Ray Cote’s textbook customers make this website possible. Author Raymond Cote provides this news website especially for hospitality educators, students, and professionals in hospitality accounting, management and operations.  Leading universities and colleges have adopted his published texts, which are: Basic Hotel and Restaurant Accounting Accounting for Hospitality Managers   BASIC HOTEL AND RESTAURANT ACCOUNTING is a hospitality principles and systems text; it also has several introductory managerial accounting chapters. Press the button at left of this page labeled Princples/System Text.     ACCOUNTING FOR HOSPITALITY MANAGERS is an advanced hospitality managerial accounting and financial management providing coverage for hotels, restaurants and casinos.  Press the button at left of this page labeled Managerial Acctg Text.     Websites of Interest What is this meal worth? What can you afford? Restaurant operators are telling diners to pay what they can afford or think a meal is worth. Here are two sites of interest. 1. http://www.twincities.com/ci_11977316?nclick_check=1 2. http://www.dallasnews.com/sharedcontent/dws/fea/lifetravel/stories/DN-pay_0323gd.ART.State.Edition1.3cbf8dd.html Three chefs discuss common restaurant mistakes. http://nymag.com/daily/food/2009/03/chef_roundtable_boulud_cardoz_and_carnora_remember_and_prognosticate.html Seedless tomatoes are available. http://www.post-gazette.com/pg/09071/954815-47.stm Ten Tips for Successful Restaurant Operations. http://www.chicagotribune.com/features/lifestyle/chi-0305-commandments-vettelmar05,0,5943482.story          UNITED STATES NEWS   MARK TO MARKET --- CURRENT NEWS ITEM The banking crisis in the United States has brought accounting into the news. You may have heard the term "Mark to Market" mentioned on numerous occasions and especially on financial/investment programs. This new accounting term is actually a renaming of another term "Fair Value Accounting". Mark-to-market or fair value accounting refers to the accounting standards for assigning a value to a position held in an asset or liability based on its current fair market price. NOTE: FAIR VALUE ACCOUNTING IS COVERED IN CHAPTER 20 OF ACCOUNTING FOR HOSPITALITY MANAGERS, A TEXT AUTHORED BY RAYMOND COTE, PUBLISHER OF THIS WEBSITE. Fair value accounting has been a part of US GAAP since the early 1990s. Investor advocates defend the application of fair value accounting, but the banking industry has appealed for a suspension or modification of the rule. Critics claim the rule is harming the balance sheets of banks because they have to write down their assets to distressed prices, even if retention of those assets is planned. The SEC enforces and helps interpret FASB's standards, but Congress wants to placate the banks. Congressman Paul Kanjorski is the Chairman of the Financial Services Subcommittee; a committee with jurisdiction over securities and insurance matters (except for health insurance). Senator Kanjorski stated "If the regulators and standard setters do not act now to improve the standards, then the Congress will." Kanjorski further cautioned: "I guarantee you that one of those pieces of legislation is going to become law before early April." Congressman Spencer Bachus stated: "If FASB and the SEC refuse to use their authority to provide useful and timely guidance, this Congress may have no choice but to act in their place." FASB’s Response: The FASB is working to determine how financial companies can classify when a market for their assets is active or inactive and what should be considered when identifying a distressed sale. Present Synopsis of Bank Accounting: "Credit losses occur when a borrower no longer has the ability to repay a loan and requires a lender to immediately recognize the loss. Liquidity losses are potential losses and there is an expectation that a borrower will still be able to repay the loan. Those losses are not recognized until the asset is sold. Currently, writedowns in assets such as mortgage-backed securities are recorded as credit losses, which some critics say is misleading, since some of the loans within the mortgage-backed security are still performing." References: FAS 65,114,115, 157,159    SHORT SALES AND THE UPTICK RULE --- In the News A short sale is a term relating to selling stock one does not own with the belief that the future price of the stock will fall. One sells the stock (which is not yet owned) at the current price and hopes to buy that stock at a lower price and make a profit. (If the price of the stock rises a loss is incurred.) The short sale is possible because the brokerage firm loans the stock to the seller from either the firm’s own inventory, the margin account of another of the firm’s clients, or another brokerage firm. (Margin rules dictate the transaction but are not the subject of this topic.) Another tactic used to force the price of stock downward is the use of naked short selling, even though its use is illegal. Some legislators and experts have asserted that even though illegal; naked shorting is widespread, subject to abuse, and that the SEC regulations are poorly enforced. Naked short selling is selling a stock "short" without first "borrowing" the shares as is done in a conventional short sale. If the seller does not obtain the shares within a required time frame, the result is known as a "fail to deliver". Naked short selling can also manipulate the price of securities by driving their price down. The original "uptick rule" was passed in 1938 to prevent selling shares short into a declining market to prevent panic share declines or outright manipulation. Basically, short sales could only be permitted on upticks (last trade higher than the one before). The SEC eliminated the "uptick rule" on July 6, 2007. While the average investor cannot affect the market it is however believed that gigantic "hedge funds" composed of a number of wealthy investors can manipulate stock prices to fall dramatically with the use of short sales and their financial leverage. On September 18, 2008, Republican presidential candidate and Senator John McCain said that the SEC allowed short-selling to turn "our markets into a casino." Sen. McCain criticized the SEC and its Chairman for eliminating the uptick rule. Other lawmakers have expressed similar concerns. Now regulatory reform is on the agenda to restore the uptick rule. The Securities and Exchange Commission is meeting to examine the rule on April 8; if the rule is reinstated, it could be effective by this summer. The rule barring short sellers from making bets against stocks unless they move higher most likely won't stop short selling; thus it won't stop the downward effect that short sellers and hedge funds might put on a stock. But the uptick rule combined with a ban on naked shorts would force short sellers to locate the shares they must borrow for the trade to be executed.    NEWS OF INTEREST Chef Cat Cora (Iron Chef America) is joining Disney. The new family restaurant to be located at Disney’s BoardWali Resort will be owned and operated by Disney. It is scheduled to open by fall 2009. It will feature a menu of Mediterranean-style cuisine that pays tribute to the Cat Cora’s Greek roots. Taco Bell, has agreed to purchase 20 percent of Little Sheep Group Limited of Mongolia. See China in the International Section below for more information. Johnny Rockets, a quick-serve burger chain with 260 restaurants, has added "mini-food" items to please customer demand. The smaller portion menu items are five varieties of Slider Hamburgers, Mini Hot Dogs and Mini Chili Dogs. Quiznos has re-negotiated 40 leases with property owners where property values have declined. These negotiations have reduced lease payments for franchisees by an average of 15 percent to 20 percent. This lease service is t no cost to franchise owners. Chili's restaurant parent Brinker International Inc. plans to open 50 or more international eateries this year, the majority of openings will be in Mexico and the Middle East. For more information see: Canada, India, Mexico, and the Middle East in the International Section below. A 181-room Holiday Inn New Orleans West Bank Tower has opened; it is the first Holiday Inn for the New Orleans market. The Holiday Inn New Orleans West Bank Tower is owned by Hotel 360, LLC who invested $13 million to convert this property in line with the Holiday Inn brand relaunch standards.     High Priced Cup of Coffee No Longer a Favorite Dunkin' Donuts is the No. 1 retailer of coffee by the cup in the U.S. Dunkin’ Donuts is the world's largest coffee and baked-goods chain, with more than 8,800 outlets worldwide. In 2008, global sales totaled $5.5 billion. 7-Eleven sells one million cups of coffee a day globally. Starbucks is the world's largest coffee chain but it posted a 5.5% decline in its first-quarter revenue. In February, the company cutting 6,700 employees, or 4% of its work force. Caribou is the third-largest company-owned gourmet coffeehouse operator in the U.S. experienced a 3% decline from a year earlier. 230 stores have closed since the 2007 fourth quarter.     Restaurant Chains Also Price Cutting to Attract Customers Applebee's: Continues its "2 for $20" special of two entrees and one appetizer. Cheesecake Factory: "Small Plates and Snacks" menu includes a $4.95 Pizzette. Chili's: Meals for less than $7. Outback Steakhouse: Some entrees at $9.95 plus 15 meals for under $15. Texas Roadhouse: Weekday promotions of early dine meals for $7.99. T.G.I. Friday's: $9.99 entrees. Ruby Tuesday has all day every day $5.99 burgers with endless fries. 50 percent of the menu items are at ten dollars or less. The restaurants offer happy hour all day, every day.    Current State of McDonalds McDonald's, the world's biggest restaurant chain, has more than 30,000 locations in 100 countries, serving 52 million people each day. McDonald's stock is 19% off its high; mostly affected by (1) a rising dollar has hurt foreign earnings and (2) higher commodity prices. The company earned 87 cents a share in the latest quarter, a 19% increase from the year-ago period. Same-store sales were strong, but total revenue fell 3%. The 29% return on equity is above average. Pretax margin in the highly competitive market is a remarkable 26.9%. Analysts forecast 2009 earnings at $3.81 a share, a 4% increase. For 2010, the forecast is $4.17, a 9% increase.    Current State of Darden Restaurants Darden Restaurants reported earnings of 80 cents a share, a 6% decline from the year-ago period, it was the second straight upside surprise. Darden’s stock was off only 10% from its 52-week high after taking a drubbing during the infamous October/November market decline. Darden claims it is the world's largest full-service restaurant company, with 1,700 restaurants. It operates Red Lobster, Olive Garden, LongHorn Steakhouse, Capital Grille, Bahama Breeze and Seasons 52. Darden expects same-store sales to drop 1.25% to 1.75% in 2009, slightly better than previous forecasts. Darden expects a $55-million-per-year savings from consolidating some operations between Capital Grille and LongHorn Steakhouse, which it acquired in 2007 from Rare Hospitality International. The company has 11 straight years of EPS growth; but analysts expect a 2% EPS decline this year.        Operatinal Concerns What is the card-check bill? http://www.uschamber.com/issues/index/labor/cardchecksecrbal.htm Wisconsin might raise the minimum wage, require paid sick leave and health insurance. The Janesville Gazette (Wis.) The "Busboy" Controversy: Some restaurants believe that current economic conditions have made the busboy’s position as not absolutely necessary; wait staff can bring the bread and remove dirty silverware. Yet some restaurant owners think busboys are necessary to fill water glasses and clear dessert dishes; an important ingredient to better customer service. And then, other restaurants have compromised by reducing the busboy staff or working schedules. Another alternative is to schedule busboys to work the peak hours of Friday evening, Saturday and Sunday. Reducing or eliminating busboy work hours has affected servers. For example, servers have to clear tables and perform other usual busboy duties.    Obama Administration Announces Plan to Aid Small Business http://www.reuters.com/article/topNews/idUSTRE52E1PI20090315 http://money.cnn.com/2009/03/15/smallbusiness/obama_smallbiz/index.htm?postversion=2009031522   INTERNATIONAL NEWS Various Middle East Locations Chili’s (Brinker International) and its partners plan to open 17 to 18 restaurants in 2009. Australia Jones Lang LaSalle Hotels Survey shows that 'the prevailing economic sentiment meant that many traditional investors, including those in the top ten, did not compete for assets in 2008, allowing a number of new players to establish themselves in the Australian hotel investment market.' Accor is opening 3 Mercure brands. Mercure Hotel Liverpool Australia opens in December 2009. Mercure Hotel Caroline Springs Australia: opens in August 2009. Mercure Yarra Valley Balgownie Estate Vineyard Resort & Spa Australia: opens on April 1. Bahamas The Bahamas Football Association will host the 2009 International Federation of Association Football Congress at the Atlantis Resort, Paradise Island from May 29th to June 4th. 208 member countries of FIFA will all be represented in The Bahamas, each with a minimum of three delegates Belgium The Rezidor Hotel Group will open the Park Inn Leuven, 133 rooms, in Q3 2010. It is Rezidor's second Park Inn in Belgium, the company already runs the Park Inn Liège (100 rooms) directly at the airport. Canada Nationally, the average price per room declined 25%. According to Colliers International Hotel's 2009 Canadian Hotel Investment Report, the Canadian hotel real estate sector experienced a 77 per cent decline in investment activity, falling to $1.1 billion over the past year. For the week ending March 14, based on year-over-year measurements, occupancy was 54.8%, a decrease of 10.9 percent. Average daily rate was CAD $121.52, a decrease of 1.3 percent. RevPar was CAD$66.59, a decrease of 12.2 percent. The Melting Pot Restaurants, Inc. has entered Canada with its first four locations outside of the U.S. namely Edmonton, Calgary and two in Vancouver under the local ownership of Heidi Wagner. Chili’s (Brinker International) and its partners plan to open about 5 restaurants in 2009. Prince Edward Island’s minimum wage effective June 1 is $8.20 hour (up from $8.00/hour); then on October 1 it will jump to $8.40 hour. New Brunswick cancels its planned 2% increase to the HST. New Brunswick corporate taxes will be cut from 13% to 8% and the small business tax threshold will increase from $400,000 to $500,000 annually. China Taco Bell, has agreed to purchase 20 percent of the outstanding common shares of Little Sheep Group Limited, its main office in Inner Mongolia. Little Sheep is the leading brand in China's "Hot Pot" restaurant category with 375 restaurants, primarily in China as well as Hong Kong, Japan, Canada, and the U.S. The hot pot cooking concept specializes in Mongolian-style hot pot cuisine with a soup base and Mongolian lamb specialties. MGM Grand Hotel Macau has been awarded "The Best Luxurious Hotel" in China, by China Hotel Starlight Awards, known as the Oscars of China’s hotel industry held at Guangzhou Baiyun International Convention Centre. Accor brand Mercure Hotel Tianyou Chengdu opens in late 2009 .France Starbucks Corporation and Kraft Foods will launch packaged Starbucks coffee in select supermarkets. The historic Hôtel des Ambassadeurs de Hollande is for sale. It was built in the late 1650s using the site of the original 15th-century house, Hôtel Amelot de Bisseuil, renowned for its elegant sculpted facades, original layout and rich interiors, designed by the 17th-century architect Pierre Cottard and executed by a series of artists. The property is now for sale, consisting of 1,713-square-meter house (18,440-square-foot) basement, courtyard space terrace; parking spaces an adjacent building; and a 794-square-meter apartment building nearby. The sale price has not been yet disclosed, but it is estimated at 35 million euros ($45.3 million). Germany Starbucks Corporation and Kraft Foods will launch packaged Starbucks coffee in select supermarkets. India Chili’s (Brinker International) and its partners plan to open 3 to 4 restaurants in 2009 Taco Bell by opening two-three franchisees in Bangalore by the middle of this year. Ginger Hotels, the budget hotel arm of Indian Hotels Company, plans to open 13 more hotels across India by 2010, bringing its total inventory to 30. Plans include expansion into these cities: Guwahati, Durg, Surat and Chennai; each with a capacity of about 100-150 rooms. Ginger presently has a capacity of about 1700 rooms in its existing hotels and has a 4-year plan to expand to 70 hotels. The Mercure Brand marks the expansion of Accor’s hotel brands in the region with the Mercure Homestead Residences Bangalore India. Accor operates 758 Mercure hotels throughout the world. HHRL (a New York, USA company) plans to build a five star 151-room property in Kochi called Dream Cochin in April 2009. The 200-250 room hotel will be on 2.5 acres of land at Malad, Mumbai. The company has been facing licensing problems in India. Fairmont Hotels & Resorts new 248 room hotel Fairmont Jaipur located in Rajasthan Is scheduled to open in 2010, Japan Shangri-La Hotel, Tokyo opened its first hotel with a grand opening that featured feng shui traditions, following a lion dance. Accor Mercure brand hotels planned for 3 locations in China. Mercure Hotel Sapporo (285 rooms) in Susukino opens June 1. Mercure Hotel Chengdu Prime China (503 rooms) in Chengdu will open in September 2009. Mercure Hotel Tianyou Chengdu China in Chengdu will open in late 2009. Malaysia Hilton Hotels Corporation has entered into a management agreement with The Intermark Sdn Bhd, for the debut of an upscale hotel. The Crown Princess Hotel in the Malaysian capital of Kuala Lumpur will get a multi-million dollar redesign and renovation and will be re-branded as the Doubletree by Hilton Kuala Lumpur City Centre. The 540-guest room hotel is scheduled to open in Q2 of 2010. Prince Court Medical Centre, an international accreditation facility, expects to profit on medical tourism for future growth following interests from overseas patients in quality healthcare services in Malaysia. Cheaper flights, hotel rates and medical services in Malaysia are factors that will attract international patients seeking better quality but less expensive medical services. Currently, international patients contribute 30% to the Centre’s business. A Malaysian tourism report forecasts a 9% decline for 2009 after having a 4% increase in 2008. About 18,148,159 tourists arrived in the Jan-Oct 2008 period, an increase of 4.8% year on year. Mexico Chili’s (Brinker International) and its partners plan to open 16 to 18 restaurants in 2009. Baltimore/Washington travelers can now enjoy daily nonstop flights. South of the Border AirTran Airways, a subsidiary of AirTran Holdings, Inc. provides these flights from Baltimore/Washington International Thurgood Marshall Airport in Baltimore, Md., to Cancun Airport International in Cancun, Mexico. Puerto Rico Marriott International, in 2011, will introduce its luxury JW Marriott brand with a 371-room resort and spa on a 27-acre oceanfront site and will be part of the existing 1,000-acre, master-planned development called Coco Beach Resort. Included in the development is an existing 36-hole championship Tom Kite-designed golf course that was host of the 2008 Puerto Rico Open. Russia Marriott International branded hotel portfolio in Moscow will increase to seven hotels in 2009 under a franchise agreement with Monarch Open Joint Stock Company. The 366-room Renaissance Moscow Monarch Center will be the seventh hotel. The hotel will be managed by Interstate Management Services, a wholly owned subsidiary of Interstate Hotels & Resorts, which currently operates three Marriott-branded hotels in Moscow as well as other Marriott-branded hotels in Ashbourne, Ireland, and Ghent, Belgium. Saudi Arabia The Rezidor Hotel Group enters this market with Park Inn Al Khobar (148 rooms) and Park Inn Muscat (175 rooms). Switzerland Mövenpick Hotels & Resorts has signed a management contract with Compagnie Tunisienne de Développement Touristique for a new upscale resort and conference property at Sousse. The Mövenpick Resort & Thalasso Sousse, a beachside hotel, will have 627 rooms and is scheduled to open in July 2009. The following is a synopsis from a tourism study. Switzerland attractions are the Alps, watches, cheese, multi-lingual inhabitants and yodeling; but a Switzerland vacation is expensive. Hotel rates tend to be higher than those of EU member states are. The year 2008 was very successful but now the negative effects of the global financial crisis will have an impact. The main reason for the successes of 2008 was not the snow-filled Alps, but that the European championships attracted a large volume of football from all over Europe. "However, despite the great snowfall in the early part of 2009, Switzerland expects doom and gloom in its tourism sector for the remainder of this year." Three major markets, namely Britain, USA and Japan are expected to decrease in numbers due to their financial crisis and Switzerland being expensive. "The fact that Switzerland does not have the European single currency is also a disadvantage in the field of tourism." Turks & Caicos The Travel Channel described Nikki Beach Resort in Turks and Caicos as ‘ultra luxury and exclusive’. This resort is a gated 432-acre playground featuring one-and two-bedroom suites, the signature Nikki Club and the world's first eco-friendly yacht marina. Notice for canceling further receipt of this newsletter: This newsletter is distributed only to educators. Your email address is treated highly confidential and is not harvested, sold, or transferred in any manner to any other institution or individual. The main purpose of this newsletter is to provide hospitality news and research. The author of this letter does have a commercial interest in the sale of his texts, which may be displayed or described therein. Upon notice from you, you may opt out of receiving this newsletter. Please mention "Opt Out" in the subject portion of your email. Immediate removal from my files will follow. Sources of Information: Some of the information for this newsletter may be assembled, summarized, and re-tailored from many sources. For example, the National Restaurant Association, the American Hotel and Lodging Association, the Wall Street Journal, The Canadian Restaurant and Foodservice Association, Internal Revenue Service, QSR Magazine, Chain Leader, Hotel News Resource, Google, and numerous other professional sites.