From The Economist May 28, 2009 'Surviving the Slump'"Nearly...

From The Economist May 28, 2009 'Surviving the Slump'

"Nearly every business has a woeful tale to tell. For example, Arne Sorenson, the president of Marriott hotels, likens the crisis to the downturn that hit his business after September 11th 2001. When the twin towers fell, Americans stopped travelling. Marriott had its worst quarter ever, with revenues per room falling by 25%. This year, without a terrorist attack, the hotel industry is “putting the same numbers on the board”, laments Mr Sorenson.

The hotel bust, like most busts, was preceded by a breathtaking boom. Although many other big firms resisted the temptation to over-borrow, developers gorged on cheap debt and built bigger and swankier hotels as if the whole world were planning a holiday in Las Vegas. When the bubble burst, demand collapsed. Hoteliers found themselves with a multitude of empty rooms even as a gaggle of unnecessary new hotels was poised to open.

Other industries have suffered even more. Hordes of builders, property firms and retailers have gone bust. And a “carpocalypse” has hit Detroit."


Yet we have Deloitte rolling over to CVC's opportunistic legal skulduggery claiming that OCV should have known when and how the "bust", the "crisis" was going to hit Stella. Costing $2.4B to create, Stella already took a $400M write down (16%) when CVC bought in. In setting their claim to $625M, CVC are effectively saying that OCV should have given Stella a Jan 2008 value closer to $1B than $2B. That OCV should have been able to predict how the GFC would evolve and then how it would affect their Australian business revenues.

On the other hand we have Deloitte saying it can't be sure that OCV was solvent at that time. WOW The gap between the two positions is staggering. Not particularly good for helping reduce the uncertainty in the market place. Uncertainty is holding back recovery and growth apparently.

Unless of course bookings have held up well in AU. which means OCV's auditors were way off the mark when they signed off on OCV's books. Look at what Stella were saying in the press in May this year.

""I've just seen the figures today and there's been no slowdown yet," Stella Hospitality spokeswoman Susan Boyd said. "It's just business as usual.""

"According to the GVH accounts, goodwill is tested for "impairment" annually or "more frequently if events or changes in circumstances indicate that it might be impaired". CVC declined to comment on whether it had revalued that impairment figure."

"He [Mr East] also said the group was on track to beat last financial year's profit 'depending how the group travelled over the next two months'. Last week, the group said it had been buoyed by the recent Rudd stimulus package, experiencing more than 1000 phone calls in one day, booking close to $400,000 worth of holiday accommodation."

"“Sales remain buoyant based on targets for the current economic climate and we are all very confident that we can go from strength to strength.”"

"Mr East said the CVC-controlled Stella was looking at acquisitions that were on the larger scale."

Someone is/was way off the mark. And the SYSTEM with ratings, accountancy, audit and law firms as the high paid play makers, is allowing them to hide. The whole finance industry is so uncertain, so grey and full of illusions and tricks.

Oh and in case you'd forgotten the Deloitte partners are billing us $520 an HOUR excluding disbursements. Let's contrast that with 1.3 million Australians on the minimum wage of $543.78 a WEEK

I'm a PIF shareholder who's losing his savings to this SYSTEM.