E M E A H OT E L S M O N I TO R J U LY 2 0 0 9 ISSUE 4
EMEA HOTELS MONITOR JULY 2009 Introduction The first six months of 2009 have proven most forecasters wrong. Although hotel performances have dropped off, in most markets they have not dived into the recessionary abyss that many had expected. Consequently, the anticipated flood of distressed sales has not materialised and the hotel transaction market remains gridlocked. The brake on development activity has brought development costs down, but without financing pipelines remain lean. To see if the second half of 2009 yields more deals and to keep in touch with all aspects of our industry, look out for the next edition of EMEA Hotels Monitor in early 2010.
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 38,000 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. 1
Performance Trends
2008
ADR
2009 Occ
RevPAR
ADR
Occ
RevPAR
€
%
€
€
%
€
Abs (€)
%
Abs %
%
Abs (€)
%
Amsterdam
121.80
64.9
79.09
143.20
74.8
107.11
-21.40
-14.9
-9.9
-13.2
-28.02
-26.2
Barcelona
120.05
59.9
71.89
152.14
68.0
103.45
-32.09
-21.1
-8.1
-11.9
-31.56
-30.5
84.63
63.6
53.86
94.53
66.2
62.55
-9.91
-10.5
-2.5
-3.8
-8.70
-13.9
City
Berlin
Growth ADR
Occ
RevPAR
Brussels
114.80
61.6
70.71
124.38
69.3
86.24
-9.58
-7.7
-7.7
-11.2
-15.53
-18.0
Budapest
71.83
48.6
34.88
82.32
61.6
50.69
-10.49
-12.7
-13.0
-21.1
-15.82
-31.2
Cardiff
72.94
67.5
49.22
87.00
69.1
60.08
-14.06
-16.2
-1.6
-2.3
-10.86
-18.1
Copenhagen
110.75
56.6
62.65
117.54
64.9
76.34
-6.80
-5.8
-8.4
-12.9
-13.69
-17.9
Dubai
186.53
70.2
130.88
226.04
82.2
185.73
-39.50
-17.5
-12.0
-14.6
-54.85
-29.5
Dublin
92.00
59.5
54.72
112.04
66.5
74.53
-20.04
-17.9
-7.0
-10.6
-19.81
-26.6
Edinburgh
87.20
72.0
62.80
104.56
72.1
75.36
-17.37
-16.6
-0.1
-0.1
-12.56
-16.7 -11.4
Frankfurt
115.55
56.7
65.55
119.45
61.9
74.00
-3.90
-3.3
-5.2
-8.4
-8.45
Helsinki
106.44
59.5
63.28
113.61
66.9
75.97
-7.17
-6.3
-7.4
-11.1
-12.69
-16.7
Lisbon
88.14
54.1
47.68
97.37
63.4
61.77
-9.23
-9.5
-9.3
-14.7
-14.09
-22.8
London
136.32
77.8
106.11
168.56
78.6
132.52
-32.24
-19.1
-0.8
-1.0
-26.40
-19.9
Madrid
97.16
57.0
55.34
119.58
68.0
81.32
-22.42
-18.7
-11.0
-16.2
-25.98
-31.9
150.64
59.8
90.15
168.91
67.5
114.06
-18.27
-10.8
-7.7
-11.4
-23.91
-21.0 -44.0
Milan Moscow
175.29
58.8
103.09
277.69
66.3
184.17
-102.40
-36.9
-7.5
-11.3
-81.08
Oslo
112.50
65.8
74.07
130.23
71.5
93.11
-17.74
-13.6
-5.7
-7.9
-19.04
-20.4
Paris
212.93
72.5
154.48
233.50
77.8
181.76
-20.57
-8.8
-5.3
-6.8
-27.28
-15.0
Prague
93.06
51.2
47.62
116.53
61.7
71.91
-23.47
-20.1
-10.5
-17.1
-24.29
-33.8
Rome
144.51
58.7
84.89
159.21
65.8
104.80
-14.70
-9.2
-7.1
-10.8
-19.91
-19.0
Stockholm
103.28
63.4
65.45
125.69
67.7
85.13
-22.41
-17.8
-4.4
-6.4
-19.67
-23.1
96.93
60.0
58.17
114.75
68.4
78.51
-17.82
-15.5
-8.4
-12.3
-20.34
-25.9
Vienna Source: STR Global
The first half of 2009 saw revPAR declining right across the globe, with the worldwide economic crisis causing demand to fall in all regions. Asia Pacific and the Middle East, two regions that until September last year had been growing steadily, were - like Europe and the Americas - pulled into steep and dramatic declines, with oversupply and falling demand contributing to the declining revPAR. All 23 cities reviewed show declines in all three key performance indicators with revPAR declining between -11% and -44%.
2
Frankfurt reported the lowest decline in revPAR, with a series of trade fairs helping the city to protect room rate meaning that they only fell by 3%. Trade fairs in other cities and better market conditions generally in Germany, saved German markets from the sharp falls that we have seen in the rest of Europe, with Spain,
Italy, Portugal and Eastern Europe being hit the hardest. Frankfurt’s €66 revPAR, however, is €89 lower than the highest revPAR achieved in Paris. Moscow, which over recent years has grown strongly, is now showing one of the highest revPAR declines of the 23 cities reviewed. The Russian capital dropped 44% to €103, mainly due to a drop in average rate. Despite this, Moscow still achieved €37 higher revPAR than Frankfurt. Prague seemed not to have benefited from the EU presidency, which the Czech government held in the first half of 2009. The additional supply in the market and overall reduced demand has put performance under tremendous pressure, although this market has been poor for a while.
3
Hotel Construction Costs Country
Budget hotels
Mid market - low
Mid market - high
Luxury
€ per key
€ per key
€ per key
€ per key
UK
46,000 - 57,000
110,000 - 128,000
141,000 - 172,000
204,000 - 260,000
Austria
40,000 - 50,000
50,000 - 70,000
70,000 - 120,000
130,000 - 220,000
Belgium
32,000 - 45,000
66,000 - 90,000
130,000 - 180,000
162,000 - 226,000
Bulgaria
16,000 - 30,000
40,000 - 55,000
55,000 - 76,000
95,000 - 151,000
Croatia
33,000 - 46,000
47,000 - 82,000
70,000 - 127,000
105,000 - 170,000
Czech Republic
25,000 - 45,000
40,000 - 70,000
70,000 - 130,000
130,000 - 200,000
Denmark
49,000 - 65,000
76,000 - 108,000
162,000 - 216,000
194,000 - 324,000
France
50,000 - 75,000
96,000 - 110,000
120,000 - 160,000
200,000 - 300,000
Germany
54,000 - 83,000
98,000 - 150,000
125,000 - 187,000
178,000 - 274,000
Greece
32,000 - 42,000
65,000 - 85,000
90,000 - 130,000
150,000 - 200,000
Hungary
27,000 - 52,000
65,000 - 95,000
92,000 - 135,000
135,000 - 230,000
Ireland
58,000 - 68,000
115,000 - 131,000
168,000 - 189,000
224,000 - 257,000
Italy
36,000 - 55,000
52,000 - 80,000
118,000 - 178,000
140,000 - 216,000
- -
50,000 - 58,000
87,000 - 99,000
108,000 - 135,000
Latvia Netherlands
54,000 - 68,000
103,000 - 132,000
150,000 - 193,000
201,000 - 259,000
Poland
29,000 - 43,000
52,000 - 77,000
89,000 - 130,000
126,000 - 207,000
Portugal
30,000 - 40,000
55,000 - 65,000
86,000 - 98,000
117,000 - 153,000
Romania
20,000 - 26,000
37,000 - 48,000
62,000 - 98,000
110,000 - 166,000
Russia
35,000 - 42,000
74,000 - 87,000
111,000 - 135,0000
148,000 - 222,000
Serbia
25,000 - 35,000
48,000 - 69,000
70,000 - 110,000
105,000 - 150,000
Slovenia
34,000 - 49,000
50,000 - 86,000
73,000 - 134,000
110,000 - 179,000
Spain
41,000 - 54,000
99,000 - 118,000
122,000 - 145,000
165,000 - 240,000
Sweden
50,000 - 65,000
120,000 - 170,000
145,000 - 190,000
190,000 - 240,000
Turkey
30,000 - 41,000
40,000 - 60,000
49,000 - 77,000
80,000 - 159,000
Abu Dhabi
51,000 - 68,000
72,000 - 97,000
125,000 - 169,000
217,000 - 374,000
Dubai
47,000 - 62,000
66,000 - 88,000
113,000 - 154,000
197,000 - 340,000
Ghana
29,000 - 47,000
51,000 - 82,000
92,000 - 132,000
112,000 - 174,000
Kenya
18,000 - 22,000
23,000 - 33,000
37,000 - 51,000
46,000 - 55,000
Qatar
67,000 - 79,000
99,000 - 115,000
142,000 - 186,000
276,000 - 386,000
Saudi Arabia
39,000 - 55,000
56,000 - 84,000
100,000 - 132,000
156,000 - 265,000
South Africa
34,000 - 59,000
64,000 - 102,000
112,000 - 169,000
143,000 - 241,000
Source: EC Harris
The effect of falling workload has seen the cost of construction in most countries fall considerably over the past year and the expectation is that this trend will continue through into 2010. In the UK, the construction market is not expected to return to positive territory until 2011. 4
The fall in the value of sterling has reduced UK costs against most European countries, resulting in prices in the UK dropping to eighth place in the global rankings.
Most of CEE remains considerably cheaper than the West. Many of these states appear to have weathered the downturn somewhat better than the UK, partly due to increased infrastructure investment. 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.
5
Transaction Tracker Region
Hotel
Portfolio Transactions 3x Purple Hotels
Location
No. of Keys
Total Price (€)
Price per Key (€)
UK
258
16,100,000
62,000
Sharm El Sheikh, Egypt Vumba Mountains, Zimbabwe
190
134,500,000
708,000
58
6,500,000
112,000
32,000,000
163,000
Single Asset Transactions Africa & Middle East
Four Seasons*
Central Europe
Radisson Blu Clarion Congress Hotel (ex-Atom Hotel) Rogner Hotel
Krakow, Poland Ostrava, Czech Republic Heviz, Hungary
196
Spain
AB Skipper Selenza Gran Vía
Barcelona Barcelona
Italy
Leopard Rock Hotel
169
6,500,000
38,000
232
40,000,000
172,000
241 53
68,600,000 18,000,000
284,000 340,000
Chia Laguna Resort (ex-Le Meridien) Sardinia Hotel Internazionale Bologna
452 116
82,600,000 21,500,000
183,000 185,000
UK
Travelodge London Tower Bridge Master Builder's House Hotel Great Northern Hotel Norfolk Royal Hotel Quality Hotel
London New Forest Peterborough Bournemouth Birmingham
190 25 36 95 176
28,800,000 520,000 2,900,000 9,500,000 5,200,000
151,000 21,000 80,000 100,000 29,000
Other Europe
Park Inn
Oslo, Norway Frankfurt Airport, Germany Lisbon, Portugal Geneva, Switzerland
118
18,000,000
153,000
209
27,500,000
132,000
109 122
29,400,000 93,500,000
270,000 767,000
Park Inn Lapa Palace Hotel des Bergues* * * 39.3% shareholding in the hotel sold off the value shown ** 50% shareholding in the hotel sold off the value shown Source: Cushman & Wakefield Hospitality
The table of transactions in this issue is the shortest to date, a clear reflection of the illiquid state of the market across EMEA. Although the UK has been the most active market in the last six months, the rest of the region has been busy trading luxury assets, including: Lapa Palace, Hotel des Bergues and Four Seasons Sharm El Sheikh. Other notable transactions that have taken place in Europe, for which the price is not public knowledge, include: Sheraton Brussels, Radisson SAS Viking in Stockholm and Popinjay Hotel in Scotland.
6
It is evident that the normally quiet Africa and Middle East region has been relatively active, with two deals listed above and a number of other deals where the achieved prices were not reported. The latter include: Banyan Tree Bahrain and the Royal Hotel in Durban, South Africa. Prices have been rounded where appropriate. 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 the announcement.
7
EXAMPLE PROJECT Strategic Advisory Services The City of London retained Cushman & Wakefield Hospitality to assist with its investigations into whether or not its planning policy towards future hotel provision in the City remains appropriate. This investigation is informing the drafting of the City of London Core Strategy Development Plan Document (CSDPD), which will be published for consultation later in 2009. Our work included an appraisal of current and future supply and demand within the City, its Periphery and in Central London, based on a blend of statistical analysis, policy reviews of neighbouring boroughs, and consultations with industry professionals and hotel owners and operators in the City. Maximising profit and asset value Westin Palace Hotel in Madrid, Spain EC Harris was appointed by Host Hotels & Resorts to advise them on the part refurbishment of the Westin Palace Hotel in Madrid. Our approach involved the use of our hotel efficiency benchmarking database combined with our local delivery knowledge to bring forward the availability of refurbished rooms in advance of the original dates; thereby creating additional revenue. The successful delivery of the project and strong relationship with Host Hotels and Resorts has ensured EC Harris’ appointment to a further series of projects.
8
Westin Palace Hotel, Madrid
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
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