---------------------------------------------------------- Visit Indonesia Daily News Online HomePage: http://www.indo-news.com/ Please Visit Our Sponsor http://www.indo-news.com/cgi-bin/ads1 ---------------------------------------------------------- Dow Jones July 23, 1999 Hilton Intl Withdraws Services From Indonesian Hotels JAKARTA -- Hilton International (U.HGP) has withdrawn all its worldwide sales, marketing and distribution services from its hotels in Indonesia after a lengthy dispute with the hotel owners over payment, the hotel company said Friday. With immediate effect, Hilton International will no longer provide these services to the five hotels in Indonesia - namely Jakarta Hilton International, Lagoon Tower Jakarta Hilton International, the Hilton Residence, Patra Surabaya Hilton International and Bali Hilton International - which have about 1,800 hotel rooms in total. The five hotels are owned by prominent Indonesian hotelier Pontjo Sutowo and his family. "The dispute is driven by the failure to pay Hilton International and group companies for various global sales, marketing and distribution services provided to the hotels," the company said in a statement. Hilton International Asia Pacific Koos Klein told Dow Jones Newswires the dispute "is over a lot of money and over a lengthy period of time. We wouldn't take such action if the matter wasn't serious." - Contractual Problems With Indonesian Partners - However, the amount of money involved and the financial performance of the hotels weren't the issue, Klein said. "The issues are contractual, it's about the owner's interpretation of the contracts," Klein said. He said if the owners had indicated that they had financial problems, Hilton would have offered assistance. Hilton International managed hotels in Indonesia directly for more than 20 years until 1996, Klein said. In 1996, Hilton International reckoned that it would no longer be possible to manage the hotels without having a local partner because of possible changes to the regulatory structure of the hotel industry. The company subsequently set up a 50-50 joint venture with the hotel owners to manage and operate the five hotels. As a result, additional contracts stipulating the provision of the worldwide support services by Hilton International were signed with the owners. Besides the financial dispute, Klein said Hilton International is also at odds with the owners on how the joint venture should be run. Under the agreement, the two parties jointly appoint the chief executive to the joint venture. But the hotel owners recently decided not to support the extension of the work permit of the chief executive who had been seconded from Hilton International, forcing the chief executive to leave the country a few months ago, Klein said. So far, no replacement has been appointed. "The joint venture is not working out as either party would have liked," he said. The hotels will continue to carry the Hilton name until the dispute is settled, Hilton International said. Because of the withdrawal, Hilton International said it won't accept any liabilities and responsibilities in relation to the hotels and their guests. "At this juncture, Hilton cannot be responsible for the level of service guests will receive in these properties," the company said. Despite the withdrawal, Klein said Hilton International would still "try to come to an amicable solution with the owners. Hilton International is part of the London-listed Hilton Group PLC (U.HGP). -By Noel Fung; 6221-3983-1277; [EMAIL PROTECTED] ++++++++++++++++++++++++++++++++++++++++++++++++++++ Didistribusikan tgl. 24 Jul 1999 jam 07:04:34 GMT+1 oleh: Indonesia Daily News Online <[EMAIL PROTECTED]> http://www.Indo-News.com/ ++++++++++++++++++++++++++++++++++++++++++++++++++++
