THE PIPELINE : EMEA
The hope is that the hospitality market in Southern Europe has hit bottom . “ In touristic markets like Paris , London , Munich and Barcelona , we really feel the new wave of tourism from emerging countries ,” Karaoglanian says . “ The recovery of those markets is driven by the leisure market , and we don ’ t see why they may drop ( further ).”
Meanwhile , unrest in a handful Middle East and North Africa ( MENA ) markets continues to cause headaches for hoteliers throughout much of that region . Leisure tourism to Egypt has slowed to a trickle , and other markets that had appeared poised to become tourism hotspots have been set back several years .
Still , recent results from the region are encouraging — Mövenpick Hotels & Resorts reports a 9.3 % jump in total revenue in the Middle East year-over-year , and Chief Operating Officer Andreas Mattmüller says Saudi Arabia , Qatar and Kuwait are among the most resilient markets for the company . In Tunisia , the birthplace of the Arab Spring protests , in the first three quarters of 2012 RevPAR soared 27.5 % to € 41 ( US $ 55 ), driven by a 7.8 % spike in occupancy , according to MKG Hospitality data .
Sales strategies evolving As few hotel industry leaders anticipate a full recovery in most parts of Europe in the foreseeable future , hoteliers must recalibrate both their strategies as well as their performance expectations .
The hotel industry in EMEA generally is becoming more polarized by segment , says Russell Kett , managing director of consultancy HVS London . “ The luxury traveler , who has money and wants to travel , continues to have opportunities to exercise their privilege , whilst budget hotels are attracting an increasing volume of customers who are seeking better value for money and / or trading down ,” Kett says . “ The conferences and meetings segment has yet to return in many parts of Europe , although there are green shoots of recovery starting to show in some locations . The bulk of the hotels which can be described as being in distress are those in the middle of the market , especially those without the benefit of an international brand .”
In Southern Europe , hoteliers are dealing with reduced inbound
Ramada Downtown Burj Dubai corporate travel and domestic leisure travelers who are unwilling or unable to spend , although the hotel industry is actually faring better than other sectors because of continued leisure travel from abroad . More short-haul leisure trips from Northern and Western Europe are helping buoy occupancy levels somewhat , but it comes with a trade-down effect that is putting pricing pressure on the upscale segment .
An increase in travel from emerging markets is helping offset reduced domestic travel in Southern Europe , forcing hoteliers to adapt marketing strategies . “ Established leisure destinations may find themselves less under pricing pressure than some urban centers which rely heavily on commercial activity ,” says Carlton Ervin , Marriott International ’ s chief development officer for Europe . International tourist arrivals to Spain , for instance , grew about 3 % during the first half of 2012 , even as overall trading figures are approaching 10-year lows .
Mövenpick is optimistic for increased incentives travel , mainly from India , along with intraregional meetings business within the Middle East . However , MICE business from Europe to the Middle East will continue to be off because of the political situation , Mattmüller says .
Pipeline at a trickle What little development activity happening in Southern Europe is in the form of hotel conversions , with independent hoteliers turning to international brands . John Greenleaf , global head of DoubleTree by Hilton , says the brand is making inroads in Spain due to its relationships with regional developers and lenders that can help struggling hoteliers convert .
Meanwhile , fallout from the Arab Spring protests continues to affect much of North Africa , although Libya has actually bounced back fairly quickly . Existing players in Libya — most notably The Rezidor Hotel Group and Corinthia Hotels — look to have market dominance in the short term . “ The competition that was going to come into Libya has obviously slowed down a lot , and that ’ s going to play
26 HOTELS March 2013 www . hotelsmag . com