HVS Hospitality Enews Europe - W/e 30 August 2002
Spain is now the second most important tourism destination in the world and its strong hotel market and progressive economy have encouraged HVS International to establish a local presence in Madrid. Laurent de Kousemaeker (pictured, left) has transferred from the London office of HVS International to spearhead this development. Following heavy domestic investment, the quality of the Spanish hotel stock has improved significantly. The hotel sector's increasing sophistication is making it a more attractive target for international investors, developers and operators. "We anticipate considerable short-term consolidation activity and a strengthening of institutional investment demand in the market, and - consequently - the growing need for specialized professional expertise," commented Laurent de Kousemaeker, director of HVS International's new Madrid office. Commenting on this strategic move, Russell Kett, managing director of HVS International's London office noted, "HVS has been keen to capitalise on our considerable experience of working on hotel projects in Spain." "Our new office in Madrid will enable us to improve our network, increase our penetration and provide southern European hotel owners, operators, lenders and investors with all the services necessary to create and enhance the value of their assets," he added. The contact details of the new office are: Paseo de la Castellana, 93-2º 28046, Madrid. Tel:+34 91 5974635 Fax:+34 91 5973054
Hilton International has opened the 320-room Hilton Stockholm Infra City following its refurbishment and its rebranding from a Scandic hotel. The new addition, Stockholm's largest congress and event hotel, brings Hilton's Swedish portfolio to four. Ramada International's Italian hotel count is now three after it opened the 82-room Ramada Fiera in the northern city of Verona. The hotel is owned by Vegna, which is controlled by the Fabbri Group.
While the current economic climate continues to stifle Hilton Group's hotel operations, the company has turned for relief to its Ladbrokes betting chain to give its interim results a lift. For the six months to 30 June Hilton recorded a 9.9% fall in pre-tax profit to £130.0 million, a figure which came close to the top end of the range forecast by certain analysts. Ladbrokes contributed operating profits of £76.5 million, a rise of 19.9%. In contrast, profits from hotels fell 22.6% to £97.8 million, with a decline in marketwide occupancy of 2.8 percentage points, to 62.8%, helping to drive down RevPAR by 5.4% to £44.05. Group turnover was up 34.3% to almost £2.6 billion. Chief Executive David Michels thought that the company had performed relatively well, and added that Hilton would be looking to develop a chain of up to 200 hotels in the mid market sector by 2004. His comments were made in light of Hilton's happy experience with Scandic Hotels, which, following Hilton's acquisition of the portfolio 16 months ago, has now been fully integrated for greater than expected savings.
Iain Ferguson, formerly Group Treasurer and Director of Corporate Finance at Thomson Travel Group, has joined Le Méridien as its new Vice President Finance. Among his many tasks will be that of leading the company's sale and leaseback and restructuring programmes. Meanwhile, Le Méridien's compatriot Accor has officially opened the 102-room Ibis Moussafir Fnideq on the Mediterranean coast of Morocco, the company's ninth Ibis-branded hotel in the country. In contrast, Mövenpick Hotels & Resorts has its first property in Saudi Arabia. The five-star Mövenpick Resort Al Nawras Island in the city of Jeddah has 93 individual villas.
Hilton Group has ended the speculation of recent months by entering into its second sale and leaseback deal. It has sold ten UK hotels, a total of 2,043 rooms, to a limited partnership formed between property group Rotch, the hotel investor Farnsworth and Bank of Scotland for £335.7 million. Hilton made an equity investment of £25 million for a 40% interest in the limited partnership and also entered into 27-year turnover-based operating leases on the ten hotels. The properties involved, which, as at 31 December 2001, had a net book value of £297.4 million, are the Hilton London Kensington and nine hotels in the UK provinces: in Leeds (the Hilton Leeds City), Northampton, Nottingham, Tewkesbury, Watford, York, at East Midlands Airport, and at Cobham and Croydon in Surrey. Hilton Group will now use the money raised to reduce its net borrowings. The company executed its first sale and leaseback deal in March last year when it sold 11 UK hotels to Royal Bank of Scotland for £312 million.
Kempinski Hotels & Resorts has revealed its results for the first half of 2002. The German company, which has more than 30 luxury hotels worldwide, reported a profit after tax and exceptionals of €6.2 million, with strong performances in Russia, Hungary, Spain and China compensating for depressed trading conditions in Germany. Turnover at its managed hotels fell 1.0% to €176.3 million. The company's President and Chief Executive Reto Wittwer said that the outlook for the rest of the year remained challenging. Besides its results, the company confirmed that Dusit Sindhorn, already its majority shareholder with 98.2%, had taken its holding to 100%, with its purchase of the remaining 1.8% stake valuing the company at approximately €140 million.
Jurys Doyle Hotel Group has issued an update covering trading for the three months since the end of its financial year on 30 April. The company is feeling the effect of the current economic climate hardest at its four-star hotels in Dublin and London through reduced room yields. To counterbalance this, the performance of the five-star Berkeley Court and Westbury hotels in Dublin, and of the Jurys Inn hotels in Ireland and the UK, is outstripping that of the comparable period a year ago. The company sees the months of September and October as the key to its interim results: if trading in these two months meets expectations, then trading in the first six months of Jurys Doyle's new financial year will surpass that of the comparable period a year ago. On a separate note, the company announced that Richard Hooper, formerly Director and Chief Executive of Corporate Finance with The Investment Bank of Ireland, is to succeed Walter Beatty in the role of Chairman. Mr Beatty retires at the end of this month, although he will remain a non-executive director.
Despite having managed to avoid plummeting to the depths predicted by analysts at the end of its first half on 30 April, French leisure group and tour operator Club Méditerranée (Club Med) has seen no upturn in its fortunes since then. In the subsequent three months Club Med has seen sales fall 13.5% to €451 million, with a continued trend of late bookings being blamed for the slump. Nevertheless, the group could take some crumb of comfort from seeing bookings in France in the four weeks to 17 August 3.9% ahead of last year's comparable period. Club Med feels that it can limit the effects of the downturn in tourism on its operating income for 2002, and added that its operating income for 2003 can rebound strongly providing there is growth in the tourism sector.
Edinburgh-based Apex Hotels intends the opening last month of the 119-room de luxe four-star Apex City Hotel in Edinburgh to mark the start of a strategy of growth that will see it operating a further 12 hotels within the next five years. According to its Sales and Marketing Director Chris Lynch, the company, which presently has three hotels in Edinburgh, is looking for opportunities in Aberdeen and Glasgow and in other locations in Scotland. Apex might open a fourth hotel in Edinburgh and is already committed to opening the £15 million 155-room Apex City Quay Hotel in Dundee this autumn. Expansion south of the border is also a possibility, with properties being sought in Leeds, Manchester, Newcastle and London. Another company with expansion plans is Eton Group, formerly known as Eton Town House Group, which plans to raise £50 million for the purpose from this autumn. Eton Group currently has four hotels in the UK, with the 66-room Glasshouse set to open in Edinburgh in spring 2003.
Swedish hotel company Pandox, which owns 44 properties in Europe, the bulk of them in Sweden, saw the current weakness in the hotel market reflected in its results for the six months ending 30 June. Revenue fell 1.5% to €30.6 million, and income before tax was down 5.2% to €10.7 million. This latter figure was in line with the company's own expectations; consequently, Pandox is maintaining its opinion that full year income before tax will be €21.9 million, even though by its own admission economic developments in its market area remain difficult to predict in the current climate.
Two tobacco companies have drawn up plans to build a 140-room, four-star hotel in the Russian city of Yaroslavl, north of Moscow. Russian firm Balkanskaya Zvezda and its Indian counterpart DTE Export Privat have formed a new enterprise, Balkan Star Service, to build and operate the hotel, on which Yugoslav developer IBS Management Holding is set to begin work this autumn. Balkanskaya is to contribute 80% of the reported US$10 million construction cost, and the hotel is due to open in autumn 2004.
- Sol MeliáThe share price benefited from the news that in July there was a slight year-onyear increase in the number of tourists coming to Spain.
- Jarvis HotelsEntrepreneur Jack Petchey has now taken his holding in Jarvis Hotels to 14.9%.
- Hilton GroupThe uncertain outlook in the tourism sector coupled with the fall in interim profits had an inevitable effect on the share price. Schroder Salomon Smith Barney cut its rating on the stock from 'Hold' to 'Underperform'.