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.
1
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.
2
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.
5
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
7
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