Editor’s note: This is the first of a two-part series on major hotel brand development in Europe. Four of the world’s largest hotel companies—Hilton, InterContinental Hotels Group, AccorHotels and Hyatt Hotels Corporation—have big plans for the continent. This article covers Hilton and IHG. The next article will focus on AccorHotels and Hyatt.
REPORT FROM EUROPE—Hilton and InterContinental Hotels Group, two powerhouse brands of the hospitality industry, see opportunities in Europe and have focused their expansion plans on the continent around their select-service brands.
Hilton, on one hand, has grown its Hampton and DoubleTree brands into major players in the region and hopes to do the same with Tru by Hilton. IHG has its sights set on Germany, and its goal is to pin its expansion efforts on its Holiday Inn brand.
Europe-based executives from both companies gave Hotel News Now an update on their development strategies.
Hilton’s brand recognition in Europe
While Marriott International vaulted to the top spot in the race to reach 1 million global guestrooms with its 2016 acquisition of Starwood Hotels & Resorts Worldwide, Hilton has reached the 100,000-room mark in Europe, according to Patrick Fitzgibbon, the company’s SVP of development for Europe, the Middle East and Africa.
“That number is a trigger point,” Fitzgibbon said. “It is significant, but Europe remains fragmented. For us, there is huge opportunity.”
Hilton will continue its growth in Europe because of its sustained success, which appeals to investors, he added.
“We’ve grown broadly with other people’s capital, and 50% of our hotels come from developers with track records,” he said. “There is no better argument for those who are looking at us for the first time, and overriding it all is our track record of hospitality.”
The first Hampton Inn & Suites hotel in Europe opened seven and a half years ago, Fitzgibbon said, and today there are 57 Hamptons across the continent. The Hampton and Hilton Garden Inn brands are part of what Hilton calls its focused-service portfolio, which European owners seem to love.
“They just get it,” Fitzgibbon said.
The DoubleTree by Hilton brand now has 103 assets across Europe, he said.
“All these brands have grown in Europe because a specific market space has been identified by us, owners and guests,” he said. “Added to that is Canopy,* which (we’re) targeting exciting destinations. Our first is in Reykjavik, and Hilton has definitely helped Reykjavik grow as a destination.”
Tru by Hilton, the company’s newest brand in the midscale segment, not entered Europe—yet. Still, executives claim Tru will one day have the largest footprint of all Hilton brands.
“We also are not afraid to say no,” Fitzgibbon said. “It’s all about the right hotel for the right location for the right owner.”
He said he is confident Hilton will continue to have strong growth in Europe, even in Russia and Turkey, where the company hopes to have more than 50 properties each. The 169-room Hilton Saint Petersburg ExpoForum recently opened on 27 March.
“Mostly, investors are local,” Fitzgibbon said.
Hilton also aims to expand in France, he said, adding that modular-construction development could be an option.
IHG’s focus on Germany
InterContinental Hotels Group is continuing to expand across all of Europe, but a good share of that development activity centers on Germany, Europe’s largest economy. Like Hilton, IHG is promoting its select-service brands, according to Martin Bowen, IHG’s associate VP of development, Germany, Austria and Switzerland.
“Germans want no thrills, so we have cleaned up our Holiday Inn estate,” Bowen said. “A couple of ‘old uncles’ needed some tender loving care, and some (hotels) were let go, which is a good message to send to both guests and investors.”
Approximately 50 new assets across Europe will receive Holiday Inn’s new open lobby concept, he said. Multi-development agreements with nine investment partners have made IHG’s European expansion possible.
IHG is also gaining a foothold in drafting management agreements instead of solely lease agreements, which are typically Germany’s favorite model.
“Yes, 90% are leases, but for example, the Hotel Indigo in Dresden is a management agreement, and any rollout of Kimpton will be the same,” Bowen said. “Management agreements allow you to be closer to the hotel, especially when you introduce a product.”
For Kimpton, IHG’s most anticipated rollout in Europe, Bowen said discussions in Germany center on bringing the brand to Berlin, Hamburg and Munich, and one or two announcements will be made this year.
He said the franchise-plus model is gaining ground in Germany, which shows to investors that IHG has some monetary involvement and more transparency is involved.
“Leases are not a relationship with owners,” he said. “Franchise-pluses will close that circle, and they’ve already been well-received.”
Hotel Indigo also is growing in Germany, with a third property to open in Berlin and others due for Dresden and Düsseldorf. But Bowen said Holiday Inn will see the greatest expansion.
“For Holiday Inn, scale matters,” he said, adding that nine or 10 properties will open in the country in 2017 followed by more than 20 in 2018.
Altogether in Germany there are 69 Holiday Inn properties open.
“It is important to crack 100 in the Germany market,” Bowen added. “We see 82 cities in Germany, which historically is a regional market.”
Across all of its brands, IHG wants between 200 and 220 assets in Germany, Bowen said, but he insisted it is not a race for the British-based brand.
“We’re interested in every city that is the backbone of German industry and has approximately 100,000 inhabitants,” he said.
Challenges derive from German guests’ price-conscious attitude and from overseas competition entering the market, Bowen added.
*Correction, 4 April 2017: An earlier version of this story misidentified Hilton's Canopy brand.