The Hotel Times - March 2008 - (Page 11)

COVER STORY: EUROPEAN UPDATE Branded properties are making in-roads in the hotel market. BY S H A R O N A N N E WA L D R O P, C O N T R I B U T I N G E D I TO R There are 5 million hotel rooms within the 52 countries that make up the European hotel market. According to Paul Slattery, director, Otis & Co. Advisory Ltd., hotel brands account for more than 1.6 million, which is up from 974,000 in 2000. “There are over 500 hotel brands operating in Europe, most of which account for less than 10 hotels,” Slattery said. The United Kingdom is the most brand-penetrated country in Europe. Slattery said that during the past 20 years, an average of 10 brands per year have either entered or exited the market. “There is a huge range of brand penetration in Europe,” Slattery said. “Within the United Kingdom, it’s about 54 percent. In Italy, it’s only around 7 percent.” Hotel brands offer investors an established and reputable operator. Simon Hudspeth, director and head of hotel consultant Christie + Co., said the company has seen large hotel companies selling their assets subject to management agreement in the past two or three years. “That’s put a lot of hotel investments out into the marketplace, and at the same time there was an influx of private equity and other types of investors,” Hudspeth said. The luxury and budget segments are showing the fastest The growth, said James Chappell, managing director at The Bench. growth that “The growth that we’re seeing is we’re seeing predominately very high end, or at the complete opposite,” he said. is high Premier Inn and Travelodge are end, or at growing very quickly in the United Kingdom. Both are looking at France, the complete Spain and Germany as potential markets. opposite. Marc Dardenne, c.e.o. at Emaar Hotels & JAMES CHAPPELL, MANAGING DIRECTOR, THE BENCH Resorts LLC, said the consolidation of the luxury market will continue to pick up momentum in the coming months and years. This is attributed to a younger guest profile and more luxury brands and brand extensions coming to Europe. “The luxury sector is poised for greater growth,” he said. Dardenne said that a survey conducted by the International Luxury Travel Conference showed that 3 percent of tourists (the luxury guests) accounted for 20 percent of the tourism expenditure, which demonstrates the sector’s potential. Also, the number of high-net-worth individuals—the big spenders—has increased by about 8 percent globally. Rising operating costs will be one of the challenges for the luxury market in 2008. B rand awareness, a surge in luxury and budget segments, and high growth in areas of Central and Eastern Europe lead the projections for the European hotel industry in 2008. “ ” Continued on page 12 March 2008 The Hotel Times 11

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The Hotel Times - March 2008 Business Outlook Editorial Outlook Contents Conference Preview Capital Outlook What's Driving Growth? European Outlook Development Outlook Fractional Outlook Branding Source List Insurance Outlook Brokers Update Brokerage Outlook Lodging's Balancing Act Transactional Facts Lending Outlook Lenders Source List In Closing

The Hotel Times - March 2008

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