In this roundup of news from Europe: Sweden’s Scandic agrees to buy Finland’s Restel; U.K.’s hotel sector in 2016 attracts £3.4 billion ($4.4 billion), and Venice joins Barcelona in trying to stem tourism numbers.
Hotel News Now each week features a news roundup from a different region of the world. This week’s compilation covers Europe.
STR: Europe hotel pipeline for May 2017
The May 2017 pipeline report courtesy of STR, the parent company of Hotel News Now, showed 167,543 rooms in 1,074 hotel projects under contract in Europe. The total represents a 15.3% increase in rooms under contract compared with May 2016.
Europe reported 77,360 rooms in 487 projects in construction for the month. Based on number of rooms, that is a 21.3% increase in year-over-year comparisons. Four European countries reported more than 5,000 rooms in construction: United Kingdom (15,119 rooms in 114 projects); Germany (13,415 rooms in 66 projects); Turkey (8,280 rooms in 51 projects), and Russia (8,061 rooms in 42 projects).
Scandic agrees to buy Finland’s Restel in €114.5m deal
Scandic Hotels Group has agreed to buy the hotel assets and operations of privately held Finnish group Restel for €114.5 million ($129.8 million) on a cash and debt-free basis. The deal makes Scandic the largest player by hotels and room count in Finland, just as its 2014 buy of Rica Hotels made it the same in Norway. The deal is expected to close by the end of the year.
The Restel deal will add approximately 7,600 rooms in 43 hotels, all in Finland, to Scandic’s portfolio of 45,000 rooms.
“We will go from having 28 properties in Finland to having over 75 hotels, and we can now offer customers the best network and the best contracts,” said Scandic President and CEO Frank Fiskers. “As you know, the hotel business is a scalable business, and we see excellent synergies that we can take out and improvements we can apply.”
Choice and Nordic franchisee increase Europe push
Choice Hotels International and Nordic Choice Hotels are looking to grow in Europe that both claim continues to offer golden opportunity, but there is some debate on the pace of that development between franchisor Choice and franchisee Nordic Choice.
In a video interview with HNN, Nordic Choice CEO Torgeir Silseth said, “There is no secret that we feel Choice’s development in the rest of Europe is not proportional to our development in the Nordics.”
Mark Pearce, SVP of Choice’s international division said, “Choice is very focused on increasing our European footprint. … International growth is one of our company’s key strategic growth opportunities. … We currently have 408 hotels open in Europe with 51,406 rooms, an increase of 4,341 rooms over the past two years.”
Overseas investors to drive U.K. hotel market in 2017
The United Kingdom’s hotel sector attracted £3.4 billion ($4.4 billion) in 2016, which exceeded the the country’s 10-year average, and more is expected as international capital takes further advantage of the weakened value of the U.K. pound sterling.
“The bond markets are driving yield compression for hotel fixed income including ground rents. … A groundswell of cross-border capital is searching for quality going concerns and fixed income,” said Julian Evans, proprietary partner and head of health care and hotels at Knight Frank.
Venice bans new hotel development
Tourism authorities in Venice confirmed the city has implemented new rules to prevent developers from converting buildings into hotels or bed-and-breakfasts, or making extensions to those already in existence, although new applications are to be considered on a case-by-case basis.
Venice is not the first city in Europe to try and stem the tide of hotel and tourism development, which officials said is unsustainable and more of a detriment than a benefit. In January, Barcelona introduced its Special Tourist Accommodation Plan, which it hopes will allow the city more breathing room from its estimated 32 million tourists per annum. Critics contend such decisions will see investors move elsewhere and existing city hotel stock having more of a monopoly than before.
Deals and developments
- A Raffles-branded hotel will open in late 2020 in London, following AccorHotels signing a management contract with the Hinduja Group and developer Obrascon Huarte Lain Desarrollos. The property is a conversion of the Old War Office building in the center of the city, and will have 125 hotel rooms and 88 residences.
- Marriott International’s soft brand Autograph Collection Hotels opened its third asset in Madrid, with the 71-room Hotel Círculo Gran Vía, a 1920s building with Art Deco and Art Nouveau elements.
- Argentine soccer star Lionel Messi, who plays for Spain’s FC Barcelona, purchased the 77-room Mim Sitges, located just south of Barcelona, for a reputed €30 million ($34 million). Catalan hotel firm Majestic Hotel Group will operate the property.
- Chinese insurance company Anbang Group, which owns such stellar assets as the Waldorf Astoria New York and Strategic Hotels & Resorts, bought the 557-key DoubleTree by Hilton Amsterdam Centraal Station from the private equity firm Blackstone Group for €350 million ($397 million).
Compiled by Terence Baker.