HotelNewsNow.com each week features a news roundup from a different region of the world. Today’s review covers Europe.
STR Global: Europe hotel results for July 2012
The European hotel industry posted mixed results in year-over-year metrics when reported in U.S. dollars, euros and British pounds for July 2012, according to data compiled by STR Global, sister company of HotelNewsNow.com.
Hotel prices on the rise
According to the Trivago “Hotel Price Index,” hotel prices throughout Europe have significantly increased since last month. For September, Trivago’s index shows that an overnight stay will cost an average £105 ($171), which is up from just £90 ($146) last month.
In the U.K., there has been an 11% decline in room rates in London now that the Olympic and Paralympic Games are over, with the average overnight stay costing £162 ($263). An even bigger 33% fall has been exhibited in Edinburgh following the Fringe Festival, with the average overnight stay costing £119 ($193). Compared to last year, the prices in London are only 2% more, while the rates in Edinburgh are just 3% higher. This shows that prices in these two cities are back to normal now.
Travelodge creditors approve Company Voluntary Arrangement
Travelodge’s Company Voluntary Arrangement, which the company launched 17 August, was approved. Ninety-seven percent of the company’s creditors, including 96% of landlords from all three categories, voted in favor of the arrangement, in excess of the 75% required for the CVA to be approved.
Budget building boom
Although Inter Ikea stole much of the spotlight this month with news of its plan to break into the budget sector with 100 properties planned, the furniture giant is but one of many players making headway. Trailblazers include Z Hotels in London, Germany's CitizenM properties in Berlin and London, and German brand Motel One, which has plans to open in the United Kingdom in Edinburgh, London, Manchester, and Newcastle, as well as hotels in Brussels and Vienna and more hotels in Germany. All have proven popular with both business and leisure travelers who are looking to rein in costs.
Budget hotel revenues grew faster than the overall sector during 2011: Sales figures for budget hotels rose 10% in 2011, representing a 41% share of the $162.5-billion European hotel industry, according to Euromonitor International analyst Nadejda Popova.
“It is hard to envisage there not being demand for another budget brand, providing it is possible for the brand to achieve critical mass within a short space of time of a homogeneous product, which does the simple things well—provides a comfortable night’s sleep, a good shower and connectivity, whilst providing good value for money,” said Russell Kett, chairman of global hospitality analysts HVS.
Chains work to resolve VAT compliance breach
Several prominent hotel chains in the U.K. are scrambling to resolve an alleged breach of regulations for not including VAT, or the value-added tax, in initial prices shown for some properties online.
The charges were first brought to light when U.K.’s Advertising Standards Authority—an independent organization recognized by the government, the courts and other regulators such as the Office of Fair Trading as the body to deal with complaints about advertising—filed adjudication on InterContinental Hotels Group and its Crowne Plaza brand. The ASA argued VAT-exclusive prices on various property websites were misleading and breached ASA code. The ASA code states that VAT must be displayed if purchasers are required to pay it.
Accor portfolio ‘rebalancing’ gaining speed
By year-end 2016, Accor remains committed to a portfolio that will consist of 40% rooms being managed, 40% under franchise agreements and 20% in owned or leased hotels. To meet that goal, the company is developing a brand-based operating organization to be introduced 1 January 2013. Also, Accor is creating a Property Management Department that will consolidate its property-related activities.
Accor’s Chairman and CEO Denis Hennequin said the company is not willing to go to a 100% asset-light model for several reasons. First, the European market is largely structured so that companies retain ownership in at least some hotels. And secondly, Accor does not want to give up the revenue opportunities that come from hotel operation.
Deals, developments and openings
- Hilton Worldwide announced the signing of a franchise agreement with RB Hotels Limited to open the 171-room Hilton at the Ageas Bowl / Southampton at England's latest test match cricket venue and the home of Hampshire County Cricket Club. The property is expected to open in early 2014.
- Accor opened its first Pullman in the U.K.—the 312-room Pullman London St. Pancras. The hotel features 17 spaces for events and business meetings, including a 446-seat tiered theater for arts and corporate use.
- The Ritz-Carlton Hotel Company opened its first hotel in Vienna. The Ritz-Carlton, Vienna, a 202-room property located on the central Schubertring Boulevard, is the ninth hotel in Europe for the luxury hotel company.
- Starwood Hotels & Resorts Worldwide will open its first Aloft in Russia when the Aloft St. Petersburg welcomes guests in 2015.
- Marriott International will open its 14th hotel in Paris with the 166-room AC Hotel Paris Porte Maillot. The hotel will be operated under a franchise agreement with SHEPI SNC.
- Kempinski Hotels opened the doors to their first hotel in Vilnius, Lithuania, and its first property in the Baltic States. The Kempinski Hotel Cathedral Square is in the heart of the Old Town—a Unesco World Heritage site—right on Cathedral Square and a stone’s throw away from the Presidential Palace.