SPECIAL REPORT : 2014 FORECAST
PPHE Hotel Group recently opened the 107-room Art ’ otel Amsterdam .
EUROPE
QUICK OVERVIEW : It is hard to tell one story for the whole region , but most industry insiders agree 2014 looks better than 2013 . There are still challenges , but Reto Wittwer , president and CEO , Kempinski Hotels , Geneva , says the current difficulties have a silver lining , such as lowering barriers to entry in gateways . Meliá Hotels International ’ s Vice Chairman and CEO Gabriel Escarrer Jaume notes the region may also end up benefitting from instability in North Africa , as more tourism is driven toward European destinations .
PERFORMANCE FORECAST : According to HVS ’ s hotel valuation report , the average market in the region will grow about 3 % a year between now and 2017 . PwC points out rates are hardening in the United Kingdom and should continue to do so through 2014 .
HOT AND COLD SPOTS : The usual suspects aren ’ t going to change much for 2014 . Germany remains a strong market due to economic stability and a booming business sector . Escarrer Jaume notes most European capital cities ( with the exception of Athens ) are safe bets for
investors . Second-tier U . K . cities such as Manchester , Newcastle , Birmingham and Edinburgh are also heating up , though an e-forecasting . com baseline suggests RevPAR in both London and the provinces is set to decrease in April 2014 from the same time in 2013 .
Other localized hot spots include central Amsterdam , where Invesco Real Estate acquired the Park Hotel . However , Invesco ’ s Director of Fund Management Alexander Ernst says the temperature isn ’ t very well regulated in some of these cities . “ We would have thought hard before investing in a hotel on the outskirts of Amsterdam ,” he notes . “ Barriers to entry are lower , but the performance is much more volatile .”
Second-tier cities also won ’ t likely see much improvement just yet in harder-hit countries such as Spain . Paris will continue to be top of mind , both for luxury tourism and lifestyle offerings like IHG ’ s Hotel Indigo brand , which will open a hotel there in 2014 .
STAR SECTORS : According to Wittwer , 3- and 4-star offerings are ripe for takeover and rebranding . In 2013 , the single biggest hotel deal was a 42-hotel portfolio of U . K . Marriott locations . Trophy assets continue to hold interest , especially for Middle Eastern investors , according to Jones Lang LaSalle Hotels .
OPPORTUNITIES AND PITFALLS : In France , Germany and the United Kingdom , business travel will continue to be a major driver for growth in 2014 . In major markets , “ lifestyle ” is a buzzword , regardless of star rating . As Wittwer notes , the increasing number of well-off single travelers is creating a new niche in the market . Openings such as the Ace Hotel Shoreditch ( in 2013 ) and Mondrian London ( slated for 2014 ) are a testament to that , Ernst says .
However , Escarrer Jaume notes hotel companies will need to lighten up their leverage to be able to access what is available . Consolidation among thirdparty operators will also likely lure investors from abroad .
ONE- “ Europe will remain as an
LINER old but solid and always surprising market , being both a shelter for investors and a long shot for trendsetters . Europe reinvents itself after the crisis and is always a safe choice for traditional and emerging feeder markets .”
– GABRIEL ESCARRER JAUME , MELIÁ HOTELS INTERNATIONAL
26 HOTELS December 2013 www . hotelsmag . com