FEURING E-MAGAZINE

Karl A. Schattmaier, CEO of the Steigenberger Hotels AG Management Board, Leaving the Company

Seen on hotel-online.com, Jan 30, 2008

Karl A. Schattmaier (58), a member of the board of Steigenberger Hotels AG, is leaving the company as of January 31, 2008.

The background to the decision, which was arrived at by mutual consent, is the restructuring of the board of management adopted by the Supervisory Board in December of last year.

Karl A. Schattmaier has been a member of the board of the Frankfurt-based company for 14 years; in 1998 he became the chairman of the board. Among his achievements is the repositioning of the company and its brands initiated in 2003. Measures with which he made a major contribution to the consolidation of the company in difficult economic times.

André Witschi, who has been appointed as the chairman of the board of Steigenberger Hotels AG as of February 1, 2008, is also assuming Schattmaier’s tasks. Witschi will then be responsible for corporate development, operations, marketing and sales, human resources, as well as corporate communication. The area of finances and controlling continues to be headed by Matthias Heck.

Ian Schrager and Bill Marriott introduce "Edition"

Seen on ehotelier.com, Jan 31, 2008

Ian Schrager and J.W. Marriott, Jr., kick started their new lifestyle boutique hotel brand, introducing its name, "Edition," and announcing an initial wave of signed development deals that will see the expected opening of the first properties in 2010.

The renowned inventor of the boutique hotel and the CEO of the world's premier lodging company said that they have reached agreements with developers for the first nine of what eventually could be more than 100 Edition hotels in markets around the globe. Under the agreements, Edition hotels are now planned for Paris, Madrid, Costa Rica, Miami, Washington, Chicago and Scottsdale, Ariz.  Two hotels are planned for Los Angeles.

Messrs. Schrager and Marriott will report their progress to a group of lodging industry leaders this evening at a gathering in Beverly Hills.  The partners will reveal that interest among developers had been enthusiastic beyond their expectations and that they are in advanced discussions involving 20 more hotels with as many as 30 agreements in prime locations expected by the end of 2008.  Six months ago, they anticipated having only five projects announced by the end 2007, essentially half of what has actually been signed.

"As this announcement indicates, Edition will be truly global," Mr. Schrager said.  "The reaction among the development community underscores the strength of the concept, reflects the breadth and diversity we anticipated, and demonstrates the industry's understanding of the untapped market we will reach."

"It's a magical combination," said Mr. Marriott, chairman and chief executive officer of Marriott International, Inc. (NYSE:  MAR).  "Each hotel will be a new Edition, a modern genre of hotel that only Ian Schrager can create.  These hotels will be an exceptional complement to our brand portfolio and will allow us to use our global platform and operational expertise to create the first truly global branded boutique lifestyle hotel on a large scale."

"The name ‘Edition' perfectly captures the essence of this brand," said Mr. Schrager.  "People today are sophisticated and demanding about quality and service, yet also expect a hotel to provide a unique environment and experience. We intend to make this type of lodging widely accessible and available for the first time in the major lodging destinations across the globe and to everybody around the world who wants it." Edition will respond to emerging cultural and social imperatives. It will reflect changing lifestyles and cater to a vast, underserved market of guests expecting and in turn demanding a unique experience, not merely a place to sleep.  The properties, while distinct, will all emphasise good design, quality, originality, authenticity and character, while delivering impeccable, modern and gracious personalised service.

With an average size of 150-200 rooms, each of the hotels will reflect the best of the cultural and social milieu of its location and of the time.  A diverse set of world-renowned architects and designers will be recruited to create one-of-a-kind buildings spanning the complete range of project types, from new construction, to conversions, to dramatic renovations.  The partners expect these hotels to be not just the most aesthetically pleasing in their markets but to be the most environmentally responsible as well.  Mr. Schrager is leading the effort on concept, design, marketing, branding and food and beverage for Edition. Marriott is overseeing the development process, and will operate the properties.

About Ian Schrager
Entrepreneur Ian Schrager has achieved international recognition for concepts that have revolutionized both the entertainment and hospitality industries.  His keen instincts for the mood and feel of popular culture were honed during the 70's and 80's, when he and his late business partner, Steve Rubell, created Studio 54 and Palladium.  The pair soon turned their attention to the hotel business, opening Morgans Hotel in 1984, introducing the concept of the "boutique hotel" to the world. Following this were Royalton Hotel and Paramount Hotel, in which Schrager again broke with industry convention by creating "lobby socializing," where the hotel lobby became a new kind of gathering place for guests and New York City residents alike, and "cheap chic," where affordable luxury was offered in a stylish and sophisticated environment.  After leaving Morgans Hotel Group in 2005, Mr. Schrager founded Ian Schrager Company, which owns, develops, manages and brands hotels, residential and mixed-use projects. It is currently involved in projects in New York, Miami and Las Vegas as well as other gateway cities around the world.  His first residential project, 50 Gramercy Park North, provides unique luxury residences adjacent to the only private park in New York City with world-class service from the Gramercy Park Hotel, another recent project from Ian Schrager Company, designed in collaboration with artist, Julian Schnabel.  In addition, Mr. Schrager completed his second residential project, 40 Bond in 2007.  The building, designed by eminent Swiss architects Herzog & de Meuron, is their first residential project in America and combines luxury apartments and townhouses.  The first townhouses built in New York City in generations offer unprecedented, innovative and sophisticated layouts, details and finishes.

About Marriott International
MARRIOTT INTERNATIONAL, INC. (NYSE: MAR) is a leading lodging company with approximately 3,000 lodging properties in the United States and 67 other countries and territories across 18 lodging and vacation resort ownership brands.  The company is headquartered in Bethesda, Md., and had approximately 151,000 employees at 2006 year-end.  It is ranked as the lodging industry's most admired company and one of the best places to work for by FORTUNE®.  The company is also a 2006 U.S. Environmental Protection Agency (EPA) ENERGY STAR® Partner.  In fiscal year 2006, Marriott International reported sales from continuing operations of $12.2 billion. 

Vivico and Hyatt conclude agreement for Europaviertel

Source: Press Release, Jan 28, 2008

Vivico and Hyatt International today signed a management agreement for a Grand Hyatt Hotel in the 5 star-plus category. The hotel will take the form of a tower around 150 metres high on the Osloer Strasse in Frankfurt's Europaviertel.

Bernhard H. Hansen, Chief Executive Officer of Vivico, emphasized the following points on signing the agreement: "Vivico is proud of acquiring the highly renowned global operator Hyatt for the prestigious location of Frankfurt and the Europaviertel." Hansen believes Hyatt's investment underscores the quality of the regenerating district and highlights the significance of the Europaviertel for Frankfurt.

"We are delighted that our new hotel will secure a foothold for us in the important banking and conference centre of Frankfurt", said Gebhard Rainer, Managing Director Hyatt International Europe, Africa, Middle East. "Our innovative and modern product which meets the highest international standards is eminently suited to Frankfurt. The Grand Hyatt Frankfurt will form the ideal complement to our existing range of successful hotels in Cologne, Hamburg, Berlin, Mainz, as well as the one due for completion in Düsseldorf in 2010, and will strengthen our position in the German market." To date, the Hyatt Group has only had one premium-brand "Grand Hyatt" hotel in Germany, notably in Berlin.

The conclusion of the agreement was initiated by Viador, a joint venture between the Feuring Group and Vivico, established as recently as 2007. Viador will continue to supervise the project and operations. Vivico will be in charge of constructing the hotel until it is ready for handover in turnkey condition. The next step will be the architectural design; the building application is to be submitted before the end of 2008. The hotel tower is scheduled for completion in 2011/2012.

The tower will cover a gross floor area of approx. 54,300 square metres. Facilities including around 405 rooms, restaurants, bars and a fitness and wellness area put the hotel firmly in the premium category. There are also plans to build a publicly accessible visitor centre offering views of Frankfurt's skyline.

U.S. 2008 hotel revenue seen rising at slower rate

Seen on Hotelmarketing.com, Jan 29, 2008

Revenue for U.S. hotels will keep rising in 2008, but at a slower rate than in the past couple of years as leisure travel softens and the supply of new hotel rooms increases, industry experts said on Monday.

Despite recession fears, steady demand from business travelers is expected to allow hoteliers to raise room prices by 5.2 percent this year, while occupancy slips 0.8 percent, bringing revenue per available room—a combination of room rates and occupancy that is a benchmark of industry health—up 4.4 percent for the year, according to a forecast from Smith Travel Research presented at a lodging industry conference in Los Angeles.

Revenue per available room, or revpar for short, rose 5.7 percent last year and 7.8 percent in 2006.

U.S. consumers are cutting back on spending and a full- blown recession would indeed crimp the business travelers that hotels have come to rely on as their best-paying customers, but Smith Travel, which tracks the lodging industry, does not forecast a recession.

Get the full story at Reuters

PwC forecasts continuous hotel seller’s market

Seen on Hotelmarketing.com, Jan 28, 2008

Hotel revenue per available room and average daily rate growth will flatten in 2008, but travel buyers should expect at least another few years of a hotel seller's market, according to PricewaterhouseCoopers' 2007 U.S. Lodging Industry Report and Forecast.

The forecast, which has a historical accuracy record of within a few tenths of a percentage point, indicated that average daily rates would increase by 5.6 percent in 2008, about the same level of growth forecast through the end of 2007. Revenue per available room was forecast to increase 5.1 percent, well below the high levels seen in 2004 through 2006 but on par with the increase expected for 2007.

PwC expects that occupancy will drop only slightly to 62.9 percent in 2008, compared with a 63.2 percent forecast for this year. It’s still a high level of occupancy, particularly in high-demand cities, said Bjorn Hanson, PwC’s hospitality and leisure group principal.

“2008 is within a few tenths of an occupancy point of the highest occupancies in 10 years,” he said. “Right now, pricing power in cities like New York, San Francisco and Boston is driving these sets of numbers.”

Get the full story at BTNonline

UK Chain Hotels Market Review – December 2007: London hotels enjoy double-digit profit growth

Source: TRI Hospitality Consulting, London

The profitability of chain hotels in the UK increased at a slightly higher rate than sales during 2007,
according to the full-year figures from TRI Hospitality’s monthly HotStats survey.

Income before fixed charges (also known as gross operating profit) increased by 7.6 per cent to £44.14
per available room, compared to a 7.1 per cent increase in room revpar to £66.51.

The overall picture of strong profit growth in the UK was predominantly due to the London hotels in
the sample that, on average, enjoyed an upswing in profit of 12.8 per cent to £64.04 per available
room.

With no change in occupancy, it was a 10.2 per cent increase in average room rate to £112.81, and a
firm grip on payroll costs, that enabled London hoteliers to turn in a very healthy profit performance
in 2007.

“The capital’s magnetism as a corporate and leisure destination and its extremely high occupancies
meant there was minimal scope for hoteliers to increase volume in 2007. This put a great emphasis on
rate growth. Indeed, the fact that demand for quality, branded accommodation continued to exceed
supply enabled London hoteliers to put in a sparkling rate performance in 2007, and boost their profits
accordingly” said Jonathan Langston, managing director, TRI Hospitality Consulting.

At chain hotels in the rest of the UK (referred to as the provinces), profit increased by 2.2 per cent to
£33.02 per available room during the full year. Room revpar and total revpar increased at 4.1 per cent
and 7.3 per cent respectively. Further profit growth was hampered by payroll costs edging up to 31.6
per cent of total revenue.

Aberdeen increases profit the most in 2007

TRI’s unique profit-and-loss sample of more than 450-full service hotels across the country shows that
in terms of profit growth, Aberdeen was the stand out performer of last year with IBFC up by 22 per
cent to £42.93 per available room. Edinburgh also had a good year with IBFC up by eight per cent to
£42.76.

“2008 looks set to be another good year for Aberdeen hoteliers since it is not until 2009 that a large
swathe of new bedrooms will open and fundamentally alter the supply-demand dynamics of the city’s
hotel market,” said Langston.

From Monday to Thursday, demand in Aberdeen from the oil and gas industries has been far in excess
of its branded hotel supply, encouraging some hoteliers to push their rates as high as £250.00.

“Apart from the shining examples north of the border, most provincial hotel markets put in a steady
performance in 2007. This year in large UK city centres, we expect business demand to stay relatively
buoyant, especially given that it continues to outstrip supply in certain key commercial markets. The
main concern in 2008 is likely to be a drop in consumer-spending. Finding ways to maintain or
increase leisure demand could be a significant challenge for UK chain hoteliers this year,” said
Langston.

Visitor numbers show moderate growth

In the 12 months to the end of November 2007 overseas visitors to the UK increased by one per cent,
according to the latest figures from National Statistics.

Visitors from North America fell by four per cent, visitors from Europe were up by three per cent and
visitors from ‘other countries’ increased by one per cent. Thanks largely to growth in Asia, there were
more visitors from ‘other countries’ than from North America during the 12 month period. Spending
by overseas tourists increased by one per cent to £16.2 billion.

At BAA’s seven UK airports, including Heathrow and Gatwick, total passenger traffic for the full year
of 2007 increased by 1.6 per cent, taking the total to just under 150 million passengers.

Hotel Spa profits rise

Seen on ehotelier.com, Jan 25, 2008

A special analysis of hotel spa department operating statements conducted by PKF Hospitality Research (PKF-HR) finds that a 9.7 percent increase in hotel spa revenues resulted in an 11.3 percent gain in spa department profits in 2006.

Driving the increase in revenues was a 9.6 percent increase in the sale of such popular spa services as massages, body scrubs/wraps, and facials. Also contributing were gains in revenue generated from local membership fees, fitness lessons and personal training, and the sale of merchandise and clothing. These observations come from the recently released inaugural edition of Trends in the Hotel Spa Industry published by PKF Hospitality Research, an affiliate of PKF Consulting (PKF-C). The report is believed to be the most comprehensive analysis of hotel spa department financial performance in the industry.

"Over the past decade, hotels across the nation have added spa operations to meet escalating consumer expectations and to increase revenues and profits," said Mark Woodworth, president of Atlanta-based PKF-HR. "A growing number of people are leading healthier lifestyles and demanding spa services when they travel. Further, by offering and promoting spas to their guests, hotels have generated increased interest in pampering and luxurious spa experiences.

"Hotel spas are now seemingly ubiquitous and have reached a level that warrants a serious study of this industry," Woodworth said. "As spas become even more prevalent, the need for effective management of these facilities is imperative. PKF Hospitality Research and PKF Consulting have a 71-year legacy of providing the hospitality industry with valuable information that allows hotel owners, operators, and other interested parties to benchmark the performance of their operations to industry-wide measures. This report builds on that legacy."

From a total sample of 147 operating statements for hotels with spa operations, PKF-HR analyzed the financial performance of 46 resort spas and 17 urban hotel spas that reported extensive revenue, expense, and profit data for both 2005 and 2006. The Trends in the Hotel Spa Industry report presents year-to-year changes in spa department financial performance sorted by location, as well as revenue categories. Under the guidance of Bruce Baltin, a Los Angeles-based Senior Vice President of PKF-C, the interpretation of the data and development of the editorial content was conducted by representatives of Health Fitness Dynamics, Miraval, and Cornell University, as well as analysts from PKF Consulting.

The following paragraphs highlight the major findings of the PKF-HR hotel spa financial analysis.

Spa Revenues

From 2005 to 2006, total hotel spa revenue grew from $2,886 per available room (PAR) in 2005 to $3,166 PAR in 2006. This 9.7 percent increase compares favorably to the 8.2 percent increase in total hotel revenues and a 5.9 percent average gain in sales from all other operated departments.

"When evaluating spa revenues, it is important to analyze sales based on a dollar-per-square-foot, or dollar-per-revenue-station basis," Baltin noted. "These metrics help an owner evaluate the potential return on investment when adding a spa operation." In 2006, hotel spa revenues averaged $130.62 per square foot, or $115,823 per revenue station. Revenue stations consist of treatment rooms and salon stations.

Treatments such as massages, body wraps, and facials are the largest sources of revenue for hotel spas. Together, they comprised 73.0 percent of the revenue generated by hotel spa departments in 2006. "While spas offer a wide range of services, massages remain the top revenue generator for several reasons," Baltin noted. "First, most consumers are unaware of or may be intimidated by more exotic spa treatments and, therefore, tend to gravitate towards the norm. Second, nothing beats a massage when you are seeking a relaxing and indulgent experience. Finally, as more men are taking advantage of spa services, they tend to be drawn to massages as their treatment of choice."

Clothing and merchandise sales exhibited the greatest gains of all revenue sources during the year (20.4 percent) and represent 6.6 percent of total departmental revenue. "As more hotels' guests are becoming educated spa consumers, they are incorporating elements of the spa experience into their everyday life by purchasing items that can enhance the home spa experience, such as candles, clothing, music and literature. Thus, spa boutiques have become an integral component of the spa business model as they provide products that relate specifically to individual treatments and thus, contribute positively to the bottom line," Baltin observed.

Spa Expenses

Because hotel spa departments are not directly burdened with their overhead costs, the majority of spa department expenses are variable in nature. Therefore, it is not surprising that the increase in operating expenses paralleled the 9.7 percent gain in revenue. In 2006, total spa department operating expenses grew 9.0 percent. Exhibiting the greatest gains were labor costs (9.6 percent) and cost of goods sold (9.0 percent). Combined, all other operating expenses grew 6.6 percent during the year.

In an effort to provide truly hands-on, personal levels of service, hotel spa departments are labor intensive operations. Taken together, salaries, wages, and benefits account for 73.6 percent of all spa department operating expenses. "It is apparent that, like the hotel industry, increasing labor costs are a key operating variable in the spa industry. As treatment prices continue to rise, the spa therapist's percentage of revenue closely follows. Further, the difficulty of efficient therapist scheduling also results in higher labor costs," Baltin noted.

Other major operating costs include contract services (5.3 percent of total expenses), cost of merchandise and clothing sold (4.8 percent), professional products and supplies (4.8 percent), and operating supplies (3.6 percent).

Spa Profits

"As the spa industry continues its evolution and revenues increase, U.S. hotels are enjoying more profits from their spa operations," Baltin said. "From 2005 to 2006, hotel spa department profits increased 11.3 percent. This is greater than the 9.9 percent average growth in profits for all operated departments during the same period."

Due to the extensive labor requirements, spa departments achieve lower-than-average profit margin ratios, compared to all other operated departments. In 2006, the average hotel spa department achieved a profit margin of 31.1 percent. This compares to a 40.8 percent profit margin ratio for all other operated departments combined. Higher profit margins were achieved by resort hotels (33.3 percent) compared to urban hotels (17.9 percent).

"With a stronger focus on staffing and a better understanding of the local community, both urban and resort spas have an incredible opportunity to increase their profit margins," Baltin concluded. "A properly operated and marketed spa facility can enhance the overall hotel's performance in terms of rate potential, occupancy, and guest demand diversity."

Asian hotel sales reach record high of US$10.8 billion in 2007

Seen on ehotelier.com, Jan 24, 2008

Hotel transaction activity in Asia reached US$10.8 billion during 2007, more than double the previous high of US$5.0 billion recorded in 2006. 

During 2007, the Asian hotel market witnessed 83 major (valued above US$5 million) transactions.  Japan recorded the highest transaction activity totalling US$6.8 billion; including four out of the five largest transactions including the IHG / ANA portfolio sold by Jones Lang LaSalle Hotels.  "Asia's hotel markets continue to perform well, driven by strong local economies and expanding leisure markets," said Mr Scott Hetherington, Managing Director Asia, Jones Lang LaSalle Hotels.

On average, investors paid approximately US$225,000 per room for hotels across Asia.  "Reflective of a higher level of product being offered for sale throughout the year, this was a 15.3% increase over 2006 and the highest level recorded since 1997," said Mr Craig Collins, Managing Director Investment Sales Asia, Jones Lang LaSalle Hotels.

While regional players still dominate, cross-border transactions have also increased accounting for 46% of total hotel transaction activity - a significant increase on last year's 39% (+US$3 billion).  Investors remain bullish on expectations for short and medium term trading across Asia Pacific.  "Continued urbanisation and development in Asia has the potential to drive economic growth for many years to come and while many forecasts suggest a slowdown in the US, developing Asia is perceived to be relatively protected from this," said Mr Hetherington.  Capital inflows in 2007 were dominated by U.S. private equity groups, as well as Middle Eastern investors.

"Prospects for greater transaction volumes were restricted by the limited number of hotel assets for sale," said Mr Hetherington.  With such positive hotel trading conditions, many investors are adopting a hold strategy.  "In our latest Hotel Investor Sentiment Survey, buyers still outweigh sellers by 5:1 with buy sentiment prevailing in over half of surveyed markets, dominated by the regional investment hot spots of China, Japan and Singapore."

"Most countries across Asia witnessed transaction activity, however deals were concentrated in North Asia, namely Japan, Hong Kong, China and Macao," said Mr Hetherington.  "Vietnam is also attracting unparalleled levels of interest," he added.  "Markets tipped hot for acquisition by investors include Macao, Hong Kong, Guangzhou, Chengdu, Beijing, Tokyo, Osaka, Singapore, Shanghai and Ho Chi Minh City," 

Japan

Japan has emerged as Asia's hotel investment hot spot over the last four years.   "Investors are lured to Japan by the low cost of debt, and while economic growth rates may not be as strong as some parts of the world, hotels still offer a positive yield spread.  Mr Tom Sawayanagi, Managing Director, Jones Lang LaSalle Hotels Japan, said.  "Investment activity continues to be dominated by two main trends: the disposal of non-core assets by Japanese companies, and acquisitions and dispositions by domestic and international real estate funds, many of whom have well-established platforms."

China

China's economy is proving resilient to the current turmoil in the global financial markets.  "Direct investment in hotel real estate only started gaining pace over the past few years," said Mr Andreas Flaig, Executive Vice President, Jones Lang LaSalle Hotels China.  "Transactions volumes have averaged around $1 billion for the past two years compared with only $200 million in 2005; and will increase as more hotel product comes on line and the market plays catch-up with a rapidly expanding domestic economy and tourism flows," he added.

Hong Kong SAR

Hong Kong remains one of the most highly sought investment destinations in Asia Pacific however it is also one of the most tightly held.  "Hong Kong recorded its highest level of hotel investment activity ever in 2007 with two significant transactions occurring - the sale of the Ritz Carlton to China Construction Bank for $464 million, and the Majestic Centre for $216 million," said Mr Hetherington.

Vietnam

The growing exuberance surrounding Vietnam's accession to the WTO (World Trade Organisation) has increased foreign investor interest in Vietnam.  Hotel transaction volumes increased fourfold to $332 million in 2007, well up from US$74 million last year.    Mr Collins said, "We expect to see investor interest continue to increase as the market offers great value because of the low cost of land and opportunity for income and capital growth."

The European hotel industry grows 8.1 per cent in 2007

Seen on ehotelier.com, Jan 22, 2008

2007 was a strong year for the EMEA hotel market with Lisbon, Portugal emerging as the top performer in RevPAR growth with revenue per available room (RevPAR; the most important benchmark in measuring performance in the hospitality industry) increasing 25.5 per cent.

On an absolute scale, Dubai in the United Arab Emirates has overtaken Moscow and now has the highest RevPAR of €219.  The Moscow market experienced a decline in RevPAR and average room rate (ARR) of -8.2 per cent and -9.9 per cent respectively although at an ARR of €300 it remains the most expensive hotel market in EMEA.

• Asia maintains momentum with growth of 11.1%

• The US market, more under pressure as supply climbs, still performs at 5.7%

• The Middle East and Africa enjoys the strongest performance, growing at 12.5%

• The UK continues to grow year-on-year with strong performance of 11%

The figures were presented by James Chappell, Managing Director of hospitality performance consultancy, The Bench, at Cushman & Wakefield Hospitality's New Year Hotel Investment Summit last night in London's Mayfair. The Bench, which monitors over 400 markets worldwide, revealed global hotel performance trends at the event which also hosted a panel session with Sir David Michels, European strategist and board member of Strategic Hotels & Resorts; Alan Parker, CEO of Whitbread and Peter Zenneck, vice president development for Europe and north Africa for Jumeirah Group.

The increase in performance in RevPAR from Lisbon (25.46 per cent growth) was largely due to its hosting of the EU Presidency.  Oslo at 16.8 per cent and Barcelona at 14.5 per cent also performed well.  Apart from Moscow, the only other European market with a negative RevPAR result was Frankfurt (-2.7 per cent to €72) in the year following the World Cup, although the feeling is that the German market is performing better that it has done in many years.

In the UK, London's 10.2 per cent growth in RevPAR came on top of strong growth in 2006.  Average RevPAR has increased from £111 in 2006 to £122, to reach its highest level since 2000.  Edinburgh also enjoyed strong growth of 5.93 per cent to £97.

The panel's feelings for hotel performance in 2008 was cautiously optimistic ‘people are worried, but never has RevPAR been so high, and no one knows when it is going to change', said Sir David Michels. Peter Zenneck was similarly optimistic that 2008 would build on success enjoyed in 2007 in Jumeirah's markets of Dubai, London and now New York ‘a record year again' he said, and went on to explain the Jumeriah was enjoying up to 95% occupancy in some of it hotels.

Philip Camble, Director of C&W Hospitality said "The Middle East continues to defy the critics and regional unrest. With regional RevPAR growth in excess of 12% in 2007, spearheaded by the regional tourism (both leisure and commercial) powerhouse that is Dubai, performance in the Middle East is reflecting the dedication of its people and investors to diversify their economies and unlock their incredible potential as destinations of international standing."

When questioned about Jumeirah's plans for 2008 Peter explained that they had a strong growth strategy in mind, and were looking to double their portfolio in prime gateway cities such as Paris. Commenting on yields in the upscale branded sector he said ‘[There is] such a demand for palace hotels in Paris we are seeing yields at 6, 5 and even 4%. I cannot see yields in that sector softening any time soon.'

To sum up the evenings discussions, Nick Pattie, Managing Director of C&W Hospitality, said ‘2007 was generally a good, or very good, year for hotel operating performances across Europe and the Middle East, but a year of two halves for hotel investment. 2008 will see strong operating performances continuing but growth slowing, whilst investment yields will soften in all but the prime markets.'

In 2007, hotel chains made 8.5 billion dollars in turnover in France

Seen on ehotelier.com, Jan 22, 2008

Over the course of 2007, hotel chains in France registered an increase of more than 11% in turnover with 8.5 billion euros, and a 9.2% increase in RevPAR, as predicted by MKG Hospitality at the beginning of the year.

The French hotel industry, after benefiting from an image overhaul and improvement of products and services, reaps the rewards for these efforts with these exceptional results, unequalled since the year 2000.

The 3* and 4* categories saw the most dynamic progression in RevPAR, up +9.9% and +11.4% respectively. The increase in average rates, along with occupancy rate growth of nearly 3 points over the year, attest to the strength of the French hotel demand.

In 2007, the "good health" of the 4* category helped with growth in other segments

Performance of integrated hotel chains by category in France in 2007 - First Estimates

	Occupation Rate	Difference in OR (pts)	Average Rates	Evolution of AR %	RevPAR	Evolution of RevPAR %
0*/1*	71.2%	0.2	37.3	4.8%	26.6	5.1%
2*	69.6%	1.8	62.3	3.9%	43.4	6.7%
3*	66.7%	2.8	91.6	5.3%	61.1	9.9%
4*	72.2%	2.9	198.7	6.9%	143.5	11.4%
GLOBAL	69.6%	1.8	82.3	6.4%	57.3	9.2%

Source : MKG Hospitality's database - official provider of data for hotel chains - January 2008

Average Rates and RevPAR expressed in euros (tax included)

As predicted by MKG Hospitality at the beginning of the year, 2007 was excellent for the French hotel industry. With an occupation level up 1.8 points and an average rate which increased by 6.4%, the evolution of RevPAR reached 9.2% over the year. The month of December ended the year in style, with a 10.3% increase in RevPAR. The whole of this performance is reflected in a turnover increase of 11% for hotel chains, or 8.5 billion euros.

The midscale and upscale segments had the most positive impact on results, like in 2006, and it was the 4* category which registered the most important progression in its indicators. In this category, the dynamism of both the Business segment and the international clientele guaranteed this growth in the volume of demand. This was confirmed in 2007 by a rise in occupation rates, which in turn resulted in an +7% adjustment of average rates for the 4* category. Other than the rate increase, the progression of average rates also resulted in changes in the client mix. The boost in activity is headed by the clients that pay the most in terms of average rates -namely, international and business travelers.  A greater number of these clients had an impact on the volume of rooms sold, which also contributes to the increase in average rates. The result for RevPAR of the 4* category showed a two-digit progression over the course of the year.

The overwhelming "good health" of the 4* sector had a positive impact on other segments: 2* and 3* establishments registered respective progressions in occupation rates of +1.8 and +2.8 points, respectively (versus +0.4 point for 2* and +0.8 point for 3* hotels in 2006). An acceleration of the growth was particularly felt by 3* hotels, which took advantage of the rate increase in the upscale category in order to win back clients who may have been attracted to the abundance of promotional prices for 4* hotels in recent years.

The super-economy segment showed less progression in RevPAR with only 5% growth, mainly due to the increase in average rates. While the category experienced some stagnation in occupancy rates in 2007, they did not decrease as they did in 2006 (-0.6 point). However, occupancy rates for this category remain high, at over 70% on average annually. Since this category is less affected by positive or negative market changes, the progression in RevPAR is rather linear from year to year.

The highest increase in RevPAR since 2000

The year 2007 turned out to be the best year for RevPAR since 2000 (+9.4%). The period between 2000 and 2003 was marked by a slower cycle for hotels, yet the period from 2004 to today showed a marked acceleration in the progression of performance indicators from year to year. 

More interestingly, an analysis of 2007 reveals a progression in hotel indicators which remained high throughout the year.

Over the first quarter, the RevPAR increased by 9.5%, riding on an upward trend already evident at the end of 2006. The beginning of the second quarter was slightly slower due to the number of holidays, which tend to restrain business travel. In addition, pre-election periods are traditionally less active for the industry. The first semester of the year still ended with an exceptional month of June, most notably with the Air Show in Paris.

During the summer months, the unpredictable weather did not seem to have a negative impact on hotel activity, which was boosted by an important influx of foreign clients. The evolution of consumer habits regarding tourism and the development of urban leisure tourism had a marked impact on chain establishments, mainly those well implanted in large cities and their outskirts. These factors helped with the RevPAR results for the third quarter, which showed an increase of 9.1%.

The final three months of the year registered a record growth in RevPAR (+11.3%).  The activity generated by the Rugby World Cup had a forcefully positive impact on RevPAR, which increased by a remarkable 14.3% in October, the highest progression over the year, just above that of June (13.4%). Despite a year-end marked by social conflict, progression of indicators remained high in November and December proved another positive month.

 

Paris is still the driving force for hotel performance

The main factors in the success of hotel performance in 2007 -the Business segment, international clients, the important events (the Paris Air Show, the Rugby World Cup, the salon Bâtimat...) and a move towards urban leisure tourism all benefited, first and foremost, establishments in Paris and the Ile-de-France.  The French capital registered a progression of 13.7% in revenue per room.

Performance of hotel chains in Paris, Ile-de-France and Provincial France

Cumulated results from January to December 2007 - First Estimates

	Occupation Rate	Difference in OR (pts)	Average Rates	Evolution of AR %	RevPAR	Evolution of RevPAR %
Paris	81.7%	3.8	147.1	8.5%	120.1	13.7%
Ile-de-France	72.8%	3.6	70.8	5.4%	51.5	10.9%
Provincial France	66.1%	0.7	68.4	5.0%	45.2	6.1%

 

Source : MKG Hospitality's database - official provider of data for hotel chains - January 2008

Average Rates and RevPAR expressed in euros (tax included)

RevPAR progression was much more rapid in Paris than in provincial France, which was true for all segments of the market.

It can also be observed that the increase initiated in Paris was seen all over the Ile-de-France. Suburban areas and departments just outside of Paris had higher positive results as well, with a progression of 3.6 points (versus +1.3 points in 2006).

On average, hotels in provincial regions of France, which covers a variety of markets from one region to another, showed a lower increase in RevPAR, 6.1%. This is primarily due to an increase in average rates (+5%), while the occupancy rate increased by 0.7 point.

The year was overall a success for major cities: greater Paris, Lyon and Marseille all registered an evolution in RevPAR of over 10% (cumulated through end-November 2007). The regions surrounding metropoles other than Paris, namely the Rhône-Alps and PACA (Provence-Alps-Côte d'Azur) regions, also showed excellent results, with a growth in revenue per room of +9.6% and 8.1%, respectively.

2007 will also be a year to remember for the northeast quarter of France, thanks to the new TGV train service to the east inaugurated in June, with which hoteliers can legitimately expect a favourable impact.  Strasbourg, for example, registered an elevated performance throughout the second semester. The RevPAR also recorded a remarkable progression in August (+28.5%), in October (+12.9%) and in November (+18.2%).  According to the results from MKG Hospitality's daily tracking observatory for hotel performance, this trend was also confirmed in December, with a progression in RevPAR of about 15%.