The Hotel Times - March 2008 - (Page 16)

EUROPEAN OUTLOOK » BY ANTHONY FRYER Good times keep rolling Growth expected to continue with influx of new wealth owever you look at it, 2007 years, with approximately 45,000 rooms was an exciting year for the set to open during the year. The U.K. European hotel sector, from has the largest pipeline, dominated by the highs, which included: London. Concerns that a dropoff in The sale of Hilton U.S. travelers would severely impact Hotels Corp. to The Blackstone Group performance have been allayed by a rise for US$26 billion; in the number of overseas visitors from Moscow posting record increases in emerging markets such as Asia. The revenue per available room; number of visitors into Europe from the The continued emergence of Middle East has continued its pattern of investment from the Middle annual increase. While additional East into Europe; U.K. supply will put pressure on SEE To the lows, which included: occupancy levels, it is believed RELATED The decline in the the market will continue to grow STORY: American exchange rate, and RevPAR will continue to Global impacting U.S. tourists increase. development pipeline traveling to Europe; In Russia, which had Page 18 The global credit crunch, the highest room rate of any which put the brakes on European country in 2007, transactions in the hotel sector; RevPAR is being driven by the The last-minute cancellation of the critical shortage of quality supply. There ﬁrst U.K. hotel real-estate investment are 45 hotels planned in Moscow and trust. St. Petersburg for 2008 that will target the higher end of the market. Russia will What is the outlook for 2008? continue to receive a high amount of Total European hotel openings in 2008 investment for the next few years as the will be at the highest rate seen for many race to establish global brands in a highgrowth market continues. H Anthony Fryer is a member of Ernst & Young UK. Contact him at +44 20 7951 7810 or afryer@uk.ey.com. The European construction pipeline–Select hotel markets Forecast for new hotel openings Total pipeline Forecast for new openings (rooms)* Projects Rooms 2007 2008 2009 UK 277 40,441 8,501 11,984 14,695 Spain 96 15,027 4,560 6,389 3,326 Germany 61 12,122 3,310 4,522 3,345 Russia 45 10,807 1,577 2,614 3,376 Italy 50 7,717 2,674 2,564 1,710 France 45 5,635 1,825 1,931 1,972 *Includes only those projects announced into the public domain that have designated land parcels and continue to be pursued by developers. Source: Lodging Econometrics Budget and luxury put the squeeze on the mid-market The European hotel market has polarized around two sectors: economy and luxury. We expect this trend to continue over the coming year, with strong demand for luxury accommodations, as more highnet-worth individuals look for a luxury experience. The economy sector continues to grow, and as long as operators in this sector can overcome the challenge of locating new sites at the right price to meet demand, they will gain additional market share. Independent or small-portfolio, mid-market hotels will struggle, squeezed 16 The Hotel Times March 2008 www.TheHotelTimes.com http://www.TheHotelTimes.com

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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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