tm yearbook 2015 - ch.cms-horwathhtl.com · 82 hotel yearbook 2015 annualedition. austria with 15%...

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2015HOTELYearbookFORESIGHT AND INNOVATION IN THE GLOBAL HOTEL INDUSTRY

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A special excerpt from The Hotel Yearbook 2015

The 2015 outlook for key geographic markets in EuropeExclusive country reports from Horwath HTL

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Hotel, Tourism and Leisure

Experts on next year’s trends, and the even bigger picture: our world in 2025

Vivek Badrinath discusses Accor’s new digital strategy

50 exclusive mini country reports, provided by Horwath HTL

The changing hotel investment landscape in 2015 and beyond

Dubai: back from the brink and roaring ahead


www.hotel-yearbook.comThis e-publication may be ordered online € 19.50

Horwath HTL (Hotels, Tourism and Leisure) is the world’s largest and most experienced Hospitality consulting

brand, with over 50 offices in 39 countries. Over the last 25 years, Horwath HTL has gained extensive local market

knowledge through involvement in thousands of projects, and have a reputation for always providing the

highest levels of service. Banks, financial institutions, hotel and real estate companies around the world have

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Horwath HTL is a member of Crowe Horwath International, a professional association of accounting and

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We all know that the future will be different, but how will it be different? For companies in the hospitality

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change, ushering in new kinds of customers and competitors, creating new opportunities, and affecting

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the Hotel Yearbook.

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With an exclusive focus on global hospitality and tourism, Hsyndicate.org (the Hospitality Syndicate)

provides electronic news publication, syndication and distribution on behalf of some 750 organizations

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This excerpt from the Hotel Yearbook 2015is brought to you by :

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At Horwath HTL, we focus one hundred percent on hotels, tourism and leisure. With over two hundred and fifty professionals world wide, our network can draw on a tremendous amount of international experience and local knowledge that gives us, and our clients, a unique advantage.

We offer a broad range of advisory solutions that covers the whole cycle of the hotel product, starting with planning and development, on to asset management and operational advice, to transactional and financial restructuring. At any stage, Horwath HTL will add value to your project and ensure that you receive the very best support every step of the way.

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CouNTrY rEporT20

15



AUSTRIA by Gerald Kroell i

2014 SNAPSHOT

• Austria’sGDPincreasedby0.6%inthefirsthalfof2014vs.2013,withthetravelandtourismsectorrevenueindexforQ22014increasingby3.2%comparedtolastyear’sresults.Thecountry’sunemploymentratewas5.0%attheendofQ3,thesecond“best”performerintheEU28.However,thiswasaslightincrease(0.2%)comparedto2013.

• Austriawasranked6thintheEurope2020CompetitivenessReport2014bytheWorldEconomicForum.

• TotalarrivalsYTDwere32.6million,witha1.8%increaseYoY,whilea0.8%decreaseinovernightsindicatesshorterstays,atrendwhichhasconsistentlyincreasedoverthelastfewyears.

• YTDtotaldecreaseof-0.8%inovernights(-1%forinternationalguests,-0.4%fordomesticguests).

• EspeciallytheEuropeaninboundmarketsareshowingatrendtowardsashorterlengthofstaycomparedtolastyear,atanequalnumberofarrivals.

• Citytourismisbooming(Vienna+5.9%,Salzburg+3%).

• PositiveOCCperformanceincomparisontoEurope(+3.29%YoY).AustriatraditionallylagsbehindinADRandRevPAR.Forexample,ADRisbehindEuropebyEUR15.60,evenwideningthegapby1%YoY.RevPARisbehindEuropeanaveragesbyEUR9.13.

• WinnerofHorwathHTLAustria’sInvestmentRanking2014wasMotelOnewithanAAArating.Steigenbergerisseenaspreferredinvestmentpartner.

BUSINESS SCENARIOS FOR 2015 AND BEYOND

Nichesegmentslikeservicedapartments(aparthotels)willplayanincreasingrole.Forexample,WienwertServicedApartmentsViennaisaconceptofferingplacestostayintraditionalandhistoricbuildingswithananonymous24-hourself-check-inanddecentservice.

TheBRICmarketsaredevelopingatdifferentpaces:Chinacontinuestogrow(+17.95%YoY).Ontheotherhand,inthesummerseasonRussia(oneofAustria’shopemarkets)declined11.3%inovernightstaysYoY.DuetothepositivedevelopmentoftheUScurrencyandeconomy,theUSAmaybeconsideredsuchamarketinthenearfuture.IncreasingnumbersfromEasternEuropeancountrieslikePolandandtheCzechRepublicshowgreatpotential.Themainmarkets–Germany,NetherlandsandItaly–willdeclineslightlyin2015.

TheimpactofclimatechangewillinfluencetourisminAustria.Dependingonweatherconditions,forexample,skiareascannotopenontime,andtemperaturesaretoohighforartificialsnowproduction.Thereisgrowingdemandforactivitiesandproductsthatareindependentofweatherconditions.

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EUROPE

Snapshot Vienna Austria EuropeGDP per capita (EUR) 2013 37,000 28,600

GDP growth 0.8% 0.8%

Unemployment rate 5.0% 11.6%

Fiscal deficit of GDP -2.8% -2.6%

Inflation 1.7% 1.4%

Occupancy* 71.50% 70.8% 69.55%

ADR (EUR)* 94.41 94.23 106.64

RevPAR (EUR)* 67.52 66.71 74.07

*KPI’sstatedareYTDofSpt2014asprovidedbySTRGlobal

82 HOTEL Yearbook 2015 annualedition

http://www.hotel-yearbook.com/linkedin/148002397.html

http://www.hotel-yearbook.com/edition/37000017/hotel-yearbook-2015.html

AUSTRIA

With15%intotalovernights,thehealthandwellnesssectorisanimportantfuturemarket.Theoverallgoalistoreach140millionovernightstaysthrough2018.Demographicchanges,whichmeansamoreelderly,butalsomoreagilepopulation,aredriversfordemand.

ThedemandforinvestmentopportunitiesinAustria’stouristicregionsincreasedtremendouslyin2014.ThereisgrowinginterestfromAsia,especiallyintheViennesehotelrealestatemarket.InvestorsarelookingforAAAlocationsandproperties,especiallyinVienna,InnsbruckandSalzburg.HotelgroupsWillberidingthistrendandlookingforlocationsindestinationswithmorethanonemillionovernightstays.

AsaneffectoftheSharingEconomy,AirBnBandprivateapartmenthomes/residencesarechallengingthetraditionalhospitality

CountryreportsarebroughttoyoubyHorwath HTL

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Gerald Kroell is Managing Director of Horwath HTL Austria. He

graduated from the University of Applied Sciences in Krems in the

program “Tourism Management & Leisure Industries”, upon which he

gained over 15 years’ experience in the national and international

hospitality industry, holding various positions up to General

Manager. Within Horwath, he is a specialist in the business lines

Hotel Asset Management, Valuation and Tourism Development.

Outlook Vienna Austria Europe

*KPI’s stated are YTD of Spt 2014 as provided by STR Global

37,000 28,600

GDP growth 0.8% 0.8%

Unemployment rate 5.0% 11.6%

Fiscal deficit of GDP -2.8% -2.6%

Inflation 1.7% 1.4%

Occupancy* 71.50% 70.8% 69.55%

ADR (EUR)* 94.41 94.23 106.64

**KPI’sstatedareforecastsbasedontheHorwathHTLforecastingmodel

83www.hotel-yearbook.com




http://www.hotel-yearbook.com

BELGIUM by Marco van Bruggen i

2014 SNAPSHOT

• ThepoliticalsituationinBelgiumremainsuneasy,withanewcenter-rightcoalitiontakingofficeinOctober2014,dominatedbyFlemishparties.

• TheeconomyinBelgiumimprovedin2014,withtheeconomicgrowthrateincreasingfrom0.2%in2013to1.4%in2014.TheFlandersregioncanbeconsideredthemainengineforeconomicgrowth,postinga1.5%increase.

• Parallelingtheeconomicdevelopment,hoteloccupancylevelshaveincreasedby2percentagepointsin2014.InthecapitalcityofBrussels,theaverageoccupanciesincreasedby2.5percentagepoints.

• Withincreasedoccupancy,Belgianhotelswerealsoabletoincreasetheaverageroomratebyapproximately1%,resultingina4%increaseinRevPAR.InBrussels,theincreaseintheaverageroomratewasslightlylowerat0.5%,butduetothehigheroccupancies,theincreaseinRevPARalsocameinat4%.


Followingtheimprovedeconomicgrowthof2014,theeconomyisprojectedtocontinuetoincrease,by1.8%in2015andbyanaverageof1.6%perannuminthefollowingyears.

TheprojectedeconomicgrowthisexpectedtobevisibleinthedevelopmentofthedemandforhotelroomsinBelgiumaswell.Asaresult,bothoccupanciesandaverageroomratesareexpectedtocontinuetoincrease,bothinBrusselsandintherestofthecountry.

NewhoteldevelopmentscontinueinmostofthemainhotelregionsinBelgium,includingBrussels,causinguncertaintyfortheexistinghotelmarket.ResearchbyHorwathHTLshowsthatmorethanhalfofthehoteliersinBelgiumexpectthelocalhotelmarkettobeimpactednegativelybynewhoteldevelopments.InBrussels,thisistruefortwothirdsofthehoteliers.Meanwhile,apositiveimpactisexpectedfromnotonlylocaleconomicgrowth,butalsofromlocaltourismdevelopments.

Occupancy, Average Room Rate and RevPAR 2008-2014

Source: Horwath HTL *) Preliminary figures

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As senior consultant with Horwath HTL, Marco van Bruggen

has carried out over 150 market analyses, feasibility studies and

valuations for stand-alone and mixed-use projects including

hotels, meeting centres, golf courses and leisure facilities in The

Netherlands, Belgium and Luxembourg, in addition to coordinating

the annual Hotel Statistics (HOSTA) for the Benelux.

EUROPE











CROATIA by Kristina Milin i

2014 SNAPSHOT

• In2014,Croatiacontinuedtorecordpositivegrowthratesofthephysicalindicatorsoftourismactivity–growthofarrivalsamountedtoaround5%,whileovernightsrecordeda2.5%increasecomparedtoyear2013.

• Unlikethetourismsector,Croatia’seconomicsectorcontinueditsfurtherdeterioration,with2014thesixthyearinarowtoseeaGDPdecrease(YoY-0.6%).Theyear2015isforecastedtobeayearofpositiveshiftwhereGDPshouldriseamodest0.2%.

• InApril2013,theCroatianParliamentadoptedtheTourismDevelopmentStrategyfor2020.Theultimategoalsetbythestrategyistoenterthetop20countriesintourismcompetitiveness.Otherstrategicgoalsincludeimprovingtheaccommodationstructure(morehotels,lessprivateaccommodation),20,000newjobsinthetourismsector,EUR7billioninnewinvestmentsandEUR14.3billioninyearlyincomefromtourismin2020.

• EuropeanCoastalAirlines(ECA)startedoperationsin2014withseaplanes–thefirstinEuropetoofferscheduledservice.InitialdestinationsincludeSplit,SplitAirport,Hvar,Rab,ZagrebandPula.Furtherplansincludeintroductionofnewdestinations,includingDubrovnik,Ancona,Zadar,Korčula,LastovoandVis.

• IstraturistHotelCompany(9hotelsand7apartmentvillages),holdingassetsinUmag,Istria,wassoldtoLuksicGroup.Previously,in2011,LuksicGrouppurchasedAdriaticLuxuryHotelsinDubrovnik.

• Severalnewhotelswere(re)introducedonmarket,includingtheValamarPresidentinDubrovnik,HotelRoyalinOpatija,HotelBellevueinLošinjandothers.ConstructionoftheSheratonŽupaDubrovačkawaslaunchedin2014.ConstructionofthenauticalmarinaSlano,nearDubrovnik,beganinOctober2014.Themarinawillhaveacapacityof200berthsforvesselsrangingfrom11upto25meters.

• Valueaddedtaxonhospitalityservices,previouslysetat10%,increasedto13%startinginJanuary2014,raisingconcernsaboutpricecompetitivenessoftheCroatiantourismsector.


Croatiaisexpectedtopresentanewtourismcommunicationconcept(“BigIdea”)thatwillbecomeafocalcommunicationandmarketingtoolkit.Inaddition,ashoulderseasonprogram(Croatia365)hasbeenlaunched,aimingtoattractmorebusinessintheshoulderseasonperiod.Aninitiallistof22destinationsincludedintheprogramwillbefurtherenlargedin2015–providingarisingnumberofdestinationswithafullrangeofservicesandproductsavailablenotonlywithinthemainseason,butalsointheshoulderseasonperiods.TheCroatianTourismBoardexpectsvisibleresultsfromtheprogrammewithinafewyears.

Croatiastillhasnumerousattractivetourismassetsthatarecurrentlyoutofuse(duetowardamage,unfinishedprivatization,restructuring,etc.)TheCroatiangovernmentisexpectedtooffervariousassetstotheprivatesector,whetherviasellingthemorthroughaconcessionmodel.SomeofthemostinterestingprojectsincludeKupari,PlatandBrijuniIslands.

Thereareseveralbigdevelopmentprojectsplannedtobeintensifiedduring2015,includingtheDubrovnikGolfResortandCresGolfResort.Severalhotelprojectswillbealsoopenedinthefollowingyears,includingaSheratonnearDubrovnik–becomingthebiggestSheratonhotelintheregion.

ThegrowthoftheCroatiantourismsectorin2015isforecastedbetween3%and5%,whiletheCroatia365and“BigIdea”effortswouldprobablygeneratemoreimpactinthemid-term.


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Kristina Milin (MA) is a consultant at Horwath HTL Croatia. She

finished her MA degree at the University of Zagreb in the Faculty of

Economics and Professional Development Program and the School

of Hotel Administration at Cornell. She joined Horwath HTL in 2012

and has been involved in over 30 hotel and tourism development

projects in SEE Europe. Her main areas of expertise are hotel

developments & concepts and market analysis.













CYPRUS by Christos Michaelides i

2014 SNAPSHOT

• Cyprusasatourismdestinationattractedasatisfactorynumberandincreaseofvisitorscomparedtopreviousyear.

• Theislandattracted1.73millionvisitorsbetweenJanuaryandAugust2014.Comparedto2013figuresforthecorrespondingperiod,thisamountedtoanincreaseof5.9%;however,touristarrivalsforAugust2014alonereachedanincreaseof5.6%andrevenuegeneratedfromthebusyholidaymonthofJulyreachedEUR321.2million.

• TheBritishholidaymakercontinuestoplayavitalroleinCypriottourism.However,onlyaslightincreaseof1.5%intouristarrivalswasrecordedfromtheUnitedKingdomthispastyear.

• AnewlyemergingRussianmarket,fromwhicharrivalsrose17%onanannualbasis,appearstobeupholdingCypriottourism.

• Thegovernmentcompletedthefirstphaseoftheprocedureforgrantingalicenseforaresortcasinowithspecificationsofthesamestandardsasthoseofthebiggestcasinosaroundtheworld.

• AirlinesfromUnitedEmiratesofferdailyflightstoCyprus,liberalizingtheairroutesbetweenthetwocountries,whileCyprusAirlinesisintheprocessofselectingstrategicpartners.


Despiteallthenegativeeconomicpredictions,Cyprusinsistsonnotlettingthiscrisisgotowasteandisdeterminedtoturnitintoanopportunitytobecomeamorecompetitiveinternationalbusinesscenter.

Investmentinmultipurposedevelopmentssuchascasinos,luxurymarinasandthemeparksarepartofawiderprojecttoupgradeCypriottourism.Thereisaclearscopetoextendthetouristseasonbeyondthepopularsummermonths,focusingonspecialinterestareassuchasenvironment,sports,nauticalandagriculture,conferences,andthemeparksdevelopingalternativetourism.

AmajorluxurymarinaprojectisbeingdevelopedinCyprus’coastalcityofLimassol,withthousandsofvisitorsthisseason,andmoremarinasareplannedforPaphos,AyiaNapaandLarnaca,providingresidentialandretailinvestmentopportunities.TheCypriotgovernmentisalsoencouragingthedevelopmentofaScientificTechnologicalPark,andtheMinistryofEnergy,Commerce,IndustryandTourismhasalreadyputtogetheraproposalforitsconstructionandoperation.Thisstrategyaimsatdecreasingseasonality,anditisexpectedtocontributetothedecreaseofunemploymentduringthewinterperiod.

Duringthe2014-2020period,CypruswillbegrantedEUR955millionfromtheStructuralandCohesionFundsinthecontextoftheEUCohesionPolicy.Itisexpectedthatthetourismsectorwillbenefitfromthisfundinginordertoencourageactionsforstrengtheningcompetitiveness,supportinginvestmentsandencouragingsynergiesforupgradingandpromotingCypriottourism.

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Christos Michaelides holds an MBA from Nuremberg University in Germany. He has 25 years in the fields of market research, strategic planning

and systems/operations, specializing in hotel tourism and leisure. He is honorary President of the Cyprus Institute of Marketing and the

Management Consultant Association, honorary President of the Industrialist and Employers Federation, Vice President of the Cyprus-Greek

Business Association, ex-member of the Board of the Cyprus Ports Authority, Member of the Board of the Limassol Chamber of Commerce and

ex-President at the Cyprus Opinion Poll Enterprises Association and honorary fellow.










FRANCE by Philippe Doizelet i

2014 SNAPSHOT

• TheeconomyofFrancehasbeenatastandstillforafewyearsnow,andasanalystslookbackon2014,thecountryexpectstohaverecordedagrowthofitseconomyoflessthan0.5%,forthethirdyearinarow.

• Still,tourismremainsoneofthebrightspotsoftheFrencheconomy.Tourismspendinggrewby1.4%in2013andisexpectedtogrowby2.2%in2014accordingtotheWTTC.ItisobservedthatthedropinFrenchdomestictravelisoffsetbythegrowthofhigh-spendingforeignvisitors.Forhotels,itmeansanoverallstableclimate,inwhichupscaleandluxuryhotelsinkeytouristareaskeepgrowing,whereasthehotelclimateismorechallengingintherestofthecountry.

• AsperSTRGlobaldata,FrenchRevPARgrowthasofYTDSeptember2014remainsmoderateatEUR115(or-1.3%)versus2013.Prospectsforfull-year2014confirmaRevPARdecreaseintherangeof-0.5%to-1.5%.ThisperformanceinRevPARisdrivenmainlybyadropinADRcombinedwithaslightdecreaseinoccupancy.

• ParisisstilloneoftheleadinghotelmarketsinEurope,astheshortageofsupplyandthecontinuinggrowthinarrivalssustainhighoccupancyandRevPAR,mostperceptiblyintheupscaleandluxurymarket.

• Parisandkeyregionalcitiesremainsattractiveforhotelinvestors.


Historically,FrenchRevPARhasbeendrivenbythegrowthofGDPandboostedbymajoreventslikethesoccerWorldCupin1998ortherugbyWorldCupin2007.Unfortunately,nosuchmajoreventisscheduledinFranceuntilthesoccerEuroin2016andtheRyderCupin2018.Consequently,theoutlookfor2015isatparwith2014.

OECDforecastsagrowthinFrenchGDPof0.9%in2015,comparingfavorablywiththe0.4%growthratein2014.Inthiscontext,RevPARgrowthfor2015couldbeintherangeof0%to2%,dependingonthepricesensitivityofdemand.ThecurrentADRandRevPARgrowthinluxuryhotelsinPariswillbefurtherputtothetestwiththerecentopeningofthePeninsulainAugust2014andtheforthcomingre-openingoftwoiconicproperties,theHôteldeCrillonundertheRosewoodflagin2015andtheRitzlaterthatsameyear.

France’seconomicandpoliticalenvironmentshouldremainstablein2015.TheneedtoimprovetheappealofFranceasadestinationhasbeenemphasizedagainbythecurrentMinisterofForeignAffairs.Nevertheless,laborcostsremainveryhighwithashortageofqualifiedhotelstaff,andrecentlyincreasedtaxeswillfurtherimpacttheprofitabilityofhotels.Itisanticipatedhoweverthatpublicreformsshouldacceleratein2015andbeyond.

Inbrief,Franceremainsthenumberonetouristdestinationintheworld,andfurthergrowthisexpected.Frenchhotelsupplyhasremainedstableinvolumeforseveralyearsnow,andasignificantshareofitisobsoleteorill-adapted.ThisgeneratesopportunitiesintheParisareaandkeyregionalmarketswherehotelinvestmentremainsmostwantedamongrealestateassetclasses.

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Philippe Doizelet is Managing Partner of Horwath HTL based in Paris. Before joining Horwath HTL, he was Corporate Head of Research at

Accor. Philippe’s business skills include market and feasibility studies, due diligence services, appraisals and hospitality strategy. Philippe held

positions as senior consultant with KPMG Leisure and Tourism and was Strategic Project Manager with Europcar International car rental, and

has over 25 years of international experience in the hospitality, tourism & leisure sector.

CountryreportsarebroughttoyoubyHorwath HTL 87www.hotel-yearbook.com





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HUNGARY by Marius Gomola i

2014 SNAPSHOT

• 2014isgoingtoberegisteredastheturning-pointyear,althoughthetangibleevidencetosupportthisstatementisyettodemonstrateitself.

• Inreality,thecircumstancestopushtheeconomytonotableandsustainablegrowthwerenotideal,tosaytheleast,withthelegislativeenvironmentgivingrisetoseriousconcerns,thecontinuedweakeningofthelocalcurrency(HUF)againstthemajorcurrencies,andtheseriouspoliticalturmoilinneighboringUkraineallhavingposedunexpectedchallenges.

• Nevertheless,theeconomyhasgrownfasterthaninmostEUcountries,andkeyeconomicindicatorsconfirmapositivedirection.

• EventhepessimistsconcernedwithbusinessrisksinHungaryhaveremainedinterestedastheyearsofinactivityintherealestatemarketcontinuetopresentundeniableopportunitiesatattractivepricinglevels,despitethelessthaninvestment-friendlygeneralbusinessclimate.

• Investorinterestisalsosupportedbyaclearturnaroundoftheattitudeofthebanks,whicharefinallystartingtoprovidefinancing.

• Fortheaveragetourist,Hungaryisequatedwiththeever-increasingpopularityofBudapest,averyattractivevalue-for-moneydestination.

• Hoteloccupancieskeptclimbinginthecapital,andaselectfewthermalspadestinationshavecontinuedtofarewelldespitethestillweakdomesticmarket.


DespitethechallengescausedbythesuddeneconomicslowdowninthekeyEUeconomiesandtheRussiancrisis-causedsanctions,thesheerfactthatthebankingsectorhasthedesireandtheabilitytolendunderacceptableconditionsisallowingtherealestatemarkettoexperienceanupturn.While

realestateinvestmentactivityisstillminimalandmostlydrivenbylocalplayers,internationalinvestorpresenceisnotablyexpandingagain.

Thehotelsectorisbeingviewedwithselectiveandcautiousinterestbybanks.Thelendingparameterslimitinvestorextravaganceandrestrictdevelopmenttothemid-marketsector,butthatishardlysurprisingasADRshaveonlybeeninchingupatasnail’spacedespitehealthyoccupancies.

Thecompletionofhigh-profilehotelandrealestatetransactionsslatedforhoteldevelopmentsbyMiddleEasterninvestorswithdeeppocketswilllikelyresultinthestartofplanning,andpossiblyevenconstructionactivity.Nevertheless,anynewadditiontothesupplyintheupscaleandluxurytierwilllikelybepushedto2016andbeyond.

GreatlydisappointingthetourismindustrycommunityistheapparentdelayorevenpossiblecancellationofthepromisedBudapestConventionCentre.TheBCCwouldhaveservedasthesinglebiggestfacilitatorofancillaryinvestmentinthecapital’stourismindustry.ThemuchanticipatedabilitytotakeMICEandevencorporatetourismtoadifferentlevelinthetwosegments–bothofwhichhavealongwaytogotorecovery–willhavetowaititsturn.

Intheabsenceoftheabilitytobookcitywideeventsthroughouttheyearnowthattheconventioncenterisoutthewindow,theupscalehotelsectorneedstofillroomswithleisuregroups.TheseareontherisepartiallyduetopopularluxuryDanuberivercruiseswhichkeepbringingvolumetothecapitalgeneratingpre-andpost-cruisestays.Suchdemandsegmentsactuallyhinderhotelpricegrowth,though,andtheireconomicimpactislaughablecomparedtocity-wideMICEevents.

Spadestinationswillcontinuetoshowtheirresilience,asdemandissuccessfullyfueledbyamixofinternationalanddomesticmarketsinchangingproportions,reflectingthelocalconsumers’purchasingpower–orlackthereof.

Expecttoseeexcitinginvestmentsinthehotelrealestatesector,whichwillbetheforerunnersofayet-to-be-pinpointedbutanticipatedgame-changingactivityinHungary’shotelindustry.


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Marius Gomola is Managing Director, Horwath HTL Hungary &

Horwath HTL Russia. He built his hospitality industry management

and consulting experience in Canada with leading hospitality

companies, and has now been involved in over 1000 projects

including a wide range of feasibility assessments for hotels, resorts,

serviced apartments, youth hostels, golf courses, conference centers,

spas, and vacation ownership developments on four continents.







IRELAND by Anne Walsh i

2014 SNAPSHOT

• Irelandcontinuestoseeatwin-trackrecovery,withtheDublinmarketout-performingregionalhotels.RevPARperformanceinDublinhasexperienceda5thconsecutiveyearofdouble-digitgrowthin2014,andindustryobserverspredictDublin’sRevPARgrowthwillbeamongthehighestyear-on-yearRevPARgrowthratesinEurope.Thisstronggrowthhasbeendrivenbyhighdemand,withoccupancylevelsinDublinhotelsreturntolevelspreviouslyseenatpre-recessionarytimes.

• Hotelsacrossallotherregionshavealsobeenexperiencingimprovedperformance,witharecentsurveyreportingover80%ofhoteliersnationwiderecordinganincreaseinaverageroomratein2014.

• Thegeneraleconomicenvironmenthasstabilized,resultinginanincreaseinbusinessandconsumerconfidenceanddiscretionaryspending.

• Theretentionofthe9%VATrate(reducedfromtherateof13.5%in2011)hashadapositiveimpactacrossallhotels,particularlyregionalproperties.ItisreportedthatthereducedVATratehassupportedthecreationofmorethan33,000jobssinceitwasintroducedin2011.The9%VATratewillberetainedfor2015.

• Forthefirsttimesince2008,overseasvisitornumbersfor2014areexpectedtoexceed7million.Therehasbeensignificantgrowthfromeachofthekeysourcemarkets(GreatBritain,NorthAmerica,GermanyandFrance),inparticularGreatBritainandNorthAmerica.

• InFebruary2014,TourismIrelandandFáilteIrelandlaunchedtheWildAtlanticWay,theworld’slongestcoastaldrivingroutestretching2,500kmalongtheIrishwestcoastfromDonegaltoWestCork.TheWildAtlanticWayhasbeenamajorboostfortourismintheWest,bringingnewdemandforhotelslocatedalongtheroute.

• TheIrishhoteltransactionmarkethasseenconsiderablepacein2014,withtotalhotelsalessettobeclosetoEUR1billionfortheyear,making2014arecordyearforhotelsales.

Thisuplifthasbeendrivenbyportfoliosalesofhotelassets–somethingthathasn’tbeenseenintheIrishmarketforoveradecade.Hotelvaluescanvarygreatlydependentonlocation,withDublinhotelsachievingvaluesupwardsfromEUR150,000perkey,whilehotelsinregionalsecondaryortertiarylocationssellingatpricesofaboutEUR20,000toEUR50,000perkey.

• SignificantdiscountstoreplacementcostsmeaninternationalinvestorsarecurrentlyseekingtobuyexistinghotelpropertiesinIreland.PrimepropertiessoldthisyearincludeDoonbegLodgeandGolfClub,theClarionHotelDublinAirportandClarionHotelIFSCDublin,MountJuliet,LoughErneResort,TheWestinHotelandAghadoeHeights.


Hoteliersareoptimisticforfurthergrowthin2015.

ItisestimatedthatvisitornumberstoIrelandwillreach7.9millionin2015,a2.8%increaseover2014.

AerLingusandRyanairhavebothlaunchednewandincreasedroutestotheUK,mainlandEuropeandtheUSA.

InDublin,visitornumbersareprojectedtoincreasebyca.7%ayear,reaching6.2millionvisitorsby2020.AkeyconcernisthattheDublinmarketisnowunder-suppliedintermsofhotelbedrooms.Inordertoincreasehotelcapacityandmaintaincompetitivepricing,thereisanestimatedneedforanadditional30hotels/5,000bedroomsinDublinCityCentre.TheIrishregionalmarketcontinuestobeover-supplied,however,andthereisunlikelytobeanysignificantadditionsoutsideofDublinorprimeurbancenters.

Theconclusionofthecapitalgainstaxreliefatyear-end2014willlessensomeoftheurgencysurroundingthehoteltransactionmarketinearly2015.However,theoutlookfortheyearaheadisthattherewillstillbeasteadypaceofhotelsbeingbroughttotheopenmarket,withanestimated200hotelsstillexpectedtobesold.Bankswillcontinuetoconsiderportfoliosofhotelstoachievetransactionsofscalethatwillattractinternationalinvestors.

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Anne Walsh is the Director of Horwath HTL, Dublin. She provides

a full range of services to the hotel and tourism sector, including

business owners, operators, developers, financial institutions and

government agencies. Anne specializes in the areas of business

planning, strategic reviews, asset management, cash-flow

management, property benchmarking and project finance.

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ITALY by Zoran Bačić i

2014 SNAPSHOT

• ThecrisisthathitItaliantourismin2012-13,withdeclinesinoveralldemand,seemstobereceding,withgrowthof+1.2%intourismflowsinthefirsthalfof2014comparedtothefirsthalfof2013.

• Thatdeclinechieflyoriginatedinsmallerdomesticnumbers(-12.4%in2013versus2011),whereastherewasanincreaseininternationaldemand(+2%).In2013,internationalanddomestichadthesameweight(50-50).

• Theprocessofupgradingofaccommodationlevelsbycategorywithintourismflowscontinues:42%ofovernightstaysareregisteredin5and4-starhotels(versus26%in2000),asaresultofanincreasinglyinternationalprofiletotheItaliantouristindustry.

• Italyhaseverychancetomaintainitsstatusasa“bigstar”inthecontextofinternationaltourism(inbothoutgoingandincomingtravellers):

- 33,700hotelsandsimilaraccommodationestablishmentswith2,251,000beds(the3rdlargestintheworld)withafurther2,500,000bedsinothercollectiveaccommodationestablishments;

- Revenuesfrominternationaltourism:EUR33billion(5thintheworld);

- 355millionovernightstaysinalltouristaccommodations,whichbecomes831million,ifweincludesecondhomesandfacilitiesnotincludedinthesurvey.

• Allkeyindicators(source:STRGlobal)registeredgrowthasofJune2014YTD: -Occupancywasexceeding61.3%(58.7%in2013); -ADRhadincreasedtoEUR124.69(EUR123.15in2013); -RevPARhadincreasedfromEUR72.31toEUR76.40.

• Rome(source:STRGlobal),aswiththemajorEuropeancapitalssuchasMadridandParis,registeredincreasesintheOR(from64.4%to67.2%),attheexpenseoflowerADR(fromEUR148.40toEUR146.55).RevPARinRomeincreasedfromEUR95.54toEUR98.50.


Forecastsfor2015remainuncertain,duetointernationaleconomicdifficulties,butwithexpectationsofslightlypositivegrowthofthedomesticmarket;theincreasesincarregistrationsandrealestatetransactionsinItalysuggestagrowthalsointhetourismsector.

TherewillpossiblybeaslightslowdownfromEuropeanmarkets,primarilyRussian,butalsoFrenchandGerman,comparedtopositiveresultsexpectedfromMiddleEasternmarketsandthoseintheFarEastandNorthAmerica.

AsignificantimpactisexpectedfromExpoinMilanin2015:20millionvisitorswillboosthospitalityinMilan,initshinterlandofLombardy,andalsoinotherItaliancitiespreparingspecialevents.

HorwathHTL’s“HotelMarketSentimentSurvey2014”ontheshort-termexpectationsofItalianhoteliersunderlinedthetendencyinsupportingORattheexpenseofADR.

TheItaliantransactionsmarketisbecomingmorevibrant,aftertwogoodyearswhichsawthesaleoftheSt.RegisGrandHotelRome(161keys)in2014,andthesalesofHotelEdeninRome(121keys),St.RegisSanClementeinVenice(200keys)andBellevueinCortina(66keys),in2013.

FurthergrowthinthepresenceofhotelchainsinItalyisexpectedaswell,totalingabout140,000rooms,whichistheresultofanimprovedwillingnessonthepartofdomesticownerstoemployspecializedorganizationsthatcanassurelowervolatilityinperformanceandprofits.


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Zoran Bačić is the Senior Partner and Managing Director of Horwath

HTL in Italy. Graduated in economics, he was team leader in

various development and research projects, the company founder

and Development VP for the Adriatic Club Yugoslavia, a business

development specialist in the infrastructure sector and business and

financial advisor in the investment banking sector.






MACEDONIA by Branko Bogunović i

2014 SNAPSHOT

• Inthespringof2014,theincumbentcoalitionledbyVMRO-DPMNEwontheelections,ensuringanother4-yeartermofpoliticalcontinuity(inpowersince2006).

• ExpectedGDPgrowthinMacedoniain2014is3.5%,whilethecountryrecordscontinuousimprovementinoverallcompetitiveness.

• Thenumberoftouristarrivalsandovernightsisonastablelong-termincreaseandisexpectedtohavereached740,000arrivalsand2.3millionovernightsin2014.

• Tourismhasbeenrecognizedasoneofthemostattractivedevelopmentsectors;however,thecurrentimpactoftourismontheoveralleconomyissignificantlybelowtheglobalaverage,makingjusta1.5%directcontributiontototalGDPandaccountingfor3%ofdirectemployment(5%totalcontributiontoGDPand6%toemployment).

• Outoftheapproximately70,000bedsavailable,only25%areinhotelaccommodation(mostlyconcentratedinSkopje),whilethemajorityofthoseremainingareinprivateaccommodation.

• Current4and5-starhotelsinSkopjeoperatewithinanADRrangeofEUR70-110,withaverageoccupancyaround50%,whilehotelsinotherdestinationshavesignificantlyloweraveragequalityandaverageADR,notexceeding40EUR.

• Intermsofglobalhotelbrands,RamadaandHolidayInninSkopjewillbejoinedbya165-roomMarriottonSkopje’smainsquareinQ1/2015.


Macedoniahasachievedsignificantimprovementsinoverallcompetitiveness,butinatourismsenseitstillisn’trecognizedasaglobaldestination.Thekeyissuesareinproductquality(especiallyoutsideofSkopje)andtourismmanagement,andthemarketingsystemofMacedoniaisn’tsetupinawaytobeabletoputMacedoniaontheglobaltourismmap.

Inthatsense,thetransformationofMacedoniaintoaglobaltourismdestination,withtourismhavingamuchgreaterimpactonGDPandemployment,needsaninitialpushbythegovernmentintermsofinitiatingcapitalprojectsandimprovingthemanagement/marketingsystem.

Currentgovernmentaleffortsareprimarilyconcentratedonthefollowing: • NewtourismdevelopmentofPopovaŠapkamountain,involvingstructuringapackagethatwouldbeattractivefortheinternationalinvestmentmarket. • Ohridarea(astheregionwithlargestshareinovernights),throughanumberofprojectinitiativesstemmingfromthelargepublicprojectsincludedintheGaličicaMasterplan.Here,lakesideresortdevelopmentsaremostlyaimingtofillthecurrentgapintheareainthe4and5-starhotelsegment.

Tounderpintheseinvestments,thegovernmentisofferingattractivedealsonpubliclyownedlandthroughpurchaseorlongtermlease(typically1Europersq.m.).

TheintroductionofMarriott(whichwillalmostcertainlygainthepositionofSkopje’smarketleaderintermsofqualityandperformanceveryquickly)willmostlikelycausesomechangesinthemarket,especiallyforthesmallerindependenthotelsinthe4and5-starsegmentthathavesofarsurvivedduetotheundersupplyofinternationallybrandedqualityhotels.

ADRsandoccupanciesaremorelikelytoseeasubstantialincreaseinthenextthreeyearsinotherpartsofMacedonia,particularlytheOhridarea,sincetheintroductionofeachoftheresortsinthepipelinewillhaveasignificanteffectonthecurrentperformanceaverage,whichforthemomentisverymodest.

Branko Bogunović is a partner in the Zagreb office of Horwath HTL.

Branko gained his MBA degree from Staffordshire University (UK) in

2004 and has 10 years’ experience in project management. He joined

Horwath HTL in 2007 and has so far managed or been involved in

nearly 100 hotel and tourism development projects in SEE Europe.

His main areas of expertise are tourism development strategies,

growth models and destination management.COUNTR

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MONTENEGRO by Sanja Cizmar i

2014 SNAPSHOT

• Montenegroisasmallopeneconomyhighlydependentontourism.TotalcontributionofTravelandTourismIndustrytocountry’sGDPis20%.

• Overthepastseveralyears,thegovernmenthasintensifieditseffortstoimprovecompetitivenessanddeepensocialsectorreforms.AccordingtotheWorldBank’sDoingBusiness2015Index,Montenegroisranked36thoutof189economies,andhasimproveditspositionby6placesfromthepreviousyear.Themainimprovementhasbeenmadeinissuingconstructionpermits,basedondecreasedutilityandotherfees.

• ForecastedGDPgrowthfor2014is2.8%.

• DespiteadropintherublevalueandMontenegro’ssupportofsanctionsagainstRussia,Russiaremainsthecountry’smajorgeneratoroftourismdemandwith28%shareoftheoveralltourismovernights.During2014,Russianovernightsincreasedby7%comparedtolastyear,doubletheaveragegrowthrateoftotalovernights.Effortsarebeingmadetoopennewmarkets,especiallyCentralandNorthernEuropeanmarkets.

• TheMontenegrohotelmarketpredominantlyconsistsofnon-brandedmidscalehotels.

• Anumberofupperupscalehotelandresortdevelopmentsonthecoastareunderway,introducinginternationalhotelbrandstoMontenegro.AmanResortisoperatingSt.Stefanresort,andTheRegenthasbeenopenedinPortoMontenegroinTivat,whileHilton,Kempinski,One&OnlyandFourSeasonshavebeenannounced.Afterafewyears’setbackfollowingtheglobaleconomiccrisis,2014broughtarevivalofinvestors’interestindevelopingrealestateinMontenegro.

• EUaccessionnegotiationsareunderway,whileNATOmembershiphasbeenputonhold.


AccordingtotheWTTC,Montenegroisrankedasthe1stcountryintheworldintermsofshort-termandlong-termtourismgrowthpotential.

Withcompletionofseveralhigh-endresortprojectsalongthecoastintheneartermfuture,thestructureofthecountry’shotelsupplywillbeimproved,enablingMontenegrotocompetegloballywithaqualityofferingandbrandedhotels.

Thegovernmentismakingeffortstocreateanintelligentbusinessenvironment,aimingtofurtherattractdirectforeigninvestmentintourismandensuresustainabledevelopment.Theregulationsforincentivizinghoteldevelopmentsareunderway.Theywillincludethelanduseplanscompletionforthecoastalregioninordertooptimizecarryingcapacity,developmentofgeneralandtouristinfrastructure,aswellasproductdevelopmentstrategyandtourismmarketingplanning.Sincealotofrealestateprojectshavebeendevelopedincoastalregion,theintentionofthegovernmentistointroducenewregulationsinordertoenabletheprojects’commercialviabilitythoughtheimplementationofmixed-usebusinessmodelssuchassaleandleaseback,fractionalownershipandothers.Inordertoimprovethebusinessenvironment,theoptimizationoftaxandlandusepoliciesisexpected.

Incentivemeasuresfortourismdevelopmentinthenorthernmountainousregionareinapreparationphase,aimingtodevelopyear-roundtourisminthispartofthecountrywithitsabundantnaturalresources.

Inthemid-term,inparallelwiththeprocessofMontenegro’saccessiontoEU,arepositioningofMontenegrotowardalifestyledestinationisexpected.

Airaccessibilityonayear-roundbasisshouldberesolved,inparallelwiththecompletionofseveralbighigh-enddestinationprojectsalongthecoast.


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Sanja Cizmar Ph.D. is a Senior Partner of Horwath HTL Croatia. Sanja has built her hospitality industry consulting experience in Southeast

Europe working on consulting projects with leading regional hospitality companies for over 25 years. She has been involved in 500+ projects

including a wide range of project development assignments, strategic planning and asset management, coaching of top management and

change management projects, valuations and management contracting projects.











THE NETHERLANDS

2014 SNAPSHOT

• TheDutcheconomystartedanewrecoveryin2014,followingadownturnin2012and2013.TheGrossDomesticProductisestimatedtohaveincreasedby0.75%,upfromanegativegrowthof-0.7%in2013.

• Followingtheeconomicupturn,thedemandforhotelroomshasalsoincreasedfurther.ThenumberofovernightstaysinDutchhotelsincreasedby6.9%inthefirstsixmonths,andcontinuedtogrowinthesecondhalfoftheyear.

• ThehotelsupplyintheNetherlandsincreasedby3.0%,addingover3,400hotelrooms.Ofthese,some1,200wereaddedinAmsterdam,anincreaseof4.7%.

• Astheincreaseindemandwasevengreaterthantheincreaseinsupply,hoteloccupanciesintheNetherlandsincreasedin2014.BySeptember,theyear-to-dateoccupancyhadincreasedbytwofullpercentagepoints.

• Asoccupanciesincreased,sodidtheaverageroomrates.Comparedto2013,theaverageroomrateinDutchhotelsincreasedbyapproximately2.5%.Combinedwiththeincreasedoccupancies,thisresultedinaRevPARincreaseofapproximately5%.


The economic recovery in the Netherlands is expected to continue, with a projected economic growth of 1.5% for 2015. Due to both a decrease of the Euro compared to the dollar and a decrease in oil prices, both exports and consumer spending are expected to improve.

As a result, the demand for hotel rooms in the Netherlands is also expected to increase further, which will result in a further increase in both occupancies and average room rates. A potential exception is MICE demand, which has been slow to recover, particularly outside the greater Amsterdam area.

The increase in the number of hotel rooms is also expected to continue between 2015 and 2020, particularly in the larger cities. In Amsterdam, another 4,000 new hotel rooms are expected, in addition to 1,100 in Rotterdam, 1,300 in Utrecht and 500 in The Hague. Of these cities, the most troublesome would be Rotterdam, as the supply threatens to outgrow the demand, potentially resulting in a new drop in occupancy rates. The other cities have a more balanced outlook, where new demand is expected to be absorbed by the market.

Occupancy, Average Room Rate and RevPAR 2008-2014

Source: Horwath HTL *) Preliminary figures

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by Marco van Bruggen i

As senior consultant with Horwath HTL, Marco van Bruggen

has carried out over 150 market analyses, feasibility studies and

valuations for stand-alone and mixed-use projects including

hotels, meeting centres, golf courses and leisure facilities in The

Netherlands, Belgium and Luxembourg, in addition to coordinating

the annual Hotel Statistics (HOSTA) for the Benelux.

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POLAND by Janusz Mitulski i

2014 SNAPSHOT

• Attheendof2014,thenumberofhotelfacilitiesinPolandamountedto2,459withover120,000hotelkeys.

• Withastableeconomicsituation,theoccupancyinPolishhotelsin2014increasedby1percentagepoint,to65.9%,accordingtoSTRGlobal.Ontheotherhand,theaverageADRdroppedby1.5%toEUR61.

• AccordingtotheCentralStatisticalOffice,duringthefirsttenmonthsof2014,thenumberoftouristsinthehotelbasesawa10.7%increasecomparingtothesameperiodin2013.Growthwasgeneratedmainlybydomestictraffic.

• Thelargesthoteltransactionin2014comprisedthetakeoverofSPSInvestment,theownerofthe350-keyWestinHotel,bySkanska.TheinvestmentcostamountedtoEUR80million.Also,OrbissignedapreliminaryagreementtobuyAccorhotelsinCEEforoverEUR140million.

• Thesecondhalfof2014wascharacterizedbyalowernumberoftouristsfromtheCIScountries,duetotheUkraineconflict.

• TheNationalBankofPolandpredictsaninflationrateupto0.2%andeconomicgrowthatthelevelof3.1%.

• InNovember2014,localelectionstookplaceinPoland.Thepro-Europeanrulingparty,CivicPlatform,gainedthelargestnumberofseats.

• In2014,Polandwasthehost(andwinner)oftheVolleyballMen’sWorldChampionship.


ItisexpectedthatthePolisheconomywillbenefitfromEUfundswhichwillhaveapositiveinfluenceonthefutureinfrastructuredevelopmentinthecountry.

ThebankingsysteminPolandisstrongbutisverydemandingwhenitcomestohotelinvestorsmeetingtherequirementsforaloan.Forsometimetocome,theperspectiveofsuchanapproachwillresultinareductionofunreasonablehotelinvestments.

Domesticguestsaccountforapprox.70%ofhotelroomssold.Ononehand,investorsperceivethisasastablebase,butontheotherhand,thismarketsegmentisverypricesensitive.This,togetherwiththerisingnumberofhotels(approx.100hotelsperyear),makesitmoredifficulttoincreaseincomesandprofits.

TheorganizationoftheEURO2012hadahugeinfluenceonthepromotionofPolandasatouristdestination.Thenumberofforeigntouristsincreasedsignificantly,whichshouldallowhotelierstoraisepricesandincreaseincomes,aswellasgeneratingincreaseddomesticdemand.Thankstothenewsportarenasandcongresscenters,CracowwillbethehostoftheWorldHockeyChampionshipsfortheGroupA,aswellastheWECcongressin2015.In2016,WroclawwillbecometheEuropeanCapitalofCultureandwillbethehostoftheWorldGamesin2017.AllthesemajoreventswillhelpunderscoretheimageofPolandasatouristdestinationandshouldhaveapositiveinfluenceonthenumberofforeignerscomingtoourcountry.


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Janusz Mitulski is a partner Horwath HTL in Poland and vice president

of the Chamber of Commerce of the Polish Hotel Industry. He has been

active in the hotel industry for over 10 years. In addition to consulting,

Janusz is the co-organizer and coach of the University of Hotelier

(Akademia Hotelarza), author of “Hotel Guidebook”, the only Polish

guide for hotel investors, co-organizer of Hotel Trends, the largest hotel

conference in Poland, and a speaker at many industry conferences.







2014 SNAPSHOT

• TheRomanianeconomycontinuedapositivetrendin2014.AlthoughtheEuropeanCommission2014outlookhasbeenreducedto2%realgrowthandonly2.4%for2015,basedonthereductionofpublicinvestment,thenationalstatisticsofficeannouncedmid-Novembersurprising2.8%SeptemberYTDgrowthresults.

• IntermsofGDPpercapita,RomaniahasruntocatchupwithHungaryandCroatiawhicharearoundEUR3,500ahead.Thecapitalcity,Bucharest,runsatEUR15,650/capita,asimilarlevelasBudapestandZagreb.

• ThemaininternationalairportinBucharest(OTP)willsurpass8millionpassengersin2014.

• With1,595officiallyclassifiedhotelsinRomaniaand95,130rooms,only7%ofthosearebranded(cf.28%intheEurozone).Atthesametime,42%ofthehotelcapacityinBucharestisaffiliatedtointernationalhotelchains(153officiallyclassifiedhotelsand10,629rooms).

• Intermsofclassification,theRomanianmarketisdominatedby3-starhotels(38.5%)and2-starhotels(35%).Thisisduetothelegacy3-starcapacitieslocatedontheBlackSeashoreandthe2-starcapacitieslocatedintheoldbathingspadestinations,whileBucharestandsecondarycitiesaredominatedby4-starand3-starhotels.

• TotalforeignarrivalsinRomaniawillpass1.8millionanddomesticarrivals6.5million.Foreignarrivalsare60%dominatedbyleisure,whileEUisthekeymarket(60%).

• Intermsofcurrenthotelperformance,occupancyhasimprovedsignificantly,backedbythereturnofstrongdemand,butADR,afterastabilizationperiod,hasnotyetstartedtorecover.

• Intermsofdevelopment,thecrisisyearshavebroughtsilencetothemarket,withafewexceptionslikeDoubletreebyHilton’sentryinOradeaandBucharest,Hamptonby

Hilton’sentryinClujNapoca,andRamada’sexpansioninClujNapocaandPitesti.Theonlymovein2014wasMercure’smarketentryindowntownBucharest.


ThepoliticalriskassociatedwiththeNov2014presidentialelectionshasbeeneliminated;however,thereisstillaregional,Ukraine-generatedinstabilitythatwillprobablystillinfluenceRomania’sattractivenessforinvestment,includinginthehotelandtourismsector.

HotelsupplygrowthinBucharestwillbedrivenbytheQ32014newsthat4matchesoftheUEFAEuro2020championshipwillbeplayedattheNationalArena.ThecommitteeassessingthecandidatureofBucharesthasindicatedinsufficienthotelsupplyintheeconomysegment.

Onthedevelopmentside,inthemid-termwecanexpectonlytimidmoves,mainlyfocusedonBucharestandselectedsecondarycities.2015willbringonlyonenewmid-scalebrandontheBucharestmarket.Brandedinvestmentsinselectedleisuredestinationswilldependontheeffortsofthegovernmenttocontinuethestrategicdevelopmentpathonasimilarfoundationastheonelaidin2010-2011.

Intermsoffinancing,wereportthateversince2012,banksarecompetingforsoundhospitalityprojectsinkeylocations.TheyarelookingforprojectsbackedupbystrongmissingbrandslikeHolidayInn,HolidayInnExpress,CourtyardbyMarriott,HiltonGardenInn,HamptonbyHilton,FourPointsbySheraton,HyattPlaceorevenselectedlifestylebrands.

OrganicADRgrowthistobeexpected,whilelowADRlevelsinBucharestcouldresultinmoreleisureguestsin2015.

ROMANIA by Ružica Herceg i & Sorin Ionescu i

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Sorin Ionescu is the founder and managing

director of Fivestar Hospitality tourism and leisure consulting, which

has been working in cooperation with Horwath HTL since 2008. He built

his expertise based on an education in engineering, followed by work

for leading strategy consulting companies, a post-graduate diploma

accredited by the Ecole hôtelière de Lausanne, and more than 10 years

of hospitality consulting projects covering all aspects of the hotel/

tourism asset life cycle: planning and development, operation openings,

valuations, transactions and finance.

Ružica Herceg joined Horwath Consulting Zagreb in 1998, after

a professional career in the banking sector, as well as in the first

Croatian management company, Croatian Hotels and Resorts.

She has been involved in major tourism development projects with

leading hospitality companies and investors in SEE Europe. Her

main areas of expertise include best use concepts, privatisations,

feasibility studies, portfolio management, restructuring.






















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RUSSIA by Michael O’Hare i & Ekaterina Marchenko i

2014 SNAPSHOT

• Foroveradecade,Russia’soil-producingeconomyanditshighconsumeractivityshowedgreatresults,withaslightdownturnin2008-2009duetotheglobalfinancialcrisis.However,alreadyatthebeginningof2014theeconomycontinuedtodecline,whichhasbeenfurthercompoundedbytheUkrainianconflictandtheresultanteconomicsanctionsimposedbytheEU.Now,withsignificantreductionofoilpricesresultinginarecordlowRUB/USDexchangerateandanupsurgeofconsumerprices,anincreasingnumberofeconomistsspeakaboutamid-termrecessionperiodforRussia.

• Thisdeclineinthecountry’seconomicperformancecouldnotbuthavehadaseriousimpactontheRussiantourismandhotelmarket.Despitemanycontroversialissuesdiscussedininternationalmassmedia,theWinterOlympicsheldinSochiinearly2014,attractingover1.5millionvisitors,isconsideredbyalltohavebeenaresoundingsuccess.LeisuretouristscomingtoRussiafortheWinterOlympicstookthechancetovisitnotonlySochiasafinaldestination,butmanytravelledtoMoscowandSt.Petersburgaswell,thusincreasingthelevelofhoteloccupancyinallthreecities.

• Apartfromleisuretravellers,thegrowthofbusinesstravellerswasremarkableasmanyofthemvisitedRussiaonaregularbasis,beingemployeesoflargeinternationalcorporationsaswellassportsmenandsports-relatedfunctionariesintheprocessofpreparingfortheWinterOlympics.Therefore,theresultsofQ12014vs.Q12013showed6%growthinthenumberofinternationalbusinesstravellersand5%growthforleisuretravellers,accordingtotheRussianAgencyforTourism.

• Forpoliticalandeconomicreasons,theresultsofQ32014forRussiaarefarfromoptimistic.Only4millionforeignersvisitedthecountry(4.2millioninQ32013),andwhilethenumberofleisuretravellersfellby1%,onlythereductionofbusinesstravellers–byawhopping23%-hadasignificantimpactonboththecountry’seconomyingeneralandthehotelmarketinparticular.AccordingtoSTRGlobal,occupancyforQ3of2014was53.4%,whichis12%lowerthantherespectiveperiodin2013andthelowestoccupancylevelamongotherEuropeancountries.ADRandRevPARdeclinedby2%and4%respectivelyinRUB,whileinUSD,duetotheexchangerate,thereductionequatedto19.5%forADRand29.2%forRevPAR.

• Animmediateeffecthasbeenthecontractioninthelevelofinterestfrombothdomesticandinternationalinvestorsinthedevelopmentofnewprojects,acquisitionsandsoon.Manyhoteldevelopmentsinthepipelinehavebeenfrozenduetolackoffunds,asituationthatislikelytoremainsointheforeseeablefuture.AnumberofkeyWesternfinancialinstitutionswillnotconsiderfundinginRussiaatthispointintime.

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Michael O’Hare is Managing Director, co-founder and partner

of Horwath HTL Hungary & Russia with over 25 years of UK and

international hotel sector experience. Since 1989, he has specialized

in CEE, Russia and CIS, and been involved in hotel projects in over

50 different cities in these markets. Michael graduated from the

Shannon College of Hotel Management in Ireland in 1982.

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WithalloftheabovenegativelyimpactingtheRussianhotelandtouristindustry,thefollowingtrendsandstepsarebeingtakentotryandcounteractcurrenttrends:

Mega events and infrastructure projects. Asarule,arecessionperiodisthetimewheninfrastructureprojectsfinancedbythegovernmentgrowinnumber.RussiawillbehostingtheFIFAWorldCupin2018,and11citiesinvolvedintheeventarenowatthestageofactivepreparation,includingtheincreaseoflodgingsupply.Onemorelarge-scaleprojectannouncedisthatSochiwillbecomeagamblingcenterasanattempttoattractmorepeopletotheresort.Inadditiontothat,NorthCaucasusresortandAltaimountainresortareinthepipelineaswell.

Finding new feeder markets. Withanalmost50%reductioninthenumberofWesterntravellers,tourismauthoritiesarenowseriouslyconsideringlookingeast.Ano-visaregimeforSouthKoreannationalshasalreadyresultedina70%upsurgefromthecountry.ThenumberofChinesetravellersisgrowingaswell,withthemajoritycomingmostlyforbusiness,andtheRussiangovernmentisnowconsideringeasingthevisaprocessforthem,aswellasotherbusinessandleisuretouristscomingfromtheAsia-Pacificregion.

Local-currency pricing policy at hotels. Inviewofcurrentdilutionofforeigncurrencyexchangerates,certainstepswillneedtobetakenbyhotelownersandoperatorstoaligntheirpricingpolicytorubles.Considerationwillhavetobegiventoswitchingfrominternationaltolocalsupplierswherepossibleinordertobeabletobuylocallyinrubles.Theissuewillbewhetherlocalsupplierscanprovidethesamequality,quantityandstandardofproduct.

Increasing the number of budget and economy hotels. Competitionamonghotelgroupswilldefinitelyincrease,andinviewofloanfinancingbarriersbecomingharderforinvestorswhenmakingadecisiontobuildahotel,itislikelythatgreaterpreferencewillbegiventothedevelopmentofbudgetandeconomytypehotelsoperatingunderinternationalbrands.

Nodoubt,itisnotthebesttimetomakepromisingforecastsfortheRussianhotelandtouristmarketin2015.Alloverthehotelindustry,themoodisclearlyfarfrombeingoptimistic,however,itisalongwayfrompanicaswell.Withwell-agreedstepstoattractnewfeedermarketsandaredefinedmarketingstrategy,hotelscanandwillmanagetotradethroughthisverychallengingperiod.

Russiastillremainsoneofthemostunder-suppliedhotelmarketsandwhiletheattractionofinvestinginRussiahasbeenstymiedasaresultofpoliticalandeconomicdevelopments,inthelongertermthehotelandtourismsectorinRussiawillreverttobeingaprimesourceofopportunityfordomesticandinternationalinvestorsalike.

RUSSIA


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Ekaterina Marchenko joined Horwath HTL Russia in March 2011 as a consultant. She graduated from the Moscow State Institute of International

Relations in 2011, majoring in international economics. Before joining Horwath HTL, Ekaterina spent six years in an audit and consulting

company, a member of Crowe Horwath International in Russia. She joined the team as an interpreter and in four years became the Deputy

Director for International Projects. During her years in the company she was in charge of project management for nearly all the international

engagements.










2014 SNAPSHOT

• EtihadAirways’acquisitionofa49%stakeinthenewlyestablishednationalaircarrierAirSerbiasignificantlyimprovedthecountry’stourismdevelopmentoutlook;

• SerbiaremainsfirmlydedicatedtotheEUintegrationprocess–accessionnegotiationswiththeEUhavestarted,withthefirstchaptersopeningsoon;

• Internationaltouristovernightsaresteadilykeepingontheupwardtrend,achievinganotable11%year-on-yeargrowthrate;

• The“BelgradeWaterfront”projecthasbegun,convertingBelgrade’swaterfronttoamodern,high-qualitymixed-userealestateopentoinvestorsmarket;

• Thepresenceofglobalhotelbrandsinthecapitalcityincreasedconsiderably:theCrownePlazaBelgradeopened(HotelKontinentalconversion)andtheMetropolPalaceopened(LuxuryCollectionbyStarwood;HotelMetropolconversion),inadditiontothedynamichoteldevelopmentpipelineinBelgrade(RadissonBlu,CourtyardbyMarriott,Hilton).


ThevitaleventshapingthebusinessenvironmentinSerbiaistheEtihadAirways–AirSerbiastrategicagreement.Goingthroughanextensiverestructuringprocessandrebranding,thenationalairlinehasalreadyachievedremarkableresults,witha32%passengertrafficgrowthrateYTD,asreportedbyACIEurope.BelgradeairportisthesecondfastestgrowingcapitalcityairportinEurope.

The“BelgradeWaterfront”project,developedbyEagleHillsAbuDhabi,aUAE-basedprivateinvestmentandrealestatedevelopmentcompany,referstotheconstructionof1.8millionsquaremetersofoffice,residentialandcommercialspace,including2,200newhotelrooms.TheprojectisexpectedtogiveBelgradeanewlandmarkandboostbusiness,settingthestageforanewimageofthecapitalcitytobebuilt.

Themomentumishere.ForeignhotelinvestorsareshowingincreasedinterestinSerbia,primarilyforthecapitalcityandmountainresorts(KopaonikandStaraPlanina).Still,Serbiahastosetupacompetitivebusinessplaygroundandintroduceextensivereformstofurtherstrengtheninvestorconfidence,oneofthefundamentalonesbeingthereformofrealestateandconstructionlegislation.

CrownePlazaBelgradeandMetropolPalace,theLuxuryCollectionbyStarwood,withfreshproductandcompetitivepricingpolicies,haveshakentheupscalehotelmarketsegmentinBelgrade,resultingintheoveralldropofADRsinamajorityofupscalehotelsintherangeof4-6%year-to-date.Nevertheless,coupledwithgrowingdemand,occupancieshavegrownconsiderablyinthesameperiod,resultinginoverallRevPARgrowthintherangeof8-12%year-to-date.

AvibrantbusinessenvironmentandgrowingmarketaregivingSerbianhoteliersgreaterconfidence.Belgradehotels,relyingonhigheryieldinginternationalbusinesstravellers,areoptimisticallylookingattheirbusinessplansfortheyearstocome.TheSerbiancapitalcityhasavastupsidepotentialtotakeholdofinthefuture,dependingonthepaceoftheoveralleconomyrecoveryandtheintroductionofacontemporarycitymarketingandmanagementengine.

However,thepotentialforgrowthinSerbianregionalhotelmarketsremainsundiscovered,withincreasingdisparityinperformanceindicatorscomparedtotheBelgradehotelmarket.Primarilyrelyingondecliningdomesticleisuredemandandsufferingfromthegenerallackofdestinationmanagement,hotelsintherestofSerbiastillneedtoundergocomprehensiveproductrestructuringandrepositioningtosucceedintoday’scompetitivemarket.

SERBIA by Silvija Lovreta i

COUNTR

YRE

PORT

S

Silvija Lovreta is a Managing Partner at the Belgrade office of

Horwath HTL, dedicated to unlocking the potential in the region

for HTL business growth. She has an affinity towards hotel finance

and dealing with the numbers to structure financially viable hotel

projects. Silvija is a member of the Cornell Hotel Society.

EUROPE










2014 SNAPSHOT

• Sloveniacontinuestoexperienceexcessivemacroeconomicimbalances,withamajorissuebeingtheincreaseingovernmentaswellascorporatedebt.Nevertheless,Slovenia’srecessionweakenedin2014,withapositiveestimatedGDPgrowthof0.8%.

• Afteraperiodofpoliticalinstability,in2014thenewgovernmentwasformed,ledbycenter-leftpoliticalnoviceMiroCerar.Hisstrongpositioncouldcontributetorestoringpoliticalstabilityafteryearsofturbulence.

• Theyear2013wasarecordyearforSloveniantourism,with3.4milliontouristarrivals(+2.6%)and9.6millionovernightsstays(+0.7%).Modestgrowthin2014wasgenerated,mainlybyinternationalvisitors.Hoteldemandisstabilizingataround2millionvisitorsand5.8millionovernightstays.

• Withregardtohotelmarketperformance,in2013averagehotelADRdeclinedby4.2%andRevPARby5.3%.However2014broughtaslightrecovery.

• ThemostdynamichotelmarketisLjubljana,thecapital,with25%growthinroomstockinthelast5years.ItsaverageRevPARrangesfromEUR50to60(4and5-starproperties).

• TherenovatedHotelMons(114rooms)re-openedin2014undertheFourPointsbySheratonflag,representingthefirstglobalbrandintheSloveniancapitalcityinmorethantenyears.

• SophosHotelsrecentlysignedamanagementagreementforamountainresortinKranjskaGora,includingtwoRamadaproperties.Anotherhighlyrankedsecond-tiermanagementcompanyenteredthemarket–HamiltonHotelPartnerstookoverthemanagementofRogaškahotels.

• Duringthelastquarter2014,twomajortransactionswereannounced:CroatianhotelcompanyLiburniaRivieraHotelswasselectedashighestbidderforHotelsBernardininPortorož,whileRussianGazpromwasinthefinalphaseofcompletingtheacquisitionofTermeMariborandskicenterPohorje.


TourismandhospitalityisanimportantrevenueandemploymentgeneratorforSlovenia,especiallythesegmentofhealth&spatourism,whichcapturesthemajorityofbusinessandisrecognizedasthemainstrategicdirectionforthepositioningofSloveniatourisminthefuture.

Followingaphaseintheinvestmentcyclewherethehotelsupplyreachedsignificantlyhigherqualitylevels(andwassupportedbyEUfunding),themarkethasbeeninstagnationintermsofnewinvestments.Lackofinvestmentpotentialbycurrentmajorhotelcompaniesisduetothelargeproportionofstateownership(nearly40%ofthelargesthotelcompanies)andhighlevelofnon-performingloans.

TheSlovenianhotelmarkethasenteredarestructuringphasewherethelargehotelcompaniesaredisposingoftheirassets,consolidatingbusinessandintroducingnewmanagementmodels.Thisissupposedto(re)activatethehoteltransactionmarketandbringregionalaswellasinternationalplayersintothegame.Consequently,thedevelopmentofnewproducts,anincreaseinsupplyandmoreinternationalhotelbrandsenteringthemarketcouldbeexpected.

Basedonthehistoricstagnationofhotelkeyperformanceindicators,itisexpectedthatacontinuationofthetrendistobeexpectedin2015,unlesstherearemajorchangesinthecurrentstakeholders’strategies.AlongwiththerecoveryofdomestictourismandtheopeningoftheSlovenianhospitalityandtourismindustrytotheinternationalmarket,in2015Sloveniawillgetontracktofurtherimproveitscompetitivepositioninthetourismandhospitalitybusiness.

SLOVENIA by Silvija Ilišković Balagović i


COUNTR

YRE

PORT

S

Silvija Ilišković Balagović has been a Project Manager at Horwath HTL

Croatia since 2011, bringing over 13 years of professional experience

in the tourism and hospitality industry consulting in Croatia and the

region. She is engaged in consulting activities within the areas of hotel

concept development, performance, feasibility and asset management

as well as valuation of hotel properties, marinas and other related

businesses. She is an active member of Cornell Hotel Society.













SPAIN by Philip Bacon i

2014 SNAPSHOT

• 2014wasarecordyearforSpanishtourism,drivenbytheinternationalinboundsegment.

• PoliticaluncertaintyincompetingdestinationsisworkinginSpain’sfavor.

• Spain’sfinancialandrealestatesectorscontinuetoundergo“OperationCleanUp”,whichextendsbeyondthehospitalityindustryintoalmostallwalksoflifeandbusiness.

• Thebankingsectorisfinallyamajorprotagonistinhospitalitytransactions.

• Largedebtdealsarenowfilteringthroughtothehotelsector.

• InternationalbrandinterestinSpainremainshigh,stillfocusedonMadridandBarcelona,UpscaleandLuxurysegments.

• Investoryieldsareunderpressureassellerpriceexpectationsarestillhigh.

• Outsidemajorcities,theBalearicIslands(especiallyIbiza)andtheCanaryIslandsaretheinvestorhotspots.

• Secondarycitiesarestillsufferingfromover-supply.

• Refurbishmentandrepositioningarethekeydrivers,combinedwithre-negotiationofunrealisticfixedrentcontracts.

• Franchisingisbecomingincreasinglypopular,withtheriseoftheindependentmanagementcompany.

• AssetManagementremainsakeyprioritytoimprovenetincomeperformanceinthefaceofslowRevPARgrowth.


Thegreatbanksell-offisexpectedtocontinue,includingsomeasset-basedportfoliodeals,provokingaflow-throughintothesingleassettransactionmarketaspropertiesaresubjectedtomorefocusedassetmanagementpoliciestosupportinvestorexitstrategiesandrequiredreturns.

However,trulydistressedassetsthatofferasignificantupsidearefarlessnumerousthantheinvestormarketbelieves.Thismayforcenewdevelopmenttobeconsideredtogainmarketpenetration.Overallconfidenceinthehotelmarkethasimproved,butfindingbankdebtisstillamajorchallengeandthejourneyremainstoughandfilledwithpitfallsforproductthatisnotproperlyfocusedontheneedsofanever-changingmarket.Noamountofrefurbishmentwillsaveanobsoleteproduct;iftheunderlyinglandhaspotential,demolitionandrebuildingmaybetheonlyoption.

ThepowerofthetouroperatorsinvacationdestinationssuchastheBalearicIslandsandtheCanaryIslandswillcontinuetodominate,butonlyhighqualityproductswillattractthebestcontractterms.

Thescarcityofviablepropertiesinmajorcitieswillcontinuetoforceinnovationfromdevelopersinallsegments,butespeciallyluxury/upscaleboutiquehotelsandcutting-edgehostel/budgetconcepts.

TheMadridandBarcelonaluxuryandupscalesegmentswillcontinuetobepursuedbyinternationalbrands,withplayerssuchasFourSeasonsandMandarinOriental drivingexpectationsofsignificantADRincreasesinMadridbyfinallyofferingachoiceofworldclassproducttothemarket.ThepoliticalarenainCataloniaisforcingmanytolooktothecapitalwithneweyes.ButBarcelonaremainsaglobalphenomenonintermsofinternationaltourismtrends,bothleisureandbusiness.

AllregionsofSpainwillbecomingtotermswithrecentlegislationcontrollingservicedapartmentproductsinthefaceofincreasingcompetitionfromthelikesofAirBnBandtheplethoraofprivateholidaylettings.Thiswillalsoaffectthepotentialofthemixed-usesector,asdevelopersattempttorealizevaluefromresidentialrealestatetofinancehoteldevelopment.

COUNTR

YRE

PORT

S

Philip Bacon has comprehensive experience over more than 30

years in all aspects of hotel and branded residential development

and operations, including 10 years’ hospitality consulting

experience in valuations, feasibility studies, operator search, asset

management and strategic business planning to owners, lenders

and operators across Europe, Africa, the Middle East and the

Caribbean.

EUROPE










SWITZERLAND by Michaela Wehrle i

2014 SNAPSHOT:

• Arrivalsrecordedamarginalgrowth(+1.0%)whilenightsarestatic(+0.1%).Theincreaseinarrivalscanmostlybeattributedtointernationaltravellers,whocontributed54%ofallarrivalsand56%ofnights.

• Thetotalnumberofregisteredaccommodationestablishmentsisdownby-1.9%atendofSeptember(roomcount:–0.8%)comparedtoyear-end2013.

• Theoverallaverageroomoccupancyratewasstableat53.3%

• Asurveyconductedamong48,000skiersandsnowboardersin55EuropeanskiresortselectedZermattthe“BestSkiResort2014”

• AccordingtoBloomberg’sWorldHotelIndex,Geneva’sroomratesarethemostexpensiveontheglobe

• OnFebruary9th,2014theSwisselectorateadoptedthe“InitiativeAgainstMassImmigration”,thusunderminingtheexistingbilateralagreementswiththeEU,suchasthatonthefreemovementofindividuals.

• In2012,44%ofallpeopleemployedinthetourismindustryinSwitzerlandwereforeigners.


HorwathHTLwantedtogetanotionofwhatSwisshoteliersexpectedwouldimpactthemarketin2015.Theywereaskedtoratethreetopicsonwhethertheimpactwoulddiminish,persist,orincreaseover2014.ThetopicssurveyedweretheSwissFrancexchangerate,theSecondHomeInitiative,andtheInitiativeAgainstMassImmigration.

75%ofallhoteliersinterviewedfearmostthattheadoptionoftheInitiativeAgainstMassImmigrationwillhaveanincreasinglynegativeimpact,notonlyonrecruitingstaff.ThecurrentsituationstokesuncertaintythroughoutseveralindustriesandhasCEOsconsideringinvestingabroad.

Theinitiativeforeseeslimitingimmigrationtoacertainnumberperannum,whichcontradictsSwitzerland’salreadyestablishedbilateralagreementwiththeEUonthefreemovementofpeoplebetweenthetwo.Thisagreement,however,isonlyoneofawholepackageofagreements.

Inthemeantime,theSwissHeadoftheFederalDepartmentofJusticeandPoliceisinarealpredicament.SheisamemberoftheinitiatingpartyandtheconstitutionmandatestherealizationoftheSwissvote.TheEU,however,alreadydismissedtherequestfornegotiations.

Inreality,thereareonlytwooptions:eitherterminatethewholepackageofbilateralagreementswiththeEU(whichbythewayisSwitzerland’smostimportanttradingpartner),orsendtheinitiativebacktothepeopleforanothervote,becauseit’sunfeasible.

Unfazedbytheoperationalissueshoteliersface,onthetransactionsideHorwathHTLseesthedemandforhotelpropertiesincities,especiallyZurichandGeneva,significantlyexceedingsupply.Profitabilityofthehotelsisnotnecessarilyreflectinthepricespaid,asinvestorsspeculatewithrisingpropertyvaluesintheseoverheatedmarkets.Newhotelprojectscompeteagainsthigherdeveloper’sprofitmarginsinresidentialorofficebuildingsandareoftendroppedinfavorofthese.

Serioushotelinvestorsarewelladvisedtoswitchtosecondarycities,where–whilestillexpensive–pricesandreturnsaremorereasonable.


COUNTR

YRE

PORT

S

Michaela Wehrle has been a Partner & Project Manager in

Horwath HTL’s Swiss office since 2010, where she focuses on project

conceptualization and asset management in addition to being

closely involved with transaction work. She has more than 15 years

of international hospitality experience, having worked in various

management positions in Austria, Germany, Spain, Switzerland and

the USA.







COU

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Y RE

PORT

S

104

2014 SNAPSHOT

• UKeconomicgrowthisforecasttobearound3%in2014,drivenbytheservicesector.Thiscomparesto1.8%in2013,whichshowedstrongerfiguresinthefirstsixmonthsbutaslowdowninthesecondhalfoftheyear.

• Afteranunevenperformancein2013,thehotelmarketinLondonhasimprovedconsiderablythisyear,despiteadipinperformanceinearlysummer,withyear-to-dateoccupancyremainingsteadyat83.3%,butADRup2.5%,at£140.56,resultinginRevPARgrowthof2.8%to£117.07accordingtoSTRGlobal(thesourceforallperformancedatahere).Growthinmidscaleandbudgetsegmentshasbeenmarkedlystrongerthaninupscaleandluxury.

• Attheregionallevel,performancehasstronglyimproved:RevPARgrewby10.4%year-to-datetoOctober,reaching£48.73,withoutstandingresultsinGlasgow(up23.9%)andCardiff(up15.6%),greatlyoutperformingEnglishcitiesacrossthenation.

• TotaltransactionsfortheUKmarketareexpectedtotop£6billion(over50%above2013)withregionalvolumepredictedtoreach£4.5billionbytheendoftheyear,morethan250%higherthanwasachievedlastyearintheregions.Assuch2014islikelytorecordthesecondhighestlevelofUK-widehoteltransactionsever,beatenonlyby2006(£8.1billion);itwillalsobethefirstyearsincethepeakperiodof2005-2007thatregionaltransactionvolumeexceedsthatofLondon.Confidenceintheregionalmarketisparticularlystrong,basedonthecontinuing(iflessvigorousthanpredicted)economicgrowth,theconcomitantreturnofbusinesstraveltotheregions,andimprovedaccesstoequityanddebt.TheLondoninvestmentmarkethasexperiencedstockconstraintsandeverincreasingcompetitionforavailableassets.


Theoutlookfor2015isoneofcontinuedstrongperformanceforLondonandvigorousrecoveryintheprovinces,withADRlikelytoriseto£144inLondonandtoabove£67intheprovinces.Occupancyispredictedtogrowmodestly,by1.5%inLondonand1.6%intheregions,butenoughtoliftRevPARtorecordlevels.RevPARisexpectedtoriseby4%inLondonand6.3%intheregions,to£121.75and£51.80respectively.

Roomsupplyintheregionsissettogrowmoderatelyat1.7%(9,000rooms)whileLondonislikelytoincreasebyaround5.3%(7,200rooms).Ascanbeseenfromtheabovefigures,demandisexpectedtooutgrowtheincreaseinsupply.CompetitionfromnewofficeandresidentialdevelopmentsmaypushupcostsforinvestorslookingintotheLondonmarket.

Transactionvolumeisexpectedtorisefurther,albeitatalowerrate,intheregionsaswellasinLondon;thoughonbothfrontsinvestmentmaybeconstrainedbyavailablesupply.Weexpecttoseemoresmallportfoliosandsingleassettransactionsintheregionsnextyear.WebelievethatthecontinuedRevPARgrowthwillfuelinvestorinterestin2015,particularlyinkeycitiesoutsideofLondon.

Theoverallsentimentisoneofconfidence,generallyanticipatingaperiodofsustained,andpossiblyrecord,growth.Theunexpectedslowdownoftheeconomicrecoveryandtheuncertaintiesintherun-uptotheMay2015Parliamentaryelectionsmayresultinslowergrowthinthemarket,andrisks–theongoingcrisesinUkraine,RussiaandtheMiddleEast,aswellasthepossibilityofatriplerecessionintheEurozone,amongothers–arecausinguncertaintyinthemarket.Despitethesefactors,thesustainedmomentumintheUKhotelindustry,abuoyantglobaltravelmarketandthedownwardsrevisionofforecastsforGBPtoUSDandEURareallpointingtoanotherstrongyearaheadfortheUKhotelsector.

UNITED KINGDOM by Erlend Heiberg i


COU

NTR

Y RE

PORT

S

Erlend Heiberg heads Horwath HTL’s UK office in London. He also

serves as the liaison with Horwath HTL’s international offices for

cross border assignments in Europe, Middle East and Africa. Erlend

is a member of the Royal Institution of Chartered Surveyors and a

Fellow of the British Association of Hotel Accountants.











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www.horwathhtl.com

The world’s number one hospitality consulting

network, Horwath HTL is the industry choice; a

global network offering complete solutions

across all markets.

Horwath HTL has become synonymous with

quality, service, impartial advice and expertise.

We are known for always providing the highest

level of service to our clients.

With over 50 offices across 39 countries - whatever

your requirements, large or small, national or

global, Horwath HTL can help you succeed.

In 2015, we will celebrate 100 years

professional involvement in the hospitality

industy. Over the years, we have gained

extensive market knowledge through

involvement in thousands of projects:

• Market and Feasilbility Studies

• Planning and Development

• Asset Management

• Tourism and Leisure

• Valuations

• Spa, Health and Wellness

© 2015 Crowe Horwath International. All rights reserved. Horwath refers to Horwath International Association, a Swiss Verein. Each member of the association is a separate and independent legal entity.

Welcome to Horwath HTL


TM

Global leader in hospitality consulting

HorwathHTL HIFI 2013 AD AW:Layout 1 13/11/13 09:19 Page 1

www.horwathhtl.com

The world’s number one hospitality consulting

network, Horwath HTL is the industry choice; a

global network offering complete solutions

across all markets.

Horwath HTL has become synonymous with

quality, service, impartial advice and expertise.

We are known for always providing the highest

level of service to our clients.

With over 50 offices across 39 countries - whatever

your requirements, large or small, national or

global, Horwath HTL can help you succeed.

In 2015, we will celebrate 100 years

professional involvement in the hospitality

industy. Over the years, we have gained

extensive market knowledge through

involvement in thousands of projects:

• Market and Feasilbility Studies

• Planning and Development

• Asset Management

• Tourism and Leisure

• Valuations

• Spa, Health and Wellness

© 2015 Crowe Horwath International. All rights reserved. Horwath refers to Horwath International Association, a Swiss Verein. Each member of the association is a separate and independent legal entity.

Welcome to Horwath HTL


TM

Global leader in hospitality consulting

HorwathHTL HIFI 2013 AD AW:Layout 1 13/11/13 09:19 Page 1

http://www.horwathhtl.com

http://www.horwathhtl.com

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