PiPeline : EuropE
Human , managing director , HVS Hodges Ward Elliott , London . In addition , most of the assets that do come to market will go to the traditional investors — Middle Eastern sovereign wealth funds and some Asian investors who can afford to wait for a return and plan to get a freehold and hang on to it .
Part of that can be attributed to tightening yields and the high operational costs of those assets , but it ’ s also a dramatic broadening of the investor base that ’ s seeking to capitalize on the low cost of debt in the upscale and midmarket range . Van Marken points out that debt is more readily available , with both alternative capital sources and new lenders ( Wells Fargo , for example ) becoming more active .
Established players are facing competition from more types of investors — and more places — than ever before . “ Within the alternative sector , hotels appear to be the leading asset class ,” Socker says . “ However , it is developments such as the IPD Hotel Index in Europe , which has helped provide transparency about the sector to the investor universe , which in turn provides investors with comfort about this growing sector .”
Institutional investors took notice of the power vacuum left by banks in the aftermath of the recession and low returns on typically “ safe ” investments like government bonds . Investment funds and private equity continue to dominate deals by volume , but institutional investors look set to continue to be a growing force , van Marken says . Asian interest in Europe is growing , but remains selective . Yuste notes many markets in Southern Europe aren ’ t a good fit . “ The Asian investment strategy is usually to buy distressed prices ( below the current market level ), and the prices in Southern Europe have reached bottom ,” he says .
Smit adds the picture will be even more varied going forward , with Dubai acting as a springboard for capital from countries in Central and Eastern Europe and Iran and Syria . “ The Eurozone will not be able to sustain its current bullish currency beyond autumn 2014 , and the swing will go to the U . S . investors , the Middle East and China ,” he says .
Franchising buzz All that is also putting a lot more pressure on hotels themselves to have skin in the game . Sliver equity and performance guarantees are musts , no matter the deal size or type .
When it comes to those deal forms , though , there ’ s one buzzword that has put everything else off to the side : franchising . It has exploded in the past
EuropE ’ s pipElinE : EuropE through Q2
Europe has 797 projects ; 130,168 guestrooms represent a year-over-year increase of 6.2 % by project and a decrease of 0.29 % by guestrooms . Upperand upper-midscale chains dominate the pipeline at 42 % by project and room count .
PrOjEcT cOunT uniTEd KingdOm : 199 projects / 27,989 guestrooms ruSSia : 109 projects / 22,685 guestrooms gErmany : 98 projects / 18,343 guestrooms TurKEy : 66 projects / 11,541 guestrooms SPain : 42 projects / 5,904 guestrooms
marKETS LOndOn : 57 projects / 9,977 guestrooms mOScOw : 35 projects / 9,453 guestrooms iSTanbuL : 31 projects / 5,093 guestrooms Hamburg : 23 projects / 4,474 guestrooms EdinburgH : 19 projects / 3,494 guestrooms
cOmPaniES ( 47 % of all projects ) HiLTOn wOrLdwidE : 133 projects / 22,807 guestrooms accOr : 84 projects / 11,937 guestrooms iHg : 81 projects / 13,644 guestrooms TravELOdgE ( u . K .): 40 projects / 3,640 guestrooms marriOTT inTErnaTiOnaL : 37 projects / 7,713 guestrooms
The ac Hotel Paris Porte maillot is giving marriott a new vehicle to grow in Europe . brandS HiLTOn gardEn inn : 47 projects / 7,772 guestrooms HamPTOn : 46 projects / 6,976 guestrooms TravELOdgE : 40 projects / 3,640 guestrooms HOLiday inn ExPrESS : 33 projects / 4,390 guestrooms ibiS HOTELS : 28 projects / 4,450 guestrooms
Lodging Econometrics
48 HOTELS October2014 www . hotelsmag . com