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EM EA H ot e l s M on itor J a n ua ry 2 0 0 9 I ssu e 3


EMEA Hotels Monitor January 2009 Introduction Wow! What a year. In defiance of the “Credit Crunch”, hotel performances continued to grow strongly at the start of 2008, before beginning their inevitable decline in Q3. By the year-end the number of markets showing positive RevPAR growth in 2008 over the same period in 2007 was 9*. The economic cycle has meant transactions are few and far between due to a lack of liquidity, rising yields and falling profits. However, every cloud has a silver lining and in the face of such stagnation, development costs are expected to fall. We hope you enjoy this latest issue of EMEA Hotels Monitor, and look out for the next edition in Summer 2009. * STR Global, down from 13 for the first half of the year.

Cushman & Wakefield Hospitality employ more than 100 hospitality professionals globally, covering all disciplines. From the world’s largest wholly-owned offices platform, the team can serve you and your business wherever you are based and wherever you want to go.

EC Harris is a leading built asset consultancy generating positive outcomes for clients. We have an international team of Hotel experts - part of a wider network of over 3,500 professionals - who enable clients to get the most from their spend on building, operating, using and owning built assets.

STR Global provides clients with access to hotel research with regular and custom reports covering over 36,000 hotels globally. They provide a single source of global hotel performance data, offering concise, accurate and thorough industry research worldwide and they track a variety of Profitability, Pipeline and Census data covering all aspects of the industry.

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Performance Trends 2008 City

2007

ADR

Occ

RevPAR

ADR

Occ

RevPAR

Growth

%

%

ADR

Abs (€)

Occ

%

Abs %

RevPAR

%

Abs (€)

%

Cardiff

86.80

67.6

58.66

102.19

70.3

71.88

-15.39

-15.1

-2.77

-3.9

-13.22

-18.4

Edinburgh

106.57

74.8

79.74

123.42

77.8

96.04

-16.84

-13.6

-2.99

-3.8

-16.29

-17.0

Prague

110.64

63.0

69.70

115.76

70.5

81.64

-5.12

-4.4

-7.53

-10.7

-11.94

-14.6

Dublin

108.08

66.5

71.88

113.09

74.1

83.79

-5.01

-4.4

-7.59

-10.2

-11.92

-14.2

Lisbon

103.18

59.9

61.79

108.82

64.4

70.05

-5.64

-5.2

-4.48

-7.0

-8.25

-11.8 -11.6

London

158.71

79.9

126.75

176.65

81.2

143.37

-17.95

-10.2

-1.29

-1.6

-16.62

Rome

153.52

64.6

99.23

157.24

71.0

111.60

-3.72

-2.4

-6.34

-8.9

-12.37

-11.1

Barcelona

141.96

66.5

94.41

148.63

70.8

105.24

-6.67

-4.5

-4.30

-6.1

-10.83

-10.3

Budapest

81.57

62.8

51.23

84.05

67.3

56.60

-2.48

-2.9

-4.54

-6.7

-5.37

-9.5

Milan

152.18

61.2

93.13

154.49

65.9

101.85

-2.31

-1.5

-4.73

-7.2

-8.72

-8.6

Madrid

114.44

63.1

72.24

115.35

68.0

78.41

-0.90

-0.8

-4.86

-7.1

-6.17

-7.9

Dubai

220.55

78.1

172.25

224.65

82.8

185.96

-4.10

-1.8

-4.68

-5.7

-13.72

-7.4

Amsterdam

137.97

73.8

101.78

133.83

78.9

105.60

4.13

3.1

-5.13

-6.5

-3.82

-3.6

Frankfurt am Main

104.37

62.1

64.78

103.71

63.0

65.38

0.66

0.6

-0.98

-1.6

-0.61

-0.9

Oslo

120.87

68.1

82.34

113.53

72.5

82.29

7.35

6.5

-4.36

-6.0

0.05

0.1

Helsinki

108.58

68.9

74.81

105.78

70.7

74.75

2.80

2.6

-1.77

-2.5

0.05

0.1

Stockholm

119.79

69.9

83.71

117.59

70.5

82.96

2.20

1.9

-0.67

-0.9

0.75

0.9

Copenhagen

116.17

66.9

77.77

109.34

70.2

76.76

6.84

6.3

-3.27

-4.7

1.01

1.3 1.8

Moscow

265.48

66.2

175.85

256.46

67.4

172.80

9.01

3.5

-1.14

-1.7

3.05

Berlin

92.02

70.4

64.80

87.07

72.5

63.14

4.95

5.7

-2.10

-2.9

1.66

2.6

Vienna

145.57

71.4

103.99

133.65

74.5

99.51

11.92

8.9

-3.02

-4.1

4.48

4.5

Brussels

118.90

68.9

81.91

110.30

70.0

77.19

8.60

7.8

-1.09

-1.6

4.72

6.1

Paris

239.02

78.0

186.40

219.98

78.4

172.55

19.04

8.7

-0.46

-0.6

13.84

8.0

Source: STR Global

„„ 2008 saw a strong first half year performance but the slowdown in demand, particularly in the last quarter, have had a significant impact across Europe and the Middle East. The world‑wide economic slowdown and fall in consumer confidence have made 2008 a tough trading year. Whilst the European cycle turned in 2007, the adverse wider market conditions have intensified the downturn. 2009’s outlook is uncertain, all regions will be impacted and the question is not if, but how severe the impact will be.

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„„ Out of the 23 cities in this selected sample, 14 reported RevPAR declines mainly driven by declining occupancies, however we have also seen average rate drops in 12 markets. Whilst the strengthening Euro

has impacted the results for the UK markets, Prague reported a 24% RevPAR decline in local currency. „„ Ireland was one of the first countries reporting falls in GDP for two consecutive quarters, meaning that technically they are in recession, this paired with additional new supply entering Dublin, meant the city saw a drop in occupancy and average room rates. „„ Berlin,Vienna, Brussels and Paris benefited from increases in ADR to report more than 2% RevPAR increases for the year. However, all are showing declining occupancies. 3


Hotel Construction Costs Country

Budget hotels

Mid market - low

Mid market - high

Luxury

€ per key

€ per key

€ per key

€ per key

UK

62,000 - 77,000

148,000 - 174,000

190,000 - 232,000

276,000 - 352,000

Austria

35,000 - 45,000

50,000 - 70,000

70,000 - 110,000

130,000 - 220,000

Belgium

31,900 - 44,400

65,500 - 88,900

128,800 - 177,800

160,700 - 223,300

Bulgaria

15,500 - 29,400

39,800 - 55,000

55,000 - 75,000

95,000 - 150,000

Croatia

27,700 - 46,200

47,300 - 82,200

74,000 - 127,400

107,900 - 186,000

Czech Republic

27,000 - 52,000

60,000 - 97,000

100,000 - 132,000

138,000 - 230,000

Denmark

48,200 - 64,200

74,900 - 107,000

160,500 - 214,000

192,600 - 321,000

France

50,000 - 75,000

96,000 - 110,000

120,000 - 160,000

200,000 - 300,000

Germany

52,000 - 80,000

95,000 - 145,000

135,000 - 185,000

173,000 - 265,000

Greece

32,000 - 42,000

65,000 - 85,000

90,000 - 130,000

150,000 - 200,000

Hungary

42,800 - 78,100

74,900 - 137,000

117,700 - 212,900

170,100 - 310,000

Ireland

64,500 - 75,000

127,000 - 145,000

183,000 - 210,000

248,500 - 285,000

Italy

36,100 - 54,100

50,900 - 77,400

113,500 - 170,500

138,000 - 208,000

80,200 - 92,800

92,800 - 105,500

123,000 - 153,700

Latvia

    –  

  –

Netherlands

53,900 - 68,000

102,500 - 132,400

149,500 - 192,600

200,500 - 259,100

Poland

33,500 - 57,800

65,900 - 110,900

104,800 - 180,500

139,300 - 266,700

Portugal

30,000 - 40,000

55,000 - 65,000

85,500 - 98,400

117,100 - 152,900

Russia

51,200 - 75,600

72,600 - 100,200

100,200 - 145,800

161,300 - 218,700

Serbia

25,000 - 35,000

48,000 - 69,000

70,000 - 110,000

105,000 - 150,000

Slovakia

17,800 - 27,300

34,600 - 53,500

50,300 - 77,600

68,100 - 103,800

Slovenia

24,700 - 49,300

55,600 - 93,500

92,700 - 126,000

130,000 - 220,000

Spain

41,200 - 53,600

97,900 - 115,400

119,600 - 138,600

157,600 - 221,500

Sweden

57,800 - 71,200

134,400 - 188,000

161,300 - 215,000

215,000 - 268,800

Switzerland

60,000 - 80,000

105,000 - 135,000

140,000 - 190,000

220,000 - 310,000

Turkey

32,100 - 44,900

44,900 - 64,200

52,300 - 80,700

85,300 - 170,500

Ukraine

25,400 - 43,500

54,400 - 65,300

68,900 - 90,600

101,500 - 108,800

Abu Dhabi

62,000 - 73,000

91,000 - 106,000

131,000 - 171,000

255,000 - 364,000

Dubai

62,000 - 73,000

91,000 - 106,000

131,000 - 171,000

255,000 - 364,000

Egypt

60,000 - 75,000

73,000 - 146,000

109,000 - 182,000

146,000 - 219,000

Ghana

29,000 - 47,000

51,000 - 82,000

91,000 - 132,000

111,000 - 173,000

South Africa

31,000 - 53,000

57,000 - 92,000

100,000 - 151,000

128,000 - 216,000

Source: EC Harris

„„ The fall in the value of sterling against the Euro and the US$ means the UK is now the most expensive country in which to build hotels by a considerable margin. „„ Materials’ prices particularly for steel, have fallen dramatically in the past few months as suppliers have reacted to drops in demand. Prices may continue to fall as contractors reduce margins to secure workload. 4

„„ Rates for buildings constructed to local standards, using local techniques may be substantially cheaper.

„„ Schemes built by international contractors may attract a cost premium, although clients may prefer working with a builder with whom they already have a relationship. Costs of 4 and 5 star hotels depend upon the efficiency ratios of the net bedroom to gross floor area which is driven by the density of the bedrooms in relation to meeting and ancillary accommodation. Costs above may include for dry leisure facilities but not swimming pools. Note that figures exclude the costs of furniture, fittings and equipment. Costs include contractors’ preliminaries and overheads and profits, but no allowance for land costs, land procurement fees, or consultants’ fees. Costs are based on a conversion rate of £1 = €1.11.

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Transaction Tracker Region

Hotel

Location

No. of Keys

Total Price (€)

Price per Key (€)

1,954

565,000,000

289,000

567 315 1,552 182

70,000,000 49,500,000 140,000,000 9,900,000

123,000 157,000 90,000 54,000

Portfolio Transactions 6 x Marriott Hotels 7 x Achat Hotels 3 x NH Hotels 14 x Express by Holiday Inn 3 x REIT Hotels

France, Netherlands, Germany Germany Spain Spain UK

Single Asset Transactions Italy

JW Marriott Tiberio Palace Ambasciatori Palace

Capri Rome

61 151

70,000,000 90,000,000

556,000 596,000

Portugal

The Lince Azores Great Hotel Quinta do Alto de Sao Joao

Azores Madeira

154 11

14,000,000 1,150,000

91,000 105,000

Russia

Park Inn Radisson SAS Slavyanskaya Gavan Hotel

Yekaterinburg Moscow St Petersburg

160 410 400

22,500,000 103,000,000 62,000,000

141,000 251,000 157,000

Spain

Los Monteros Hotel Guadelete Summa Peguera Tryp Bracos Barcelo Torre Arias

Malaga Jerez Baleares Logrono Madrid

182 137 175 71 114

115,000,000 12,000,000 10,000,000 6,000,000 15,000,000

632,000 88,000 57,000 85,000 132,000

UK

Premier Inn Trentham Crowne Plaza Blackfriars* York & Albany Hotel Andaz (formerly Great Eastern Hotel) Patio Hotel Swallow Dundee

Staffordshire London London London Aberdeen, Scotland Dundee, Scotland

119 203 10 267 168 103

12,000,000 100,200,000 4,800,000 228,000,000 44,000,000 4,900,000

101,000 494,000 480,000 854,000 262,000 48,000

Other Europe

Hotel Ambassador

Paris, France Nuremberg, Berlin, Germany Helsinki, Finland

294

152,000,000

517,000

610

36,000,000

59,000

202

42,000,000

208,000

2 x Motel One Sokos Hotel * 50% shareholding in the hotel sold off the value shown Source: Cushman & Wakefield Hospitality

„„ A number of freehold interest only transactions have occurred, with the owner of the fond de commerce of the 168‑key Prince de Galles in Paris acquiring the freehold for €144.5 million and The Ascot Group acquiring the freehold interests in their 192‑key Citadines Holborn (London) and 51‑key Citadine Paris Louvre (Paris) for €34.8 million and €21.5 million respectively.

„„ Elsewhere companies have been receiving cash injections: KPO Capital acquired 50% of the Stein Group and Sator acquired 40% of Baglioni Hotels. We do not warrant the accuracy of this data which was obtained from publicly available sources and reported in industry journals. Conversions to euros were made according to the exchange rate at the time of announcement.

„„ Transaction ingenuity manifested itself when Mitchells & Butler asset‑swapped 21 Express by Holiday Inns for 44 Whitbread pub/restaurants (based on similar asset values of €94 million). 6

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Example project Valuation Services Over the last six months the Cushman & Wakefield Hospitality valuations team has been very active valuing going-concerns and a significant number of new development projects across the region. Trading assets have included hotels in London (for example Andaz, Carlton Tower and Lowndes) and the Caribbean (for example Blue Waters, Antigua). Examples of new developments have included: hotel sites in Abu Dhabi, mixed-use development sites in Bahrain and Mozambique, Les Roches Rouge near Roquebrune on the Côte d’Azur and Taymouth Castle in Scotland.

Antigua Creating a competitive advantage through Integrated Technical Services Market conditions are driving hotel operators to drive greater operational efficiency and productivity from their Technical Services Teams. The deteriorating financial environment means that the need for brand and revenue protections has turned the spotlight on Technical Services Teams to: „„ Deliver Completion Certainty „„ Deliver 100% Brand Compliance „„ Deliver Operational Reliability „„ Deliver Cost Savings

8

Total outsourcing of the Technical Service function may not be acceptable but we are finding that the integration of our skills and capability with our clients’ teams is delivering real cost savings, 100% compliance, delivery and operational certainty.


Telephone: +44 (0)20 7935 5000 hospitality@eur.cushwake.com www.cushmanwakefieldhospitality.com

Contact: Allan Sugg Telephone: +44 (0)20 7812 2398 property@echarris.com www.echarris.com/hotels

Š 2009 Cushman & Wakefield All rights reserved

Telephone: +44 (0)20 7922 1930 info@strglobal.com www.strglobal.com

Cushman & Wakefield, EMEA Hotels Monitor, January  

str Global provides clients with access to hotel research with regular and custom reports covering over 36,000 hotels globally. they provide...

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