Industry Update
Press Release30 August 2010

HVS EMEA Hospitality Newsletter – Week Ending 27 August 2010

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PANDOX SNAPS UP NORGANI
Swedish hotel property company Pandox is to purchase Norway-based Norgani Hotels for an acquisition price of €1 billion. The deal, which is conditional on funding and the approval of competition regulators, will see Pandox’s portfolio swell by 73 hotels and one conference centre located across Sweden, Finland, Norway and Denmark (a total of 12,900 rooms). After the acquisition, the value of Pandox’s hotel portfolio will reportedly rise to €2.3 billion. Some of the Norgani properties need work, such as investment and revised lease structures, and Pandox has estimated the cost of this work to be €125 million.

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ACCOR ANNOUNCES A MID-YEAR SALE

This week, French group Accor has signed a memorandum of understanding for a transaction which will result in the sale of 48 of the group’s Novotel, Ibis, and Etap hotels in France (31 properties), Belgium (10) and Germany (7) for €367 million. The deal is expected to be completed by the end of the year. The hotels will retain their brands and will continue to be managed by Accor under 12-year variable lease deals, which will be renewable six times at Accor’s option.

ARABELLASTARWOOD TO BE NO MORE

The Munich-based Schoerghuber Group has announced that its hotel management company ArabellaStarwood Hotels & Resorts, which was established through a joint venture with Starwood in 1998, is to be dissolved. According to a press release, the Schoerghuber Group has taken the decision to limit its portfolio to its owned hotel properties owing to changes in International Financial Reporting Standards.

FIVE-STAR HOSPITALITY TO RANGE TO KARBALA

UK-based company Range Hospitality is to develop the first five-star hotel in the town of Karbala, central Iraq. The 12-storey, 624-suite Al Rawdatain Gardens serviced apartment complex will be part of The Range – Karbala mixed-use project, which will also include restaurants and health facilities. Commenting on the project, Mohammed Asaria, vice chairman of Range Hospitality, said: “We are in the process of operator selection and the calibre of the companies approaching us is clear evidence of the importance of Karbala within ‘New Iraq’ and the wider MENA region.”

THE CORINTHIA LONDON

Malta-based Corinthia Hotels has released the details of its flagship London property, which is expected to open in early 2011. The Corinthia London will be the brand’s ninth hotel and it is currently being constructed in a Victorian building overlooking Trafalgar Square and the River Thames. According to Corinthia, once open, the 294-room hotel will have the largest suite in London, at 470 m².

CALM TO DESCEND ON LONDON’S CHISWELL STREET

London-based Montcalm Hotels has announced its plans to build a new luxury property on Chiswell Street in London: the Montcalm London City Hotel, which is to be developed on a site left unfinished by buy-to-let hotel company Guestinvest, after it went into administration during the second half of 2008. The 235-room hotel will join its sister property in the West Endthe Montcalm London.

THE EUROPEAN HOTEL FINANCE & INVESTMENT SUMMIT REACHES A DECADE

It is less than two weeks until this year’s Annual European Hotel Finance & Investment Summit. This year marks the event’s tenth birthday, so, if you haven’t already, visit euromoneyseminars.com to book your place and join the party. The summit will be held at the Hyatt Regency Churchill Hotel in London, UK, from 7-8 September. Among the many industry experts speaking at the conference is HVS London’s managing director Russell Kett.

ACCOR’S 2010 HALF-YEAR RESULTS

Accor recorded a strong performance by its hotels business in the first half of 2010 with revenue up 5.1% like-for-like and the EBITDAR margin up by 2.0 points. There has been a return to a positive net profit of €12 million before demerger-related costs and tax expense. By segment, like-for-like growth came to 6.7% in the upscale and midscale segment, and 5.5% in the economy segment. According to Accor’s press release, the growth was led by higher occupancy rates, while average prices in the upscale and midscale segment rose in Germany and the UK, and stabilised in the economy segment. In upscale and midscale hotels in Europe, July RevPAR excluding tax was up 14.1% like-for-like, compared to a 7.1% increase in the first half of the year. In the economy hotels segment in Europe, July RevPAR excluding tax was 5.6% higher like-for-like, compared to a 3.0% improvement in the first half of the year.

GLADEN’S TIDINGS

The news from Spain by Esther Gladen, Business and Market Intelligence Analyst, HVS Madrid. Al Andalus signs an agreement with Possibilitum to manage the Hotetur portfolio: Jamal Iglesias, the majority owner of Al Andalus Hotel Management, has signed a pre-agreement with Possibilitum, the new owners of Marsans. The plan is to take over the management of the Hotetur portfolio (19 hotels), strengthening both the Hotetur and BlueBay brands. A final decision will not be taken before October 2010, but Iglesias states that at present the group´s intention is to purchase two or three hotels and manage seven or eight. The Warm Side turns up the heat in Morocco and the Canary Islands: Canary Islands-based construction company The Warm Side, owned by Satocan, is looking to expand its business by increasing its luxury hotel portfolio, offering personalised services and special amenities. Part of the project is to buy existing properties in beach-front locations and then adapt them to the company’s standards. At present, The Warm Side manages three hotels and two golf courses on Gran Canaria. Its latest product is a development of six luxury villas in Salobre Golf, in the south of Gran Canaria. The group is also looking at opportunities in Agadir.

Accor – Credit Suisse reiterated its "neutral" rating for Accor and kept the share price target at €26.
Millennium & Copthorne – The company rose 0.9% on high volume, rising for two consecutive days.
Sol Meliá – Share prices rose overall despite the fact that Sol Meliá traded at a 23-day low of €5.90 during the past week.

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