BERLIN—InterContinental Hotels Group is revving up its development engine in Europe, helping tow some owners across the finish line to get deals done in what continues to prove a challenging environment.
The group signed 48 hotels representing nearly 7,000 rooms on the continent—an increase of 22% from 2011, according to Robert Shepherd, chief development officer, Europe. IHG opened an additional 39 properties in Europe—the most in the past four years.
IHG has 628 hotels and 102,027 rooms in Europe at present.
“We’re progressing very well,” he said during a break at the International Hotel Investment Forum earlier this month. “We’re really motoring.”
Primary targets include Germany, the U.K., Russia and Turkey.
|
|
Robert Shepherd InterContinental Hotels Group, Europe |
But it hasn’t all been easy, Shepherd admitted.
“What we’re seeing is a lack of debt financing still for new build, and half of our signings were rebrandings,” he said. “We’re seeing quite a lot of non-branded or lesser branded looking for some delivery.”
Intent didn’t always mean conversion, however. Many owners are struggling to pull the trigger—or to get banks on board. IHG is stepping in with a spark where it can, Shepherd said. The group is bringing assistance in the form of key money, loans, some mezzanine financing and even lease guarantees.
“Helping to make deals happen is how we’re delivering these results,” he said.
Holiday Inn Express leads the way
When asked which brands were driving IHG’s growth, Shepherd pointed to the usual suspect.
“No surprise I guess in that it’s in the Holiday Inn brand family, specifically Holiday Inn Express,” he said.
Of the 48 hotels signed, 35 were either Holiday Inn or Holiday Inn Express. The remaining 13 comprised:
- seven Hotel Indigos;
- four Crowne Plaza Hotels and Resorts;
- one InterContinental Hotels and Resorts; and
- one Staybridge Suites.
IHG opened an additional 31 Holiday Inn and Holiday Inn Express hotels in Europe last year.
With five openings during 2012, the Hotel Indigo brand is also gaining traction, Shepherd said. The upscale boutique-inspired brand lends itself to conversion because it has a more flexible design that excludes meeting facilities.
Upscale Crowne Plaza also will emerge as a formidable player in the coming years, Shepherd said. The brand is in the first of a three-phase refresh that will conclude some time during 2014.
“We fully expect to have as impactful a result as we had with Holiday Inn. It’s very important that with each of our brands we ensure that they stay relevant to our target customer. Keeping them up to date is critical,” he said.
Overcoming the ‘scare factor’
For all the doom and gloom, a number of regions throughout Europe such as Germany have solidified themselves as safe havens for investment, Shepherd said.
One need only look to the recent flurry of portfolio trades as a reflection of the growing sense of optimism, he added.
“The value gap between buyer and seller is closing. I think there are some more realistic expectations on both sides of the transactions table. The scare factor of Europe in crisis and all that stuff has just seemed to be less influential, less detrimental than what we first thought,” Shepherd said.
“There are new opportunities, and the challenge which we’re trying to live up to is to be thinking creatively because the same old cookie-cutter way, one-size fits-all-way of doing deals just does not exist anymore.”