E M E A H OT E L S M O N I TO R AU G U S T 2 0 1 0 ISSUE 6

EMEA HOTELS MONITOR AUGUST 2010 Introduction In Issue 5, we speculated that the volume of distressed sales in 2009 could have been the beginning of something big, but this initial ripple has not resulted in a tsunami of transactions. If anything the system has become even more blocked as banks adopt the “rolling loan gathers no loss” approach. Hotel markets across the region are continuing to perform well and construction costs are falling in most countries. In this issue we also present the first in a series of tabulations - average room sizes by category as stipulated by the big brands.

Cushman & Wakefield Hospitality employs a team of dedicated 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 international Built Asset Consultancy generating positive outcomes for its clients from their investment and expenditure in built assets. EC Harris has an international team of Hotel experts who act as trusted advisors to its clients in planning and executing strategies that optimise the construction, operation, use and ownership of built assets.

STR Global provides clients with access to hotel research with regular and custom reports covering over 40,000 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.

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Performance Trends 2010 City

Amsterdam

 

2009

ADR

Occ

RevPAR

ADR

Occ

RevPAR

Growth

€

%

€

€

%

€

ADR Abs (€)

Occ

RevPAR

%

Abs %

%

Abs (€)

%

123.34

70.6

87.11

123.32

65.9

81.23

0.01

0.0

4.8

7.2

5.88

7.2

Berlin

88.30

65.4

57.75

81.79

62.9

51.43

6.51

8.0

2.5

4.0

6.32

12.3

Budapest

62.60

52.6

32.92

70.53

48.2

34.02

-7.92

-11.2

4.3

9.0

-1.10

-3.2

Cairo Cape Town Copenhagen

98.39

65.4

64.32

93.97

65.4

61.47

4.42

4.7

0.0

0.0

2.85

4.6

125.44

57.6

72.23

86.63

60.2

52.12

38.81

44.8

-2.6

-4.3

20.11

38.6

95.77

57.8

55.35

112.06

56.1

62.88

-16.30

-14.5

1.7

3.0

-7.53

-12.0

Dubai

172.20

73.1

125.91

188.63

69.0

130.07

-16.43

-8.7

4.1

5.9

-4.16

-3.2

Dublin

79.01

62.5

49.36

87.37

59.5

52.01

-8.36

-9.6

2.9

4.9

-2.65

-5.1

Edinburgh

86.21

72.7

62.67

83.37

71.3

59.45

2.83

3.4

1.4

2.0

3.23

5.4

Helsinki

96.32

63.0

60.65

104.77

57.6

60.31

-8.46

-8.1

5.4

9.4

0.34

0.6

London

139.12

79.2

110.15

126.61

77.1

97.63

12.51

9.9

2.1

2.7

12.53

12.8

Madrid

92.67

64.8

60.02

95.30

57.1

54.42

-2.63

-2.8

7.7

13.4

5.60

10.3

Milan

136.62

61.3

83.72

146.98

57.2

84.05

-10.36

-7.0

4.1

7.2

-0.33

-0.4

Moscow

147.28

59.2

87.14

154.05

53.2

82.01

-6.77

-4.4

5.9

11.1

5.13

6.3 -17.2

Muscat

176.82

57.8

102.20

214.65

57.5

123.41

-37.83

-17.6

0.3

0.5

-21.21

Oslo

122.19

59.0

72.13

110.42

60.7

67.05

11.77

10.7

-1.7

-2.8

5.08

7.6

Paris

171.57

74.5

127.77

165.51

71.9

118.98

6.06

3.7

2.6

3.6

8.79

7.4

Prague

73.94

55.4

40.99

83.33

51.1

42.58

-9.39

-11.3

4.3

8.5

-1.59

-3.7

Riyadh

199.29

66.6

132.73

194.11

66.6

129.25

5.18

2.7

0.0

0.0

3.48

2.7

Rome

138.54

64.5

89.40

144.27

57.6

83.09

-5.72

-4.0

6.9

12.0

6.31

7.6

Stockholm

112.76

64.3

72.46

100.70

62.7

63.12

12.06

12.0

1.6

2.5

9.34

14.8

Vienna

90.98

67.3

61.27

94.15

59.2

55.76

-3.17

-3.4

8.1

13.7

5.51

9.9

Zurich

148.31

70.4

104.34

145.09

64.4

93.48

3.22

2.2

5.9

9.2

10.86

11.6

Source: STR Global

„„ After a turbulent 2009, the first half of 2010 saw a recovery for most hotel markets. Occupancy levels improved on weak performances last year, whilst ADR remained under pressure. Middle Eastern markets lagged behind their European and African counterparts as the region went later into the downturn in early 2009.

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„„ Cape Town was the star performer in ADR terms. The FIFA World Cup, which took place 11 June to 11 July 2010, boosted the YTD rates. In June 2010, Cape Town’s ADR grew 117% compared to June 2009 and 18% YTD in local currency. Interestingly, occupancy levels for the month of June remained subdued at 58%, just 7.9 percentage points higher than last year.

„„ Oslo’s room supply increased (+9%) in the first half of this year, which slowed down the occupancy recovery. ADR in local currency just finished the YTD on a virtual par with the first six months of 2009 (-0.7%) „„ London achieved the highest YTD occupancy of the markets reviewed here. The combination of strong demand (being influenced by the favourable Euro/USD to Pound exchange rates) and its continued appeal as a leisure and business destination enabled hoteliers to start rebuilding their ADR (YTD +6.4% in local currency). 3

Hotel Construction Costs Budget hotels € per sqm

€ per sqm

€ per sqm

€ per sqm

UK

1,350 - 1,750

1,700 - 2,210

2,180 - 2,730

2,710 - 3,460

Austria

1,120 - 1,520

1,540 - 1,880

1,790 - 2,800

1,950 - 3,380

Belgium

1,040 - 1,660

1,960 - 2,530

1,810 - 2,730

2,280 - 3,350

Bulgaria

500 - 970

820 - 1,260

970 - 1,500

1,030 - 1,680

Croatia

1,010 - 1,520

1,160 - 1,920

1,320 - 2,100

1,630 - 2,630

890 - 1,260

1,070 - 1,440

1,340 - 1,860

1,780 - 2,270

Denmark

1,410 - 1,890

1,560 - 2,230

2,280 - 3,080

2,390 - 4,140

France

1,490 - 2,110

2,210 - 2,720

2,030 - 2,740

2,720 - 3,800

Germany

1,690 - 2,620

2,230 - 3,470

2,040 - 3,140

2,490 - 3,790

900 - 1,240

1,330 - 1,810

1,360 - 2,000

1,880 - 2,500

600 - 800

960 - 1,210

1,310 - 2,220

1,580 - 2,650

Ireland

1,750 - 2,110

2,530 - 3,030

2,700 - 3,220

3,190 - 3,600

Italy

1,170 - 1,800

1,290 - 2,050

1,990 - 3,010

2,100 - 3,090

960 - 1,210

1,140 - 1,580

1,350 - 1,880

1,550 - 2,300

Netherlands

1,380 - 1,750

1,500 - 1,790

1,640 - 2,070

1,950 - 2,340

Poland

1,030 - 1,810

1,510 - 2,510

1,750 - 2,920

2,190 - 3,950

Portugal

990 - 1,350

1,310 - 1,640

1,510 - 1,810

1,780 - 2,340

Romania

1,010 - 1,320

1,140 - 1,350

1,330 - 1,540

1,570 - 1,740

Russia

1,130 - 1,380

1,730 - 2,080

1,900 - 2,370

2,180 - 3,190

Serbia

850 - 1,210

1,160 - 1,730

1,260 - 1,990

1,630 - 2,280

Slovakia

680 - 1,040

930 - 1,430

1,010 - 1,540

1,190 - 1,720

Spain

1,300 - 1,720

2,300 - 2,760

1,970 - 2,400

2,280 - 3,330

Sweden

1,660 - 2,110

2,090 - 2,740

2,440 - 2,860

2,840 - 3,940

Turkey

1,100 - 1,600

1,200 - 1,880

1,200 - 1,970

1,460 - 2,620 2,310 - 3,520

Czech Republic

Greece Hungary

Latvia

Abu Dhabi

    -    -

Mid market - low

Mid market - high

1,580 - 2,060

1,780 - 2,620

Egypt

1,880 - 2,170

2,200 - 2,590

2,350 - 2,810

Ghana

1,110 - 1,800

1,520 - 2,380

1,690 - 2,420

Luxury

2,570 - 3,090       -    -

Oman

    -    -

1,560 - 2,020

1,760 - 2,580

2,270 - 3,470

Qatar

    -    -

1,600 - 2,080

1,810 - 2,640

2,340 - 3,570

Saudi Arabia

    -    -

1,520 - 1,980

1,700 - 2,500

2,220 - 3,360

Costs may include dry leisure facilities but not swimming pools. Note that figures now include cost estimates for FF&E. Costs include contractor’s preliminaries and overheads and profits, but no allowance for land costs, land procurement fees, or consultants’ fees. Costs are based on a conversion ratio of £1 = €1.11.

Country

Source: EC Harris

„„ The figures above have been calculated from a survey which EC Harris has carried out of construction costs in 50 different countries. Costs are now given per sqm of gross internal floor area (thus multiplying the above by the gross area per key tabulated on the last page of this issue should provide you with a guide cost per key) and include FF&E. 4

„„ Construction costs in many parts of the world have continued to fall over the past year as the global

downturn continues to affect construction workload, reducing contractors’ profits and bringing down tender prices. „„ Western Europe as a whole remains the most expensive region. The fall in tender prices in the UK, down by almost 10% since this time last year, means that the UK only comes in 8th in the European league. 5

Transaction Tracker Region

Hotel

Portfolio Transactions 3x Accor hotels 3x various hotels 5x Premier Inns

Location

No. of Keys

Total Price (€)

Price per Key (€)

Europe UK UK

553 274 400

57,000,000 15,700,000 40,200,000

103,000 57,000 100,000

Single Asset Transactions CEE

Mercure Zabatova Sheremetievo 2 Hotel

Bratislava, Slovakia Moscow, Russia

175 247

17,000,000 49,800,000

97,000 201,000

France

Renaissance Le Parc Trocadero Pullman Paris La Defense Bailli de Suffren Hotel

Paris Paris Paris

116 384 25

35,500,000 77,200,000 5,100,000

306,000 201,000 203,500

Italy

Grand Hotel Timeo + Villa Saint'Andrea Novotel + Ibis hotels

Sicily

161

81,000,000

503,000

Nr Florence airport

400

34,000,000

85,000

Spain

Hotel Husa Paseo del Arte NH Maquinista Hotel

Madrid Barcelona

260 92

50,000,000 8,000,000

192,000 87,000

Turkey

Munamar Hotel Sungate Port Royal Hotel

Iclemar, Marmaris Beldibi, Antalya

180 989

15,000,000 190,000,000

83,000 192,000

UK

Park Central Hotel Travelodge Bournemouth Seafront abba Queen's Gate Hotel St Ermins Cumberland * Coronation Hotel Marriott Marble Arch Doxford Hall Hotel New Northumbria Hotel * * Charlton House Hotel & Spa * *

Bournemouth

60

4,400,000

74,000

Bournemouth

110

8,200,000

75,000

90 285 1,019 23 240 25 57 26

40,000,000 75,000,000 264,500,000 3,000,000 61,500,000 10,400,000 6,700,000 3,400,000

444,000 263,000 260,000 131,000 256,000 414,000 118,000 129,000

Other Europe

Holiday Inn Amsterdam Schipol Chief O'Neill's Hotel Motel One Leipzig Nikolaikirche Marriott Courtyard

Amsterdam, Netherlands Dublin, Ireland Leipzig, Germany Stockholm, Sweden

342 73 194 278

30,000,000 8,500,000 15,000,000 66,000,000

88,000 116,000 77,000 237,000

Middle East

Four Seasons Cairo at The First Residence Jerusalem Regency Hotel

Cairo, Egypt

269

250,000,000

929,000

Jerusalem, Israel

505

47,000,000

93,000

London London London London London Northumberland Newcastle Shepton Mallet

* Price for the head lease only ** Sold out of receivership. Source: Cushman & Wakefield Hospitality

„„ Other deals of interest but not listed include the sale of the Columbus Hotel in Monaco (to be rebranded a Swissôtel) and a few corporate transactions where ownership has changed materially, including: Hoseasons (UK), Fairmont~Raffles Hotels International, Regent Hotels, Tryp Hotels and Interstate Hotels & Resorts. 6

„„ It is worth noting that although there have been few deals in the UK, there are many examples where banks

have been extending and amending loans. Examples include: the owners of 47 Marriotts in the UK, De Vere Hotels, Ramada Jarvis Hotels, Alternative Hotel Group and The Rocco Forte Collection. Prices have been rounded where appropriate. 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 the announcement.

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Hotel Development Parameters   Europe

  MEA

Urban

Resort

Urban

Resort

sqm

sqm

sqm

sqm

Luxury Net area per key Gross area per key

38 - 60 90 -120

38 - 70 90 -145

40 - 60 90 -130

45 - 70 95 -145

Upper Upscale Net area per key Gross area per key

28 - 40 60 -100

30 - 50 70 -110

28 - 50 70 -140

35 - 55 85 -165

Upscale Net area per key Gross area per key

20 - 35 40 - 80

20 - 40 40 - 90

30 - 36 65 -100

30 - 40 70 -120

Mid-market Net area per key Gross area per key

22 - 28 40 - 67

25 - 30 50 - 67

22 - 30 45 - 80

26 - 33 70 - 95

Limited Service Net area per key Gross area per key

13 - 23 20 - 40

21 - 23 33 - 60

Cabin Net area per key Gross area per key

6 -15 12 - 30

10 25

Ratio of gross to net Luxury Upper Upscale Upscale Mid-market Limited Service Cabin

1.8 - 2.5 1.8 - 2.5 2.0 - 2.3 1.7 - 2.7 1.3 - 2.0 1.5 - 2.0

1.6 - 2.4 2.0 - 2.5 2.0 - 2.3 1.7 - 2.7   -    -  -

1.8 - 2.2 1.9 - 2.8 1.9 - 2.8 1.9 - 2.8 1.4 - 2.6 2.5

1.6 - 2.5 2.0 - 3.0 1.9 - 3.1 2.5 - 2.9   -    -  -

Net area per key = size of standard room bay Gross area per key = total built area of the hotel (including public areas and back of house) divided by number of keys Source: Cushman & Wakefield Hospitality

„„ Unsurprisingly, resort hotels tend to have larger room bays and more space for amenities compared to urban hotels, with the gross area per key being significantly larger in resorts. „„ Hotels in Middle East and Africa (MEA) tend to offer larger rooms and more amenities compared to developments in Europe, in both urban and resort markets.

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„„ The “ratio of gross to net” varies enormously depending on the quality of hotel, location and region; whereby the net room area per key can be multiplied by a factor of 1.3 to 3.1 in order to derive an indicative gross area per key.

Telephone: +44 (0)20 7935 5000 [email protected] www.cushmanwakefieldhospitality.com

Contact: Allan Sugg Telephone: +44 (0)20 7812 2398 [email protected] www.echarris.com/hotels

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Telephone: +44 (0)20 7922 1930 [email protected] www.strglobal.com