HotelNewsNow.com each week features a news roundup from a different region of the world. Today’s review covers Europe.
STR Global reports August hotel performance
The European hotel industry posted mixed results in year-over-year metrics when reported in U.S. dollars, euros and British pounds for August 2011, according to data compiled by STR Global, a sister company of HotelNewsNow.com.
Year-over-year, August 2011 figures for Europe (U.S. dollars, euros and British pounds):
Source: STR Global
“Demand continued to grow across Europe for August and, coupled with limited supply increases, that bodes well for European hoteliers”, Elizabeth Randall, managing director of STR Global, said in a news release. “Whilst we saw the first monthly average rate decline for this year in August, it can mainly be attributed to exchange rate effects. Looking at the region in constant currency, Europe still reported a year-on-year 0.6% increase.”
Germany leads European recovery
Germany’s hotel markets have benefitted from strong growth in the country’s manufacturing, according to a report from HVS London. Hotel trading in most of Germany’s cities is now back to, or exceeding, pre-crisis 2008 revenue-per-available-room levels.
The sector has also been boosted by the German value-added tax decrease from 19% to 7% for overnight stays. This has enabled hotels to raise funds for refurbishment making them more competitive as consumer demand returns.
However, the report highlights the fact that Germany’s secondary cities are recovering slower than primary ones. Düsseldorf and Stuttgart, where the hotel market is closely tied to the trade fair calendar and therefore more prone to cycles, still lagged 2008 at the end of 2010.
Interstate eyes growth in Europe
Interstate Hotels & Resorts’ recently announced joint venture with TVHG Budget Group Beheer is more than just an investment in the latter’s portfolio of nine hotels across the Netherlands. It’s an investment in Interstate’s future in Europe, said Jim Abrahamson, the company’s president and COO.
Interstate, whose portfolio of 330 hotels comprises 12 properties open in Europe, is placing a renewed emphasis on the region.
“Our attention is to build the largest and most quality network of operated hotels within the region,” said Abrahamson, who in June succeeded Tom Hewitt as the management company’s president and COO.
Of the nine hotels included in the deal, one was recently opened: the 112-room Holiday Inn Express Schiphol Airport in Amsterdam. The remaining eight, anticipated to be open by the end of 2012, will be converted from existing buildings to Holiday Inn, Holiday Inn Express or Hampton Inn brands. All nine hotels, comprising approximately 1,800 rooms, will be managed under long-term contracts by Interstate.
Interstate has more than 25 hotels open or in the pipeline in Europe, though Abrahamson would not cite specific numbers. “It’s pretty fluid right now,” he said.
Europe Ad Will Appear Here
Read “Abrahamson: Interstate eyes growth in Europe.”
Jupiter acquires 24 Jarvis Hotels
Jupiter Hotels Limited acquired a portfolio of 24 hotels from the administrators of Jarvis Hotels Limited. The 24 hotels (2,665 keys) comprise 21 freeholds and three leaseholds.
Jupiter Hotels is a new entity created for this transaction and is a 50/50 joint venture between Patron Capital, the pan-European institutional investor focused on property-backed investments, and West Register, part of the Global Restructuring Group of the Royal Bank of Scotland plc.
Andrew Gill, formerly of InterContinental Hotels Group, will become interim CEO of Jupiter Hotels. With the exception of Jarvis's board of directors, all existing employees of Jarvis' head office and the 24 hotels will transfer to Jupiter. The hotels will be rebranded Mercure under a franchise agreement with Accor.
Europe brand survey
Leisure and, to a lesser extent, business travel rebounded during 2010 across most of Europe (but not Spain and the Netherlands), Best Western International was the most improved brand over 2009 and Hilton was the top brand of 2010, according to the Pan European Hotel Guest Survey 2011 conducted by British consultancy BDRC Continental.
Other key findings in the 500-page report:
• Germany was the key source of the uptick;
• leisure demand within specific countries thrived, particularly in Italy and Germany;
• while the business market added more roomnights abroad than domestically, leisure made up far more than two-thirds of demand, underlining its importance as a marketing target; and
• ten of the top 25 “improvers” came from the deluxe tier, six from upper full-service, seven from midmarket (limited-service) and just one from budget (BDRC notes budget and midmarket product is less prominent continentally than other tiers). Growth in branded room supply was modest during 2010, the first in several years demand rose faster than supply.
Europe pipeline
The Europe hotel development pipeline comprises 819 hotels totaling 132,234 rooms, according to the August 2011 STR Global Construction Pipeline Report.
Among the countries in the region, Azerbaijan ended the month with the largest expected room growth (+63.3%) if all 1,601 rooms in the total active pipeline open. Other countries that reported significant expected room growth: Kazakhstan (+25.1% with 1,245 rooms); Russia (+20.4% with 16,236 rooms); United Kingdom (+8.2% with 39,836 rooms); and Romania (+7.6% with 1,965 rooms).
Marriott ramps up development in Italy
Marriott International is ramping up its expansion efforts in Italy.
The international hotel chain in September added two hotels in the country to its Autograph Collection: the Boscolo Palace Roma in Rome; and the Boscolo Venezia in Venice. Two additional Boscolo hotels will join the collection during 2012, one in Milan and another in Rome.
The partnership with Boscolo—which was announced in July and will include a total of six properties in Italy, the Czech Republic and Hungary—was a strategic move toward developing a stronger footprint in Italy, said Carlton Ervin, chief development officer for Marriott in Europe.
Marriott has 20 hotels in Italy. The company has 273 hotels throughout Europe, with an additional 24 in the total active pipeline, according to STR Global.
Read “Marriott ramps up development in Italy.”
Deals, developments and openings
• Best Western opened its first two hotels in Russia: the 970-room Best Western Vega Hotel & Convention Centre and the 153-room Best Western Country Resort Hotel.
• Wyndham Hotel Group will introduce its Wyndham Hotels and Resorts brand to Turkey with the 306-room Wyndham Petek Istanbul, which will open next year.
• An affiliate of Hyatt Hotels Corporation has entered into management agreements with OJSC Nash Dom-Primorye for two new Hyatt hotels in Russia. The Hyatt Regency Vladivostok, Golden Horn and Hyatt Vladivostok, Burny, which will be the third and fourth Hyatt-branded hotels in Russia, are under construction and are expected to open in advance of the Asia-Pacific Economic Cooperation Summit in the autumn of 2012.
• Hilton Worldwide has signed a management agreement with Zagreb-based BP Pluto for its first DoubleTree by Hilton property in Croatia, according to HVS. The DoubleTree by Hilton Zagreb is expected to open in Croatia’s capital in spring 2012.
• Marriott’s Residence Inn by Marriott brand opened its first hotel in Europe, the 125-room Residence Inn Munich City East.
• Starwood Hotels & Resorts Worldwide opened its first St. Regis in Florence, with the opening of The St. Regis Florence. The hotel, formerly the Grand Hotel Florence under Starwood's The Luxury Collection brand, underwent a 10-month restoration.
• Premier Inn opened the 267-room Premier Inn London Stratford. The Whitbread PLC-owned brand will be opening 20 new hotels comprising 3,245 rooms during the next 24 months across London in locations such as Leicester Square, Blackfriars, Old Street, Holborn and Islington, creating 1,000 new jobs.
• Accor opened its first MGallery hotel in the U.K., the 331-room St. Ermin’s.
• Travelodge strengthened its presence in Spain by opening its fourth hotel in Valencia and started building a new 250-room hotel in Barcelona, the Rambla Poble Nou. Both hotels represent a combined investment of £40 million (US$62.6 million) and will create 66 new jobs.
• An affiliate of Cologne-based international hotel owner and investor Event Hotel Group has bought the 280-room Radisson Blu, Tallinn, and an adjacent office building in Estonia for an undisclosed sum. The high-rise city centre property will continue to operate as a Radisson Blu hotel under the management of Event Hotel Group, according to HVS.
• Al Faisal Holding Company, through its subsidiary Al Rayan Tourism & Investment Company, exchanged contracts with Northern Irish developer McAleer & Rushe to acquire the 192-room W London, Leicester Square for close to £200 million (US$313 million), according to ArabianBusiness.com.
• Morgans Hotel Group Company, the operator and 50% owner of the London joint venture that owns Sanderson and St Martins Lane, has entered into a definitive agreement to sell the Sanderson and St Martins Lane hotels for £192 million Sterling, or approximately US$295 million, to Capital Hill Hotels Limited, a Middle Eastern investor with other global hotel holdings. The sales price for the two hotels represents a value of approximately £542,000, or US$832,000, per room.