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Louvre ups ante for global expansion in 2013
January 14 2013

The Paris-based company opened 70 hotels during 2012 and is on its way to becoming a global owner/operator.

Highlights
  • Louvre opened 70 hotels during 2012, including 48 outside of its home base France.
  • The group is targeting 80 to 85 openings during 2013, three-fourths of which will be outside France.
  • Louvre Hotels Group was formed when owner Starwood Capital merged Louvre Hotels with Golden Tulip in April 2011.  

PARIS—Having completed is international expansion goals during 2012, Louvre Hôtels Group has set its sights on an even more aggressive target for the year ahead.

The Paris-based group—which is less than a year into a reorganization that merged Louvre Hotels and Golden Tulip after their respective acquisitions by Starwood Capital—opened 70 new hotels during the year, including 48 outside of France. The group plans to open between 80 and 85 new hotels during 2013, with more than three-fourths of the hotels located abroad.

Louvre operates more than 1,100 hotels in 42 countries. The company has consolidated ownership in 290 properties and non-consolidated interests in an additional hundred.

The progress made outside of its home country represents several years worth of hard work and positive momentum, said Matthieu Evrard, Louvre’s chief development officer.

Matthieu Evrard
Louvre Hôtels Group

“Louvre Hotels in 2007 had operated 10% of its portfolio outside France” while today that percentage of rooms has grown to 42%, he said. “And in France, we operate about 800 hotels. It’s a huge platform for the French market. But our growth is outside France. That’s why we started the intentional development strategy.”

The two-pronged strategy focuses first on the emerging countries of Brazil, Russia, India and China, where Louvre aims “to capture natural growth of those markets,” Evrard said.

The group opened 31 hotels comprising 4,600 rooms in the BRIC countries during 2012,including:

•    five assets in India;
•    16 in China (helped in part by Louvre’s partnership with China-based Jinjiang Group); and
•    10 hotels in Brazil.

Executives are targeting emerging markets in the Middle East and Africa as well, where Louvre’s portfolio now numbers 55 hotels with an additional 24 in the pipeline.

The second aspect of the group’s international growth strategy focuses on Europe—a mature market where Louvre has been able to capture a lot of market share, Evrard said. Louvre more than doubled its number of openings in Europe (excluding France) during 2012 to 16.

The biggest challenging when developing in either is finding the right strategic partner, Evrard said.

“As a hotel group, we’re going to provide the brand distribution and the operational skill set. We are expecting mainly from the local partner to provide the real estate, development and local financing concepts,” he said.

“The real estate market is very special country by country,” he said, adding that it’s easier to find financing within the country where the development is rather than from an international bank or international investors.

Maintaining an open line of communication throughout the process is also essential, Evrard added.

“From Paris or somewhere else you are monitoring the development execution from far away and you don’t always understand what is happening on the ground,” he explained. “You need to be reassured and make sure things are done.”

Brand expansion
Louvre Hotels Group counts six brands in its portfolio ranging from 1 to 5 stars: Premiere Classe, Campanile, Kyriad, Tulip Inn, Golden Tulip and Royal Tulip Luxury Hotels.

But while the company has a number of arrows in its quiver, executives typically break into new markets with flagship Golden Tulip, which primarily serves international business travelers, Evrard said.

“That’s the first step of the business development strategy in those markets,” he said. “Once we have a critical size of the portfolio with the operations support team and so on,” then the company focuses on the economy segment, which is more for local business travelers.  

The next phase sees the introduction of the lower-rated Campanile brand, which serves domestic business travelers, Evrard said.

“We’re working this year on growing Campanile in India and Brazil because those hotels will open in 2014 or 2015,” he said.

Planting those seeds of development now is the only way to keep the group’s momentum going, Evrard said.

“What is very exciting is that we can notice that the internationalization of the group is really being realized. … Even though there is this global crisis and a lot of companies are suffering on executive and revenue, we keep our heads on top of the curve.

“It’s really exciting to see the results.”

 

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