In spite of more rapid growth in other parts of the world, notably in East Asia & Pacific and the Middle East, Europe retains by far the greatest hotel capacity of the six worldwide tourism regions, as defined by the WTO, with about 6.2 million rooms (an estimated 38%of the total).

Overall, Europe's hotel stock, differs fundamentally from that existing elsewhere in the world in that, for the most part, it consists of older, and, on average, smaller units. The European hotel sector is also far more fragmented than in most other regions worldwide. In Europe only about 20%-25% of room capacity is branded by an integrated chain, (i.e. not including consortia), whereas in North America approximately 70% of the hotel stock is chain-managed or franchised. The rest of the world falls somewhere in between these figures.

Within Europe, the degree of chain penetration varies greatly by country. Basically, countries with large nationally based chains such as France, UK, and Spain have higher levels of chain concentration than countries where the roster of locally based players is limited to small and medium-sized hotel groups as in Germany, Italy and Switzerland.


Paris-based Accor dwarfs all other hotel operating groups in Europe with an estimated 20% of chain-operated capacity in the European Union. As the fourth-ranked hotel company in the world by number of rooms, Accor manages the two biggest brands in the area; Ibis, Mercure, as well as Novotel, Formule 1, and Etap which are in fourth, sixth, and tenth position respectively. In addition to the brands mentioned above, Accor has an upscale flag, Sofitel, and a new extended-stay product, Suitehotels, which has just begun operations in the Paris and Lille metropolitan areas.

Of Accor's 440,807 rooms worldwide at end 2002, 51% or 225,284 are to be found in Europe. Over half of the latter number, or 116,118 (52%) are located in France. In spite of this concentration in its home country, Accor is the number one hotel operator in several other European nations, including Germany, Belgium, Switzerland, Hungary, and Poland.

In March of this year, the former Six Continents split into two separately quoted entities InterContinental, plc, which owns the hotel brands (Holiday Inn, Express by Holiday Inn, Crowne Plaza, InterContinental, and Staybridge Suites), and Mitchells & Butler, which has taken over the group's restaurant and pub activities.

Société du Louvre, a publicly quoted company controlled by the Tattinger family (the Champagne producers), combines both upscale hotels with its Groupe Concorde, and budget hotels (Groupe Envergure.)

Hilton Group, plc is a British-based chain which has the rights to exploit the Hilton name outside the USA, which is the province of Los Angles-based Hilton, Inc. The only thing that links the two Hilton's is a worldwide marketing agreement, as the two entities remain entirely separated as to ownership


For the average independent European hotel, the best affiliation solution is often to be found with a voluntary chain or consortium. These two terms are basically synonymous and refer to loosely structured hotel groupings, which demand less of the individual hotelier in terms of conformity to rigidly prescribed standards, and, especially, in terms of costs. Whilst the independent hotelier can pay as much as 7% to 10% of his annual rooms revenues for an integrated chain brand franchise, such as Holiday Inn or Ibis , voluntary affiliations typically cost much less - between 1% and 2%. In fact, yearly franchise fees charged by an integrated chain often represent only the "tip of the iceberg", as compared to the total outlays necessary to renovate and maintain a property to the chain's standards. Another advantage to the hotelier is the ease with which the affiliation can be cancelled, usually within a period of two years or less, as opposed to chain franchise or management agreements which typically stretch over decades.

In any case, the great majority of independent European hotels are unattractive to the major "hard brand" chains due to being too small, or having the wrong location. Integrated chains favour properties having at least 50 rooms and located in urban areas or nearby transportation arteries such as motorways or airports. Thus for all the above reasons, a voluntary association frequently best meets the needs of the independent European hotelier. For instance, in Switzerland, a country notorious for its highly fragmented hotel sector, an estimated 27% of total rooms capacity is affiliated to a consortium, whilst only 8% of rooms are branded by an integrated chain. Elsewhere, voluntary chain associations are well-developed in France, Spain, and Germany, although no precise figures exist as to penetration of the overall hotel stock.

Whilst consortia and representation groups have been typically structured as not-for-profit associations, organised on a country-by-country basis, there is a trend, particularly in the upscale segment, for them to become profit-making enterprises. For example, Leading Hotels of the World, Relais & Chateaux, and Indecorp (which manages the Preferred Properties, Summit, and Sterling brands) have been incorporated as for-profit entities.

As can be observed in the table above, most of the major affiliations lost capacity over the last year. This development was due, to a considerable extent, to a tightening of standards on the part of the consortia. Best Western, for instance, has announced fourteen new operating standards, covering such basic items as requiring coffee and tea making facilities, hair dryers, and ironing boards in all guest rooms to free local phone calls and data port connections, which were to be respected as of the beginning of 2001. Best Western has yearly inspections and even Logis de France with almost 4,000 hotels has one person who visits each new affiliate's premises. Relais & Chateaux has ejected 161 properties which failed to meet its increased quality standards.

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Macy W. MARVEL - MBA (Toronto), MA (London School of Economics). Has professional experience in the financial sector. Before joining the EHL in 1996, he spent eight years as an investment strategist and financial analyst for two private banks in Geneva. Prior to that, he has held the position of finance trainer at Digital Equipment Corporation, was an auditor for PriceWaterHouse Coopers and securities analyst at the Value Line Survey in New York.