Room 77 employees take a break from "turning hotel search inside out" or whatever else they do at company headquarters. New CEO Drew Patterson (center, on the couch) thinks these are very early days for hotel metasearch. / Room 77

Drew Patterson, who recently became Room 77′s first CEO, does a perceptible double take at the seeming absurdity of the question.

“How is Room 77 going to meet the challenge of being relatively late to the party?” he’s asked.

After all, the first crop of travel metasearch sites, including FareChase, SideStep and Qixo, are now distant memories of a bygone Travel 1.0 era, and notable players such as Skyscanner and Kayak have each been refining their products and building traffic for about a decade already.

How, then, are travel startups such as Room 77, which only debuted its hotel-metasearch business about a year ago, and Hipmunk, founded in 2010, going to compete against the bigger and and more-established players?

It may be late, but it’s still early

Patterson believes it’s actually early rather than late.

“It’s the very early innings of the shift to mobile,” Patterson says, noting that a massive shift in consumer behavior is under way as travelers reach for their smartphones and tablets, often even when the desktop is within easy reach.

“Mobile is the catalyst,” Patterson adds.

Patterson argues that travel search is a great fit for mobile as travelers won’t need a plethora of apps, they may be on-the-go searching for a hotel, and can benefit from streamlined side-by-side comparisons “when there’s no keyboard and screen real estate” is scant.

In some ways, as relatively new and funded travel startups, Room 77 ($43.8 million) and Hipmunk ($20.2 million) find themselves in similar situations. How are they going to break out of the pack in the battle for global traction, and site and mobile visitors?

“It all starts with the right product,” Patterson says.

Is Room 77 different enough?

In that regard, one can make an argument that Room 77 currently has a more differentiated product than Hipmunk’s.

Sure, Hipmunk has its much-touted and attractive user interface and Agony index, and can adeptly enable users to search for hotels based on the location of their business meetings, too.

But, consider some of Room 77′s differentiators:

• Room 77 offers simulated room views for around 1 million rooms at hotels that are three stars and above, and also features insider tips for choosing specific rooms, hotel floors, or vantages (pick a room facing E. 33rd Street) at around 16,000 hotels.

• You can book about 200,000 hotels on Room 77 without having to navigate to another hotel or online travel agency website, and many of these properties enable guests to delay payment until hotel checkout, a spokesperson says. Customers can also book hotel stays from the Expedia Affiliate Network and Getaroom.com without leaving Room 77.

• In addition to displaying rates from various online travel agency and hotel websites, Room 77 also shows AAA, senior, government and military rates.

• At four- and five-star hotels booked on Room 77, you can indicate your room preferences and Room 77′s Room Concierge service will attempt to get you a specific room type or location to match your likes and dislikes. During the booking process, guests can also give hotels special requests such as putting flowers in the room for an anniversary etc.

The tortoise and the cheetah?

Patterson argues that Room 77′s site speed is a differentiator, too. Around the Skift office, we informally gauged the pace of Room 77′s loading of hotel search results against those of Hipmunk and Kayak. Room 77 may have been a tad quicker, although this was far from a scientific study, and the contest was close.

However, the speed of TripAdvisor’s hotel metasearch results seemed like a tortoise compared to Room 77′s cheetah.

Breaking into seeming talking points mode, Patterson says Room 77′s “speed, intelligence and relevance is second to none.”

Founded in 2009 by Brad Gerstner, a former co-CEO of National Leisure Group and avid travel industry angel investor, who serves as Room 77 chairman, the company first focused on its room view technology after having acquired OpTrip and TripKick for their tech and talent.

Changing views about the business direction

Room 77′s room views, created by plotting a room’s latitude, longitude and altitude, and then marrying them with Google Earth, are still part of the site, but they are relegated to the lower portions of the page. Many hotels weren’t exactly enamored with the idea of giving consumers the option to book a specific room, which was Room 77′s ultimate intent, although there is indeed some of that going on in the hotel industry today.

At the time, Room 77 enlisted hotel guests with its iPhone app and spent a lot of energy in the early days collecting hotel floor plans to build the world’s largest database of hotel rooms.

That process may be ongoing, but Room 77 pivoted toward hotel metasearch and got into it in a meaningful way about a year ago.

Independence, with a few dependencies

With 38 employees, Mountain View, California-based Room 77 has implemented a different funding strategy than its Hipmunk competitor and neighbor in nearby San Francisco.

In January 2013, Expedia, Concur, Sutter Hill Ventures, General Catalyst Partners, Felicis Ventures, and a bunch of angels, including Rich Barton, Erik Blachford, and Spencer Rascoff, participated in a $30.3 million Series C round, bringing Room 77′s total funding to $43.8 million.

With its $20.2 million in funding from the likes of Institutional Venture Partners and Ignition Partners, not to mention Ashton Kutcher, Hipmunk doesn’t have Expedia- and Concur-like strategic investors, and Hipmunk CEO Adam Goldstein argues this gives Hipmunk a competitive advantage with potential partners because it is “independent.”

Investments from Expedia and Concur send a signal about Room 77′s direction and strategy, Goldstein argues.

In fact, Goldstein says: Hipmunk is “one of the last independent metasearch companies in the U.S.,” and “one of the fastest growing.”

Patterson of Room 77 isn’t buying Goldstein’s analysis, saying: “I’m not sure they [Hipmunk] could make up more asterisks on what they are number one in.”

Patterson says Expedia and Concur are “passive investors” in Room 77, and they don’t have seats on Room 77′s board.

Still, Patterson says, “we are in active discussions with those guys.”

Expedia, Trivago and Room 77?

It may not be too far-fetched to speculate that one day Expedia, which recently poured $632 million in cash and stock into German hotel metasearch site Trivago, taking a majority stake, could one day consider acquiring Room 77 outright. If it paired Trivago in Europe with a growing Room 77 in the U.S., then Expedia could build a base to begin to challenge Priceline-Kayak in the global online travel battle.

Patterson doesn’t touch that speculation, but says Room 77 is “well-capitalized,” which gives the company “enormous flexibility.”

Room 77 is experimenting with online marketing through different channels, although the key would be to find the right ways to engage consumers, and not just buy traffic, Patterson says.

“Having that kind of dry powder,” Patterson says, referring to Room 77′s funding, “creates flexibility. Do we want to go offline [with advertising]? We have the capital to do that.”

Hotel metasearch is a crowded field with intense competition. Search engine marketing is very expensive, and titans of metasearch, such as Kayak, undoubtedly command better unit economics than startups like Room 77 and Hipmunk because of their much smaller footprints.

And, let’s not overlook TripAdvisor, which will undoubtedly play a huge role in shaping the market.

However, even with those disadvantages, amply funded travel startups such as Room 77 and Hipmunk are currently focusing mostly inward on their products, and aren’t in a huge hurry to play the big, paid-marketing game.

After all, if you believe Room 77′s Patterson, these are the early days.

“The smartest investors in this category see huge growth to come in search,” Patterson says. “We are playing with where the business can be five or six years from now, and not the next quarter.”

This is the second of a four-part series on funded travel startups, looking at where they started and their strategies for breaking out of the pack.

Part 1: The real-world challenge for travel startups, as mirrored in Hipmunk’s story 

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Royal Caribbean Ltd.’s largest investor is challenging Chairman and Chief Executive Officer Richard Fain by supporting a plan that could lead to a board shakeup at the second-largest cruise operator.

Investors vote today on a non-binding shareholder proposal calling for the elimination of staggered directors’ terms at Miami-based Royal Caribbean. The company opposes the plan, which would have each board member come up for an annual vote. The measure is supported by Oslo-based A. Wilhelmsen AS, owner of a 19 percent stake, whose chairman, Arne Alexander Wilhelmsen, is a Royal Caribbean director.

Backing from A. Wilhelmsen may be enough to pass the measure, after a similar initiative in 2009 was endorsed by 29 percent of shares voted. A. Wilhelmsen didn’t support the plan four years ago, said a person close to the company. Both Institutional Shareholder Services and Glass Lewis & Co. have recommended in favor of the activist proposal.

“When the largest shareholder wants it, I think that’s a big signal,” said D. Daniel Sokol, who teaches corporate law at the University of Florida in Gainesville. “They’re responding to a larger trend for what constitutes good corporate governance.”

Passage could herald changes at Royal Caribbean, including separation of the chairman and CEO roles as well as turnover at the board, said investor Robert Kurte, who with his father sponsored both proposals.

‘Growing Trend’

“That’s a good, positive sign that there’s some hope for change,” Kurte, a 42-year-old consultant in Weston, Florida, said of Wilhelmsen’s decision. “It’s time for some of these longstanding directors to give up their posts.”

Until 2011 A. Wilhelmsen, which owns shipping and real estate interests, was part of an agreement to vote its shares with the next-largest investor, Cruise Associates, comprised of members of Chicago’s Pritzker family and Israel’s Ofer clan. Together, the three own about 36 percent of Royal Caribbean, data compiled by Bloomberg show.

Staggered boards are a hurdle to activist investors because they require a multi-year effort to make changes. Directors at the company currently serve three-year terms, with no more than four standing for election at a time.

“Royal Caribbean shareholders would be better served by a board whose members are elected annually,” A. Wilhelmsen said in a statement last week.

Thomas Pritzker, 62, a Royal Caribbean board member who is up for re-election, didn’t return a call seeking comment. He is chairman of Hyatt Hotels Corp. Royal Caribbean director Eyal Ofer, a 62-year-old shipping and real-estate magnate worth $6.1 billion according to the Bloomberg Billionaires Index, declined to comment, according to a representative.

Experienced Board

Royal Caribbean fell 2.4 percent to $36.89 yesterday in New York, after larger rival Carnival Corp. cut its forecast for the rest of the year. Royal Caribbean has advanced 8.5 percent this year, lagging behind the 17 percent rise in the Russell 1000 Index.

While board structure isn’t a major concern at Royal Caribbean, the proposal is “part of the move to improve transparency and shareholder returns” at all companies, according to Joshua Herrity, an analyst at Telsey Advisory Group in New York. He said the management is viewed as stable.

The cruise operator’s incorporation articles prevent third parties other than A. Wilhelmsen and Cruise Associates from buying more than 4.9 percent of its stock without board consent, according to its annual report.

Today’s meeting will be held at 9 a.m. local time in Miami. In Royal Caribbean’s proxy statement opposing the proposal, the company cited the “increased continuity, depth of knowledge and focus on the long-term” of the present board.

The shareholder plan isn’t unique to Royal Caribbean, Cynthia Martinez, a company spokeswoman, said in an e-mail. She said the proxy outlines the company’s position.

Management Moat

The Kurtes pointed to studies showing an association between companies with staggered boards and lower valuations, smaller gains from buyouts, and less linkage between pay to performance.

“A staggered board can entrench management and effectively preclude most takeover bids or proxy contests,” Institutional Shareholder Services said in its report. “All directors should be accountable on an annual basis.”

Some Royal Caribbean directors have served for 20 years or more, said Kurte, who with his father, Harold, owns 1,000 shares.

“They’re overall a well-managed company, but there are certain oversight questions that the board needs to address,” Kurte said.

<strong>With assistance from Marie Mawad in Paris. Editors: Anthony Palazzo, Rob Golum. To contact the reporter on this story: Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net./em>

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net

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A view of Las Vegas' CityCenter complex at night. James Marvin Phelps / Flickr

CityCenter never had it easy.

MGM Resorts International announced plans to build the $4 billion development in 2004 during the height of Las Vegas’ boom. By the time the project wrapped up four years later, its construction budget had ballooned to almost $10 billion and the city was sinking into a historic recession that almost forced the project into bankruptcy.

Though MGM officials felt pressure to mothball the complex, they trudged ahead and opened CityCenter in 2009. In the years since, the complex has been called a failure, a Tower of Babel, a sign of Las Vegas’ hubris and a symbol of what can go wrong.

But CityCenter appears to have turned a corner. It posted an all-time earnings record during the first quarter of this year and helped boost MGM into the black.

MGM reported its best results since the beginning of the downturn five years ago.

During the first quarter of 2013, CityCenter reported a cash flow of $93 million, three times the amount it pulled in the year before. Net revenue generated at Aria, Vdara, Crystals, the Mandarin Oriental and numerous residential units rose 32 percent, to $315 million.

Strip analyst Chris Komanowski of CB Richard Ellis said it isn’t unusual for high-end hotels to take a couple of years to find their footing.

“This (time frame) is really where a luxury property is beginning its life as a stabilized business,” Komanowski said. “That typically takes time.”

Analysts attribute CityCenter’s success to a rebounding tourism market. Last year, a record 39.7 million people visited Las Vegas.

The Strip in general also is making more money than it ever has. Gambling revenue soared to $696 million in February, the highest single-month total ever recorded. Consumer confidence is rising, and visitors are beginning to spend more.

Still, many local resorts continue to struggle. Komanowski pegged CityCenter’s specific success to a growing number of visitors who demand high-end options when they visit Las Vegas.

“You have kind of a different animal attracting different people,” Komanowski said. “They’re looking for more luxury amenities.”

And today’s tourist does much more than gamble. More than 69 percent of casino visitors in the past year ate at fine-dining restaurants, 55 percent saw a show or concert and almost 45 percent visited a club, according to the American Gaming Association. CityCenter offers all those options.

“The trends are positive,” Komanowski said. “We expect extended and steady growth.”

CityCenter’s journey from the red was not an easy one.

MGM announced in 2004 it would partner with Dubai World to build the hotel-condo complex. Economically, the year marked one of the best in the Strip’s history. Visitation numbers surpassed 37 million, an increase of 2 million from the previous year, and continued to grow.

The project initially was estimated to cost $4 billion. In late 2005, MGM upped it to $5 billion. The following year, the price tag jumped to $7 billion.

By late 2008, CityCenter’s construction budget peaked at $9.3 billion — just in time for the recession.

“It created chaos for us,” CityCenter President Bobby Baldwin said.

A few months later, on the heels of Wall Street warnings, MGM launched a cost-cutting program that slashed the building budget to $8.9 billion. It wasn’t enough. When MGM released its annual report in 2009, operators feared they wouldn’t have enough cash to pay off their debt. They worried bankruptcy would delay CityCenter’s opening.

MGM pushed forward anyway, delaying the opening of the Harmon Hotel to save about $200 million. Clark County officials halted work on the 49-story hotel-condo project in 2008 because of construction flaws.

MGM and Dubai World later announced they would scrap plans for the Harmon’s top-floor condos and cap the building at the 26th floor. Today, the Harmon remains closed, mired in lawsuits.

During the same time, MGM’s stock plummeted from $99.75 a share to $1.89 a share.

“(CityCenter) couldn’t have opened at a worse time,” Komanowski said. “The property appeared with a lot of difficulties.”

Baldwin said MGM invested so much money into CityCenter, there was no way the project could have been mothballed or stalled.

“There was no stopping for us,” Baldwin said. “Looking back on it, it wouldn’t have made any difference if we opened it earlier or later. We would have ended up in about the same spot.”

Many experts agree. Although MGM’s business plan was good, its timing was not.

“They were knee-deep in it,” said Yale Bock, a stock analyst with YH&C Investments. “Then, everything changed — land values, moods, construction costs, gas prices.”

CityCenter has managed to build its equity to about $294 million, but it still owes about $1.5 billion, a 5-to-1 debt-to-equity ratio. Baldwin couldn’t say for certain how long it would take the development to make that money back.

“We have a long way to go,” he said. “Everything is on the move. It’s part of a slow rise. It’s something you see all around Las Vegas.”

(c)2013 the Las Vegas Sun (Las Vegas, Nev.) Distributed by MCT Information Services. 

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The exterior of the Frank Lloyd Wright-designed Arizona Biltmore Resort & Spa. / Arizona Biltmore Resort & Spa

Billionaire investor John Paulson has put a real estate unit of his hedge fund into bankruptcy to thwart a lawsuit by a lender that claims it is owed tens of millions of dollars related to the recent sale of several luxury resorts.

According to filings late Wednesday in Manhattan bankruptcy court, MSR Hotels & Resorts Inc. sought Chapter 11 protection from creditors to sell its remaining assets and wind down.

A bankruptcy filing often halts litigation against a debtor.

Daniel Kamensky, MSR’s treasurer and a partner at a Paulson & Co. affiliate, said in an affidavit that protection was necessary because of the “baseless” lawsuit filed last month by Five Mile Capital Partners against MSR’s directors, which he said reflects the lender’s “scorched-earth” tactics.

“The REIT now seeks to end Five Mile’s continued terrorization of directors that the court has previously found acted in good faith,” he wrote.

MSR in February won court approval to sell four resorts to the Government of Singapore Investment Corp. sovereign wealth fund for $1.5 billion, including assumed debt, court papers show.

The resorts included the Arizona Biltmore Resort & Spa in Phoenix; the La Quinta Resort & Club PGA West in La Quinta, California; the Grand Wailea Resort Hotel & Spa in Maui, Hawaii; and the Claremont Resort & Spa in Berkeley, California.

But Five Mile, which said it lent $50 million to an MSR affiliate, accused MSR directors of having conflicts of interest that prevented them from getting the best prices for trademarks, logos and other intellectual property.

Its lawsuit seeks $58.7 million representing sums owed, including interest and costs, plus at least $100 million for breach of fiduciary duty, gross negligence and corporate waste.

David Friedman, a lawyer for Five Mile, called the bankruptcy case a “cheap litigation tactic” designed to shield directors from liability, and destined to fail.

“For someone from Paulson to accuse someone of terrorism, when all we’re doing is litigating a commercial dispute, should offend anyone who understands the meaning of the word,” he said in a telephone interview with Reuters.

Five Mile is evaluating its options, Friedman added.

A spokesman for Paulson declined to comment.

MSR said it intends to use Chapter 11 to sell intellectual property for the Biltmore, La Quinta and Grand Wailea resorts.

On Wednesday, MSR urged a federal district judge to dismiss the Five Mile lawsuit. It said the lawsuit was designed to get around earlier court rulings that Five Mile did not like, and said MSR directors had met their obligation to maximize value.

The other MSR directors sued by Five Mile were Michael Barr and Jonathan Shumaker, who are both also partners of a Paulson & Co. affiliate, and Mohsin Meghji.

MSR said it had about $785,000 of assets and $59.2 million of liabilities as of March 30.

Paulson rose to fame when he made $15 billion by betting against subprime mortgages ahead of the U.S. housing collapse.

But his assets under management have fallen to about $18 billion from $38 billion in early 2011 because of lagging performance and investor redemptions. His gold fund has fallen about 47 percent this year, according to performance data provided by a person familiar with the fund.

The case is In re: MSR Hotels & Resorts Inc., U.S. Bankruptcy Court, Southern District of New York, No. 13-11512. The earlier bankruptcy case is In re: MSR Resort Golf Course LLC et al in the same court, No. 11-10372. The Five Mile lawsuit is Five Mile Capital SPE B LLC v. MSR Hotels & Resorts Inc. et al, U.S. District Court, Southern District of New York, No. 13-02920.

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Jumeirah Group president and CEO Gerald Lawless singled out Canada, which has prevented Emirati airlines from landing more than six flights per week into the North American country despite years of lobbying by Dubai-based airline Emirates Airline and the UAE national carrier Etihad.

“Governments around the world should stop supporting these so-called legacy airlines,” Lawless said. “We don’t need hotel rights to build a hotel in Toronto so why should our airlines need flight rights to fly to Toronto if that’s what they want to do if the airline meets all safety standards, so legacy airlines should not be supported anymore by their governments.

“The hotel industry depends on airlift to bolster its business; we don’t have airlift, we don’t have customers.”

Canada’s refusal to increase Emirati landing rights led to a breakdown in the diplomatic relationship two years ago, which only began to thaw last year.

Both countries imposed visa restrictions on each other’s citizens until the decision was reversed in February.

However, there is no sign of Canada increasing Emirati landing rights. The UAE also has suffered from Germany’s refusal to allow Emirates landing slots at Berlin’s new airport. Berlin Mayor Harald Wolf last year claimed the national carrier Lufthansa had lobbied the German government to deny Emirates’ request.

“The Berlin government was, and is, in favour to open the airport to Emirates and give them the possibilities to have direct flights,” Mayor Wolf said.

“But the difficulty is the federal government. They are very restrictive. They [the Federal Government] have had a very strong lobbying from Lufthansa not to strengthen Emirates.”

Bahrain also has been accused of propping up its national carrier, Gulf Air, at the expense of Bahrain Air, a privately run airline that went into voluntary liquidation in February blaming the government for demanding immediate payment on past government debts.

Bahrain Air CEO Russell Nuttall accused the government of favouring Gulf Air, its direct competitor.

Minister of Transportation Kamal Ahmed is a board member of the national carrier, which Nuttall said was a conflict of interest.

© 2013 ITP Business Publishing Ltd. All Rights Reserved. Provided by Syndigate.info an Albawaba.com company. 

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Cubs chairman threatens to move team from Wrigley. / Associated Press

Chicago Cubs Chairman Tom Ricketts for the first time threatened to move the team out of Wrigley Field if it doesn’t receive government approval for more signs in the outfield, including a giant video scoreboard.

“I’m not sure how anyone is going to stop the signs in the outfield, but if it comes to the point that we don’t have the ability to do what we need to do in our outfield then we’re going to have to consider moving,” Ricketts said at Wednesday morning event at the City Club of Chicago where he was the guest speaker. “It’s a simple as that.”

His comments significantly raised the stakes in Ricketts’ proposal to spend $300 million renovating Wrigley Field as the project seeks approval from the City Council. Since his family purchased the team in 2009, Ricketts has repeatedly said they intended to preserve the 99-year-old ballpark for future generations.

Two weeks ago, the Cubs, Mayor Rahm Emanuel and 44th Ward Ald. Tom Tunney agreed to what the parties called a “framework” of plan to renovate the stadium and develop land around it. The framework included more night games, a video scoreboard in left field and additional advertising throughout the ballpark. In addition, the Cubs agreed to work with residents in the Wrigleyville neighborhood to increase security after games and find more off-site parking to decrease congestion in the area. Many details remain to be finalized but Ricketts said at the time all sides are “together on this.”

But on Wednesday he changed his tune, perhaps indicating his frustration with long negotiations and opposition from rooftop businesses surrounding the stadium to more outfield signs.

His remark about moving came in response to a guest in the audience at Maggiano’s restaurant who asked “What if opponents stop the signs in the outfield?”

Speaking to the media afterward, Ricketts attempted to clarify his comments about moving.

“The fact is we are committed to try to work this out. We’ve always said that we want to win in Wrigley Field, but we also need to generate the revenue we need to compete as a franchise. Having the ability to put video boards and signs in the outfield is very important to us.”

Ricketts estimated that outfield signs could increase revenue by about $20 million.

Beth Murphy, one of the rooftop club owners who attended the breakfast, said, “I don’t know where he is going to move. They come to Wrigley Field because it’s an old ballpark, and it’s in a neighborhood. Look at this team.”

The team’s renovation proposal, made public earlier Wednesday, calls for re-creating green terra-cotta canopies, along with the windows and wrought-iron fencing, that graced parts of Wrigley’s exterior in the 1930s, according to drawings released to the media Tuesday.

At the same time, Crane Kenney, president of the team’s operations, insisted the team needs to make more money to compete, thus the proposed addition of more than 41,000 square feet of signs to the stadium’s interior and surrounding neighborhood.

The plans call for a 6,000-square-foot, three-panel video screen atop the left field wall that would be topped by lights illuminating the power alleys in right and left field. There also would be a 1,000-square-foot sign in right field and four new signs ringing the outfield. Those include two new LED signs akin to the one introduced in right field last year.

While all that, if approved, would change the interior look of the stadium, the area just beyond Wrigley also would take on a different, and far more commercial, appearance. Advertising would adorn a proposed seven-story hotel at the northwest corner of Clark and Addison streets and six-story retail-office building on the triangular parcel west of the stadium. They would be linked by a walkway over Clark with its own sign.

Nonvideo, or static, ads would top the 91-foot-tall hotel, as well as the clock tower on the office building. A three-panel video screen would be placed on the office building, inside the plaza, where seven obelisks would carry more static ads. Banners featuring team sponsors would hang from the hotel, facing Clark.

Change also would come to the southeast corner of the stadium, where the site of the Captain Morgan Club would be replaced with a two-story structure topped by signs and a deck.

Add in the updated concourses, expanded bathrooms, improved player areas and outdoor terraces, and the broader idea is to give the stadium modern amenities, create a town square for Wrigleyville and generate more revenue, both to cover the cost of the renovation and provide revenue for team development, Kenney said.

“We have to generate new revenue,” he said. “We have to catch up to our large-market competitors on ballpark revenues, so this project has to work from a financial perspective as well.”

Tribune reporters Hal Dardick and Bill Ruthhart contributed

(c)2013 the Chicago Tribune. Distributed by MCT Information Services.

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The Kaua'i cliffs look over pristine ocean in Hawaii. / Hawaii Tourism Agency/MCT

The number of visitors coming to Hawaii in the first three months of the year surged 7.1 percent to 2.1 million, but tourism officials said Thursday the industry’s growth will likely slow later in 2013.

Nearly 10 percent more travelers arrived in the islands from western U.S. states compared with January through March of last year, the Hawaii Tourism Authority said. The number of travelers from Japan climbed 5 percent.

Mike McCartney, the state tourism agency’s CEO, said he expects to see more moderate growth in coming months.

“Spending and arrivals have been on the upswing, but there has been a decrease in visitor average length of stay for markets like U.S. West and Canada, which could be an indication that visitors may be reaching their spending threshold,” McCartney said in a statement.

A reduction in the number of direct flights from the East Coast and a weakening Japanese yen may also slow growth, he said.

The agency plans to continue luring business travelers for meetings and encouraging visitors to travel to the neighbor islands. It intends to continue supporting the addition of direct flights to Hawaii from South Korea, China, Taiwan, Australia and New Zealand while maintaining marketing efforts in the U.S. mainland, Canada and Japan.

“Due to the fragile nature of the tourism economy, the HTA understands the importance of sustaining and diversifying global market share in an industry based on discretionary spending,” McCartney said.

Visitors spent $3.9 billion in the state from January through March, up 7.6 percent from the same quarter last year. The biggest increase came from western U.S. travelers, who spent 18.7 percent more, and eastern U.S. visitors, who spent 8.3 percent more.

Tourism arrivals hit a record 8 million last year as a recovering global economy, strong yen, stable oil prices and the addition of more direct flights encouraged more people to visit the islands.

The previous record of 7.6 million was reached in 2006, before the Great Recession.

The tourism agency said last month it expects 8.5 million people will visit Hawaii this year.

Copyright (2013) Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. 

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The company released its first quarter results today, and its operating profit in North America fell 22.5% to $5.5 million on a sluggish revenue increase of 5% to $30.2 million.

“The decrease in operating profit was a result of increased expenses related to sales force expansion, hotel booking platform development, traffic acquisition and subscriber marketing,” Travelzoo stated about its North America business.

Travelzoo’s Groupon-like Local Deals business has lost some of its luster over the past year, and the company acquired Perfect Escapes in 2012 as the basis for its first foray into hotel transactions.

Chris Loughlin, Travelzoo’s CEO, stated today: “We continue to develop our new hotel booking platform, which we plan to roll out later this year.”

Travelzoo’s combined first quarter net income for North America and Europe increased 49% year over year to $5.6 million as revenue climbed 7% to $42.2 million.

Looking at its results in Europe, Travelzoo’s operating profit there was flat, increasing from $2.4 million in the first quarter of 2012 to $2.5 million in the first quarter of 2013.

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Glacier National Park in Montana. Meredith Rendall Photography / Flickr

The way — and amount — Big Sky Country markets itself to potential visitors has changed a lot in 25 years.

Back in the 1980s, a magazine ad might have been the best way, or at least the industry standard, to draw new visitors to Montana, but today a smartphone app or snappy Facebook page is a more likely way for the Montana Office of Tourism to connect with travelers passing through the state.

“Right now it’s about mobile, making sure we have all of our marketing and all of our websites in a mobile friendly (format),” said Jeri Duran, the administrator for the Montana Office of Tourism.

“As the statewide industry has evolved, so too has the Montana Office of Tourism’s marketing,” said Mary Paoli, public relations manager for Voices for Montana Tourism, an industry coalition and advocacy group. “In 1987, three major TV networks and household magazines like Life and Time dominated. Today, Montana marketers reach travelers with highly-targeted advertising campaigns, mobile apps and social media engagement.”

The shift appears to have paid off: The number of out-of-state visitors in 2012 — and the amount of money they spent — was nearly triple what it was in 1988.

In 1988, 3.38 million nonresidents visited Montana and spent a total of $583.3 million (that’s about $1.14 billion in 2013 dollars), according to information provided by Voices of Montana Tourism.

Last year 10.9 million nonresident visitors came to the state and spent $3.2 billion — about 7.3 percent of the state’s gross domestic product, according to the latest numbers from the Institute of Tourism and Recreation Research at the University of Montana in Missoula.

That set a record for the number of nonresident travelers visiting the state and for nonresident traveler spending, which increased 12.6 percent compared to the previous year.

Connecting with more travelers starts with identifying what it is that actually attracts people to Montana, Duran explained.

The first reason people come to Big Sky Country is obvious, she said — it’s Montana’s spectacular and unspoiled natural beauty.

The second thing that draws people to Montana are the state’s small, charming towns, which Duran says give people an obvious place to stay while they explore the Great Outdoors.

After that, it’s that visitors want to experience the things that make Montana unique — things like Native American culture, Montana-made goods and specific restaurants and bars, she said.

Understanding that what travelers are really after has shaped the way the Office of Tourism markets the state to visitors, Duran said.

“We’ve sort of labeled it the ‘geo-traveler,’ and what that means is that they really want to experience a sense of place, of the culture,” she said. “They really want to live kind of like a local. People want to hear from other people, not the company or not the person doing the selling. They want to hear about the experience from other people who have visited.”

One of the ways the Montana Office of Tourism has connected with travelers is through its “Get Lost” smartphone app, which uses cellphones’ GPS systems to — with just the tap of the screen — show what destinations are in your immediate area.

Duran says the app connects people with destinations in Montana they “would never know about driving by on the freeway.

“That was very focused on highlighting those out-of-the-ordinary, off-the-beaten-path experiences and that really allowed us to partner with actual businesses and trails and get very specific with visitors about what there is to do around the state,” she said.

One of the Office of Tourism’s latest marketing campaigns features videos of real visitors interacting with the wild experiences Montana has to offer.

“It’s actual video of somebody going to Yellowstone Park and seeing a grizzly bear for the first time, so it’s just a random stranger that we’ve found,” Duran said. “We are really trying to go that direction — let other people sell Montana and the great experiences that they’ve had. Our biggest responsibility overall is to inspire somebody to come to Montana with more of that, ‘Wow, that’s amazing. I really want to go there.’”

According to some industry insiders, the lodging tax, which was passed in 1987, and its contribution to marketing the state as a travel destination is a big part of why Montana is able to attract so many more visitors.

The tax allows hotels and the like to charge customers a 4 percent sales tax that is then pooled and used to market the state as a travel destination. In 2003, an additional 3 percent lodging tax was added.

Just before the original lodging tax passed, Montana was in the bottom few states in the country in state-funded tourism marketing and only spent about $2 million in 2013 dollars a year trying to attract out-of-state visitors — and the money came directly out of the state’s general fund, said Stuart Doggett, executive director of the Montana Lodging and Hospitality Association, who testified before the state Legislature in favor of the tax in 1987.

In fiscal year 2013, the Office of Tourism is projecting having about $15.4 million to work with.

The lodging tax is great for economic development in Montana, Doggett said, adding that “the $3.2 billion that nonresident visitors bring in really matters. It’s bringing new dollars into our economy.”

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Officials say a Carnival cruise ship that had been disabled for days in the Gulf of Mexico has broken away from its moorings in a Mobile, Ala. shipyard.

The U.S. Coast Guard tweeted Wednesday afternoon that high winds are likely to blame for the Triumph becoming dislodged.

Due to strong winds in Mobile, Carnival Triumph, which was docked @ Mobile shipyard, broke away from its moorings. US Coast Guard is on site

— Carnival Cruise Line (@CarnivalCruise) April 3, 2013

Carnival spokesman Vance Gulliksen says the ship drifted and is resting against a cargo vessel. Gulliksen says tug boats and U.S. Coast Guard officials are on the scene.

The Triumph was disabled Feb. 10 by an engine fire that stranded thousands of passengers onboard for days in the Gulf.

It has been docked in Alabama since being towed to port.

Copyright (2013) Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Fox News’ Shepherd Smith comes in with some video and his distinctive voice:

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