                          ---------------------

(Slide: Infrastructure)

There are a couple of final points I want to share with you.

Keep your Travel & Tourism infrastructure up to date.

Nothing turns a visitor off quicker than poor airport facilities,

antiquated local transportation equipment, dirty public

restrooms, unfriendly government officials and so on.

                          ---------------------

(Slide: Visitor Safety)

And never, ever forget that visitor safely is essential.



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If something does happen to a visitor, no matter whose fault it

is, be prepared to do everything you can to help.

That kind of Island Hospitality pays tremendous dividends.

                           ------------------

(Slide: No task etc.)

One final thought. There is a Hawaiian proverb that says,

“No task is too big when done together by all.”

This powerful message is more important now than ever.

Things are very difficult now, but I really believe that the future

for Travel & Tourism in the Pacific is very, very bright.

Many of you in this room will be the leaders who will accomplish

many important things in coming decades.

And, perhaps some day, one of you will be standing up here

speaking to the next generation.

Perhaps you will tell them about a guy who once gave a talk in

Honolulu about Pacific Tourism.

He said,

“By pulling together, we can accomplish anything we set our

minds to do.”

                          ---------------------



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(Slide: Tourism Is etc.)

And he closed by reminding us of the central point of his

speech, namely that . . . .

“In the Pacific, Tourism Is Everybody‟s Business.”




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