THE PIPELINE : EUROPE
AC Santo Mauro in Madrid has joined Autograph Collection .
half of last year , according to TRI Hospitality Consulting . A study from PwC places Istanbul at the top of both RevPAR and ADR growth lists for fullyear 2011 among major European cities , at 19.5 % and 21.7 %, respectively , despite a 1.8 % occupancy slip .
In Turkey and Russia , Accor plans to double and triple , respectively , its pipelines by 2015 . Starwood Hotels & Resorts Worldwide identifies both countries as its fastest-growing markets in the region . Likewise , Hilton believes Turkey holds the most growth opportunity in Europe , particularly for its midscale and select-service brands . Hilton has 34 hotels open or under development in the country , with its Hampton by Hilton brand having debuted late last year . Several other groups announced initial forays into Turkey in 2011 , including Viceroy Hotel Group , Morgans Hotel Group and the Raffles Hotels & Resorts brand .
Another spot drawing interest is the resort area along the Adriatic Sea , in Croatia and Montenegro , where past turmoil has led to underdevelopment and pent-up demand . “ But these will largely remain on the back burner until the debt markets return to some level of normalcy ,” says Russell Kett , managing director of HVS London .
Paris-based Louvre Hotels Group — which now ranks 10th globally in number of properties — identifies Germany as its prime growth market .
“ Germany has a well-developed hotel market , but relatively low brand penetration ,” President Pierre-Frédéric Roulot says .
Roulot also takes an optimistic view of development in Eastern Europe . “ 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 ,” he says . “ This will , in the mid- and long term , be beneficial for the local hotel markets .”
Louvre has an aggressive development plan for Poland ; in addition to the 10 hotels it already owns in the country , Louvre aims to leverage the strength of its Campanile budget brand to set up Golden Tulip and Tulip Inn properties in Poland ' s 10 largest cities .
Roulot ’ s bullishness notwithstanding , previously hot development markets in Southern and Eastern Europe continue to stagnate . “ The situation has not yet improved in some countries , such as Spain , Italy , Romania , Slovakia and the Czech Republic ,” says Christian Karaoglanian , executive vice president of hospitality development for Accor . “ In addition , the increase of VAT in many countries doesn ’ t really help our industry .”
Conversions continue A dearth of new supply during the downturn has helped Europe ’ s hotels recover value and rate since the 2009 nadir , and the diminished pipeline should help both metrics hold steady even if Eurozone GDP stagnates . Financing for new development is still difficult to secure , keeping new inventory at a minimum , except in gateway cities with high barriers to entry . The exception has been the budget sector , which continues its widespread growth due to lenders viewing such investments as real estate lease deals and thus providing easier access to financing , says HVS London Director Tim Smith .
New-build development is the primary mode of expansion in emerging markets like Turkey , but conversions and reflaggings continue to dominate in mature markets due to their comparatively limited financing requirements and a lack of attractive greenfield sites , especially in the midscale segment . “ A substantial part of Accor ’ s supply growth in Europe will come from the integration of existing hotels — mostly independents looking for an umbrella to improve their room rate and occupancy , but also hotels switching from other brands ,” Karaoglanian says .
Starwood Hotels & Resorts has shifted its focus in mature European markets to a mix of new-builds and conversions , says Bart Carnahan , senior vice president of development and acquisition in Europe , Africa and the Middle East . Marriott , meanwhile , has designed a specific Europe prototype for its Courtyard by Marriott select-service
www . hotelsmag . com March 2012 HOTELS 33