HVS EMEA Hospitality Newsletter – Week Ending 18 February 2011

Best Hotel Properties Heads For The Mountains In Slovakia
After it successfully acquired the 231-room Kempinski Hotel River Park, in Bratislava, last year for US$59.7 million, Slovakia-based investment company Best Hotel Properties has completed the purchase of the 98-room Grand Hotel Kempinski High Tatras for US$31 million; this five-star property can be found in the north of the country in the mountain resort of Strbske Pleso.

When One Becomes Two
Marriott International has announced that it plans to split the company’s hotel and timeshare businesses into two separate, publicly traded companies. A new company, which reportedly will be the largest stand-alone timeshare company in the world, will be created exclusively to develop and operate timeshare and fractional products under the Marriott brand and develop fractional and related products under the Ritz-Carlton brand. Marriott International will continue to focus on its hotel management and franchise business. The split is expected to happen later this year through a special tax-free dividend to Marriott International shareholders. Bill Marriott will remain chairman of the board and Marriott’s chief executive officer and Stephen P Weisz, the president of Marriott’s timeshare business, will become chief executive officer of the new company.

Three New Markets For Morgans
US-based Morgans Hotel Group recently announced that it has signed three new management agreements which will see the group gain a new 175-room hotel in New York in 2014 and make its debut in Mexico and Turkey in 2013 with its Delano brand. A 114-room Delano in Cabo San Lucas, Mexico, is already under construction and a 200-room Delano hotel in Turkey is expected to be developed in the west of the country, on the Aegean Sea. Morgans also announced this week that it is to manage a hotel under its Mondrian brand in Qatar; construction has already started on the 265-room hotel, which is owned by a member of the Qatari royal family, and it is expected to be ready by the beginning of 2013. Morgans will operate the hotel under a 30-year management agreement, with options to extend. These new hotels are not Morgans first foray into Europe, however, as the group’s portfolio already includes the Sanderson and the St Martins Lane in London, UK. Commenting on the new signings, Marc Gordon, Morgans’ president, said: “We are particularly pleased to expand our portfolio to new non-US destinations, which we are confident will be just the tip of the iceberg of our future international expansion.”

W Arrives In London
Ten storeys of translucent glass now rise above Leicester Square, in London, in the form of the W London-Leicester Square. This week, the 192-room hotel, which was developed by Northern Ireland-based firm McAleer & Rushe and reportedly cost £200 million to develop, became the 40th hotel to open worldwide under Starwood’s design-led lifestyle brand; although this is the first W in the UK.

A High Five In France And A Quartet In Russia
Marriott International has opened its fifth hotel in France: the 170-room Courtyard Paris Arcueil, which is the first Courtyard hotel in France to sport the brand’s GoBoard® Technology, an interactive touch screen in the hotel’s lobby that provides guests with local information. This week, Marriott also opened its fourth hotel in Russia…another Courtyard no less! The 150-room Courtyard Kazan is now operating under a management agreement with Moscow-based Transstroibank in the city of Kazan, west Russia.

A Second Swissôtel For Ukraine
Swissôtel Hotels & Resorts has signed a management agreement with Ukraine-based investment and development company Interpoint Development for its second hotel in Ukraine. The 333-room Swissôtel Odessa is scheduled to open on the shores of the Black Sea in spring 2013, in the port of Odessa, southern Ukraine. Hotel number one in the country, the 513-room Swissôtel Kiev, is due to open in 2012.

Encore For Ramada…In Newcastle
Wyndham Worldwide is to operate a hotel in Newcastle, in northeast England, under its Ramada Encore brand. The 202-room Newcastle-Gateshead Ramada Encore is expected to open in March 2012. Construction has already started on the development, which is estimated to cost £17 million. The hotel is being developed by Quay Hotels and is the first of a number of midmarket hotels that Quay plans to develop across the UK under the Ramada Encore brand.

Grand City Lands In Larnaca
Grand City Hotels and Resorts has incorporated its first international resort into its portfolio of more than 11,000 rooms: the E Hotel Spa & Resort Cyprus in Larnaca, on the southern coast of Cyprus. Additionally, after taking over the management of the 257-room Radisson Blu Hotel & Conference Centre, Salzburg in June last year, the Berlin-based company has acquired the Mövenpick Hotel Messe at Stuttgart Airport from Frankfurt-based Union Investment; Grand City is now in negotiations with well-known franchisors to operate the 229-room hotel.

A Doubletree Debutante In Istanbul
Hilton Worldwide’s Doubletree brand made its debut in the city of Istanbul, Turkey, this week with the opening of the 171-room Doubletree by Hilton Istanbul – Old Town. This is Turkey’s third Doubletree by Hilton property as Hilton also operates hotels under the brand in the capital Ankara and in the town of Avanos, in central Turkey.

An Island, A Kingdom and A Resort
Mix the above together and what do you get? The Raffles Praslin Seychelles Resort and Residences, which was opened by Kingdom Hotel Investments this week on the island of Praslin, the second-largest island in the Seychelles. Kingdom Hotel Investments holds a 91% equity share in the 86-villa resort, which is estimated to have cost US$145 million.

March Means The IHIF
You’d be as mad as a March hare to miss the 2011 International Hotel Investment Forum next month. There is now less than three weeks to go until the conference takes take place at the InterContinental Berlin, in Germany, from 7-9 March. To get your ticket or for more information click here. The event is expected to attract more than 1,500 investors, operators and industry experts. Some of the topics being discussed at this year’s conference include “why the world economy is entering a new territory and its implications”, “alternative sources and forms of financing” and “does a brand enhance asset value?” Some of this year’s speakers include Russell Kett, HVS London’s managing director; Charles Human, managing director of HVS Hodges Ward Elliott; Philip Bacon, managing director of the HVS Madrid office and HVS Shared Ownership Services; and Arturo Garcia Rosa president of HVS Argentina. Russell’s plenary session on Monday afternoon, 7 March, entitled “CEOs Hard Talk”, features Andy Cosslett, chief executive of InternContinental Hotels Group; Ian Livingstone, executive chairman of London & Regional Properties; and Anders Nissel, chief executive officer of Pandox AB. If you would like to meet with one of the HVS team attending the conference, please email Kerry Phillips at [email protected].

2010 – A Result For IHG
InterContinental Hotels Group (IHG) reported a total revenue of US$1,628 million for the year to 31 December 2010, an increase of 6% on the same period in 2009. Global RevPAR for 2010 increased by 6.2%, with a growth of 8.0% in the fourth quarter of 2010 alone. Total revenue for the EMEA region was US$414 million, an increase of 4.0% on 2009. RevPAR for the region grew by 6.1% in 2010; Germany proved to be the strongest of the major markets with a RevPAR growth of 18.4%. “2010 was an excellent year for IHG. After a slow start to the year, the industry staged the sharpest recovery in its history, exceeding all expectations”, said Andrew Cosslett, IHG’s chief executive. “Our priority is to increase market share and improve margins in an industry set for strong growth over the next few years”, he commented.

Good Performance In 2010 For Millennium & Copthorne’s London Hotels
Millennium & Copthorne has reported a pre-tax profit of £128.6 million for 2010, a 57% increase on 2009. Revenue for the past year grew by 10% to £743.7 million. The group recorded an overall RevPAR of £61.06, a 10.7% increase on 2009. Millennium’s five hotels in London performed well in 2010 with an increase in RevPAR of 7.9% to £90.04 and an 8.4% increase in average rate to £107.45. However, RevPAR for the group’s regional UK properties fell by 1.1% to £44.80 during 2010. Commenting on the results, Kwek Leng Beng, Millennium’s chairman, said: “The economic outlook is more favourable than this time last year, although some uncertainty remains.”

Marriott International’s 2010 Results Marriott International recorded a total adjusted net income of US$435 million for the full year 2010, a 27% increase on 2009. RevPAR for the company’s worldwide comparable systemwide hotels increased by 5.8%. Adjusted EBITDA for 2010 totalled US$1,044 million compared to US$898 million in 2009.