HotelNewsNow.com each week features a news roundup from a different region of the world. Today’s review covers Europe.
Hotel performance results
The European hotel industry posted positive results in year-over-year metrics when reported in U.S. dollars, euros and British pounds for October 2011, according to data compiled by STR Global, sister company of HotelNewsNow.com.
Year-over-year, October 2011 figures for Europe (U.S. dollars, euros and British pounds):
Source: STR Global
|ADR (U.S. dollars)
|ADR (British pounds)
|RevPAR (U.S. dollars)
|RevPAR (British pounds)
"Despite the economic news across Europe, the hotel market continued to report demand, occupancy and average-room-rate growth,” Elizabeth Randall, managing director of STR Global, said in a news release. “Cities with higher declines in local revenue per available room missed key events from last year: Cardiff (U.K.) benefited from the Ryder Cup last year and Gothenburg (Sweden) from a medical congress. Stockholm (Sweden) and Cologne (Germany) reported increases of more than 20% in RevPAR due to a medical congress and the Anuga trade fair, respectively.”
Brands eye key assets in Europe
Don’t expect hotel brands to loosen the purse strings on development in Europe any time soon, but it’s reasonable to anticipate the addition of key assets to portfolios by companies leveraging strong balance sheets, reported HotelNewsNow.com’s Jeff Higley.
Speakers on a panel about development during the 23rd European Hotel Investment Conference said the economic climate likely is to remain downright overcast for the foreseeable future. They also said there’s not going to be a rush to break the bank to acquire hotels. That means the asset-light position taken by companies during the past decade isn’t in danger of being eliminated.
Philippe Baretaud, director of development for of Accor Hospitality Middle East, said leveraging a company’s balance sheet can help assure the right asset manager is in place for a property.
“There has to be some kind of balance. Asset-light does not mean you are asset-zero,” said Puneet Chhatwal, executive VP and chief development officer for The Rezidor Hotel Group. “Sliver-equity participations together with local and regional investors will become more trendy in the next five or 10 years. I don’t see 100% (ownership) in short term.”
Gateway markets show prowess
Europe’s hotel industry is much like the rest of the world in the wake of the global recession. Gateway cities tend to fare well, but outside those 24-hour mega markets, things got pretty tough. That’s how Nick van Marken, head of Deloitte’s tourism, hospitality and leisure practice, summed up the situation as his company prepared to host the 23rd annual European Hotel Investment Conference.
“There’s always the exception, and if you look at gateway markets in general and in places where barriers to entry are high, they performed well,” van Marken said. “Step into the provincial markets, and it’s much more difficult, much more of a grind.”
Van Marken said cities such as London, Paris and Geneva fall into the top performer category, and it shows up not only in hotel performance but also in the number of transactions in the market and the amount of refurbishment going on at hotels.
Europe development pipeline
The Europe hotel development pipeline comprises 841 hotels totalling 134,437 rooms, according to the October 2011 STR Global Construction Pipeline Report.
Year-to-date 2011, 207 properties opened in the region with 30,579 rooms. In the remainder of 2011, 72 more properties are expected to open with 10,494 rooms. The majority of the new rooms will be in the upscale segment (15 properties with 2,521 rooms) and the economy segment (17 properties with 2,327 rooms).
Europe Ad Will Appear Here
Ireland investment outlook
Despite the global economic crisis, Ireland remains an attractive location for business and investment. The outlook on the Irish tourism and hospitality industry are positive, according to research conducted by Horwath HTL Dublin, a tourism and leisure consulting firm.: 70% of hoteliers expect occupancy to increase; 50% of hoteliers expect room rates to increase; while only 10% expect a further decline in 2011.
A significant positive factor in running a business in Ireland is its low corporation tax rate of 12.5% in comparison to other European countries such as Germany (15.8%) and France (33.33%). Despite pressure from other European Union member states, the Irish Government has made it clear it does not intend to change the rate of tax.
Challenges include a decline in visitor numbers, languishing hotel rates and increased operating costs. Labor costs especially are a concern, despite its decline in recent years. Ireland has the fifth highest net wage level in the Organisation for Economic Co-operation and Development 28 and it’s 35% above the OECD 28 average.
Deals and developments
Rezidor continued this month with its usual flurry of development announcements, including:
• the 150-room Park Inn by Radisson Amsterdam Schiphol, which is expected to open during the third quarter of 2012 and will be Rezidor’s first Park Inn by Radisson hotel in the Netherlands;
• the 138-room Park Inn by Radisson Milan Malpensa, which opened last month after rebranding from the Grand Hotel Milan Malpensa;
• the 152-room Radisson Blu Hotel, Athens, which will open this month after rebranding from the Athens Park Hotel;
• the 180-room Park Inn by Radisson Petrozavodsk, which is scheduled to open in 2013 in Russia;
• the 500-room Radisson Blu Resort & Congress Hotel, Sochi, which is scheduled to open its doors during the first quarter of 2013 in Russia; and
• the 135-room Radisson Blu Hotel, Oslo Alna and the 208-room Park Inn by Radisson Oslo Alna, which will be located in adjacent towers with shared facilities and management; the properties are scheduled to open during the third quarter of 2013.
Deals and development news from other companies include:
• Best Western International opened the 65-room Best Western Plus Ballina Manor Hotel in Ireland;
• Hilton Worldwide signed an agreement with Dijkhuis Vastgoed Management BV for the 94-room Waldorf Astoria Amsterdam, its seventh Waldorf Astoria hotel in Europe.
• Marriott International opened its first hotel in Russia, the 208-room Courtyard by Marriott Irkutsk City Center;
• Travelodge announced a deal with Waitrose to develop three hotels alongside new Waitrose stores in Aylesbury, Sidcup and south England;
• Travelodge also opened its 20th hotel in Birmingham, the 71-room Birmingham Halesowen Travelodge hotel in England;
• Starwood Hotels & Resorts Worldwide will open its second property in Russia, a 333-room Sheraton hotel in Moscow;
• Park Plaza Hotels is to renovate and rebrand two Arenaturist properties in Croatia, on the Istria Peninsula: the 241-room Park Plaza Histria Pula and the 385-unit Park Plaza Verudela Pula, according to HVS;
• Steigenberger Hotel Group plans to start construction on its sixth hotel in Berlin, a 340-room hotel, in autumn next year, with an expected opening date in the first half of 2014, according to HVS;
• The Ballymore Group sold the Radisson Edwardian New Providence Wharf, London, off a guide price of £37.5 million (US$58.5 million) to Edwardian Hotels Limited; and
• Golden Tulip opened the Golden Tulip Savoy Prague on 1 December.
Compiled by Patrick Mayock.