BERLIN—Anyone looking for evidence of investors’ increased appetite for hotel development need only look to Hilton Worldwide’s increasing pipeline in the Europe, Middle/East and Africa region.
The global hotel chain has notched significant gains during the past few years, according to Simon Vincent, president of the region. During January 2010, Europe accounted for only 6.9% of Hilton’s total pipeline. Two years later, it accounted for 15.7%.
“We are growing significantly,” he said during a break at the International Hotel Investment Forum earlier this month. “We’ve got 190 hotels (and more than 43,000 rooms) in our pipeline. That’s indicative of a pretty healthy environment and appetite that is out there right now. We are seeing banks starting to lend again. We are seeing investor appetite increasing.”
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Simon Vincent Hilton Worldwide EMEA |
Hilton has 303 hotels with more than 74,000 rooms open in the EMEA region.
Notable hot markets for expansion include Eastern Europe, the United Arab Emirates and Africa, Vincent said.
“But in reality, we are expanding throughout the region,” he added. “The U.K. is one of our most established markets, and we’ve got a very strong pipeline in the U.K. Ditto in a country like Turkey where we’ve been operating for over 50 years, and we have 20 hotels open today with a further 20 in the pipeline.”
In more established markets such as the U.K., growth will come from conversion, as was the case with three recently announced DoubleTree by Hilton hotels
The 139-room DoubleTree by Hilton Edinburgh City Centre will become the brand’s first hotel in the Scottish capital following a refurbishment of the former Point Hotel. A former Jarvis hotel will undergo a multimillion pound renovation before opening as the 201-room DoubleTree by Hilton Bristol City Centre. And the 106-room DoubleTree by Hilton Nottingham Gateway will open after converting from the former Nottingham Gateway Hotel.
Emerging markets, on the other hand, will largely see expansion through new builds, Vincent said.
“In a lot of the markets the governments are very actively involved as well, so they’ll be in there with seed financing. It’s very attractive from that proposition,” he said.
Hilton will pitch in some sliver equity or seed money to get the right projects off the ground, but “we principally operate under an asset-light model,” Vincent said.
Growth by leaps and bounds
Hilton’s recent strategic development deal with Foremost Hospitality is a familiar arrow in the development team’s quiver, Vincent said.
“We would always look for strategic development partners. We would always look to do multiple deals with owners. That’s been one of the secrets of Hilton’s success over the years, working with existing partners on multiple deals. … That way you develop a relationship,” he said.
The Foremost partnership will see 10 new Hampton by Hilton and Hilton Garden Inn hotels open in key German markets. Foremost will operate each property.
Finding a skilled partner is even more crucial in the emerging markets, where Hilton executives might not be familiar with local laws and bureaucratic nuance, Vincent said.
“It’s often easier to break into those markets with a partner, and we’re very keen to do that,” he said.
When asked if the group had any growth targets for the EMEA region, Vincent said he’s focused more on a continuous churn than a specific number.
“We’re just looking to execute on the deals that we have signed. We’re clearly ambitious in our growth targets. There isn’t a magic number. It really is just down to us working on the deals that are out there in the marketplace, and clearly we’ve had a great deal of success if you look at the pipeline activity right now,” he said.
Getting each of those 190 hotels up and running is the executive’s No. 1 priority.
“Clearly, if we’re successful, people will come back and do more deals with us. That’s the virtuous circle we work in,” he said. “We’re very focused on meeting the requirements of our partners who are putting in a lot of the money. If we do that, we’ll go on to continuing to have long-standing relationships with those guys.”
His biggest challenge?
“It’s probably talent and getting the right people in the right roles into our hotels,” especially in markets without a long-standing tradition of hospitality, such as Russia, he said.
“We’re having to gear up significantly in terms of our training and our relationships with universities.”