THE PIPELINE : EUROPE
EUROPE at a glance
ACCESS TO DEBT REMAINS THE BIGGEST CHALLENGE to hotel investors and developers in most European markets , and unstable Eurozone economies are complicating the matter . Still , development and trading remains relatively strong in the major gateways of London , Paris and Amsterdam . |
As of November 2011 , Europe ’ s UPSCALE SEGMENT ACCOUNTED FOR THE LARGEST PORTION OF ROOMS in the pipeline ( 22 %), according to STR Global , followed by upper-midscale ( 19 %) and upper-upscale ( 15 %). |
No market in the region is growing in size and prestige quite as rapidly as TURKEY , which has been insulated somewhat from the financial crisis . |
THE PIPELINE INCLUDES 125,000 GUESTROOMS EXPECTED TO OPEN BY 2014 , a 2 % gain on existing supply , according to Lodging Econometrics . The United Kingdom boasts Europe ’ s largest country pipeline over the next three years , at 27,000 guestrooms , followed by Russia ( 18,000 ) and Germany ( 13,000 ). |
In terms of performance , HOTELIERS IN EUROPE ARE BRACING FOR A SLOWDOWN in RevPAR and occupancy growth following two strong years of rebound . |
relationships with lenders are getting projects done . Patrick Fitzgibbon , senior vice president of development in Europe and Africa for Hilton Worldwide , points to the Waldorf Astoria Amsterdam , under development by Hilton Amsterdam owner Dijkhuis Vastgoed Management BV . “ That ’ s rare ,” Fitzgibbon says of the luxury project slated to open in 2013 . “ Having said that , in the major markets like London , Paris and Amsterdam , you ’ re always going to find some developers who have the capacity — because there is demand — to new-build products in those markets . But that is a small percentage of the growth one would typically see in the market .
“ Once everybody is more comfortable about where the euro is going , I suspect there will be some developers that become even more active ,” Fitzgibbon adds .
Pipeline projections Europe ’ s development pipeline is small , with 125,000 guestrooms expected to open by 2014 , which represents just 2 % of the region ’ s existing supply , according to Lodging Econometrics . The United Kingdom boasts Europe ’ s largest pipeline over the next three years , with 27,000 guestrooms , followed by Russia ( 18,000 ) and Germany ( 13,000 ). Accor , which added about 20,000 newly built guestrooms in Europe last year , expects to add just half that this
“ Whereas in the past development in these markets has been very speculative , we now see that BOTH INVESTORS AND BANKS ARE MORE CAUTIOUS and that only the better projects can be realized .”
– Pierre-Fré dé ric Roulot , Louvre Hotel Group
year . Most of Accor ’ s regional growth will come via franchising and owned or leased hotels subsidiaries in the economy and budget segments .
Development in the luxury segment is pressing forward behind the right project / right location adage . As of November 2011 , luxury accounted for 8 % of Europe ’ s total pipeline , with upper-upscale claiming an additional 15 %, according to STR Global . “ There have been discussions on whether the European luxury hotel market is dead — we don ’ t think so ,” says Carlton Ervin , Marriott International ’ s chief development officer in Europe . “ We have just signed a new Ritz-Carlton in Vienna and a Bulgari in London and intend to develop more luxury hotels throughout Europe . While not all markets can bear luxury hotels , there are many that can .” Europe ’ s gateway cities — led by London , Amsterdam and Paris — will have most of this year ’ s upscale and luxury hotel openings across the region . Before the debt crisis , hotel investors were increasingly venturing into emerging markets in search of higher returns . Now , most investors are retrenching to mature markets , especially in the United Kingdom , where the downturn has caused significant falls in asset values . “ London , which has held up throughout the downturn , remains the most sought-after destination for investment into Europe ’ s hotel sector ,” Human says .
Beyond Europe ’ s gateways , the markets generating the most buzz for 2012 are Turkey and , to a slightly lesser extent , Russia . Turkey is one of the few areas in the region where access to financing remains tenable . Performance there is on the uptick , with Istanbul posting a 49 % spike in gross operating profit per available room for the first
32 HOTELS March 2012 www . hotelsmag . com