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Russell KettManaging Director
HVS – London
Amsterdam – 16 January 2008
European Hotel Sector Review of 2007
Key Trends for European Hotels
● Occupancy and room rate● Hotel valuation● Transactions
Europe – Still the RevPAR King
4050
607080
90100
110120
2003 2004 2005 2006 2007
US
$
Asia Pacific Middle East Europe Europe € USA
Sources: HotelBenchmark™ by Deloitte; Smith Travel Research
Seasonally Adjusted RevPAR$115
$103
$99
$64
€87
European hotel occupancy %
0
10
20
30
40
50
60
70
80
90
A'dam
B'lona
Berlin
Bruss
els
Genev
a
London
Paris
Mila
n
Rome
2005
2006
2007e
European hotel ADR €
0
50
100
150
200
250
A'dam
B'lona
Berlin
Bruss
els
Genev
a
London
Paris
Mila
n
Rome
2005
2006
2007e
Hotel RevPAR 2006-07 YTD Nov (€)
0% to -10% 0%-5% 5%-10% 10% -15% 15%-20%
Frankfurt Amsterdam Athens Barcelona
Prague Berlin Geneva Brussels
Rome Budapest Madrid Lisbon
Dublin Paris London
Milan Moscow
Stockholm
Vienna
Warsaw
Source: HotelBenchmarkTM Zurich
Key Trends for European Hotels
● Occupancy and room rate● Transactions● Hotel valuation
Hotel investment volumes (€m)
Source: HVS International Research
—
5,000
10,000
15,000
20,000
25,000
1999 2000 2001 2002 2003 2004 2005 2006Single Asset Transactions Portfolio Activity
European single asset transactions
Source: HVS International Research
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
5,500
6,000
6,500
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
€ M
illio
ns (App
roxim
ate)
0
20
40
60
80
100
120
140
160
Num
ber of
Tra
nsac
tions
€ Millions Number of Transactions
Buyer categories 2006 (€m)
Source: HVS International Research
Private Equity, 5,178
Hotel Operator, 6,864
Undisclosed, 137
High-Net-Worth Individual, 585
Real Estate Investor, 3,448
Hotel Investment Company, 2,789
Institutional Investor, 1,277
Key portfolio transactions – 2006
Portfolio Buyer Price €m Room €
Hilton Group Hilton Hotels Corp 4,767 --
Marriott (47 UK) Delek 1,671 195,000
De Vere (35 UK) Alternative Hotel Gp 1,073 229,000
Travelodge (229 UK) Dubai Int’l Capital 977 57,000
Starwood (5 Europe) Host Hotels 762 291,000
Hospitality Europe (8) Blackstone Group 650 201,000
Key portfolio transactions – 2007
Portfolio Buyer Price €m Room €
Hilton Hotels Corp (2,800 hotels)
Blackstone Group 19,043 --
Marriott (47 UK) Quinlan Private 1,619 190,500
Jury’s Inns (20 UK, Eire) Quinlan Private 1,165 241,000
Accor (91 Germany) Moorpark 863 72,000
Scandic Hotels (132) EQT 833 --
Accor (30 UK) Land Securities 711 142,000
Key single asset transactions – 2006
Hotel Buyer Price €k Room €
Hotel Lancaster, Paris – 60 rooms
Hospes Hotels 48,000 800,000
Four Seasons, Milan – 118 rooms
Statuto Group 200,000 1,695,000
Hotel Arts, Barcelona – 483 rooms
Host Hotels 417,000 863,000
Great Eastern, London – 267 rooms
Global Hyatt / JER Partners
217,200 813,000
Marriott Park Lane, London – 157 rooms
Bahrain Royal Family 151,400 964,300
Blakes Hotel, London – 49 rooms
Sir Mark Weinberg 33,400 681,400
Key single asset transactions – 2007
Hotel Buyer Price €k Room €
Crowne Plaza, London City – 203 rooms
Statuto Group 123,000 606,200
St David’s Hotel & Spa, Cardiff – 132 rms
Principal Hotels 43,400 374,100
Forte Village, Sardinia – 758 rooms
FIMIT 312,000 411,600
Dolce Chantilly, Paris – 200 rooms
Banimmo Real Estate 45,000 225,000
Nikko Hotel, Dusseldorf – 301 rooms
Benson Elliott Capital 114,000 378,700
Caledonian Hilton, Edinburgh – 251 rooms
Farnsworth 76,500 772,700
Key Trends for European Hotels
● Occupancy and room rate● Transactions● Hotel valuation
Value trends – winners & ‘losers’ 2006
Mosco
w
Amste
rdam
Lisbo
n
Wars
aw
Madrid
Berlin
Buda
pest
Athens
Prag
ue
Hambu
rg
-10%
-5%
0%
5%
10%
15%
20%
25%
2006
Values – Top 10 European cities €/room
2005 2006
London 516,100 London 576,700
Paris 484,500 Paris 528,200
Milan 415,800 Milan 467,000
Zurich 376,000 Zurich 413,800
Geneva 340,100 Geneva 365,800
Rome 288,500 Edinburgh 319,600
Edinburgh 285,200 Rome 311,000
Amsterdam 261,000 Amsterdam 304,000
Prague 248,800 Moscow 290,500
Moscow 241,200 Prague 252,300
Outlook and Expectations
● Most locations – RevPAR growth, now mainly rate driven, profits up, values up…
● Strong buyer demand prevails – yields unlikely to fall further – now is a great time to sell…
● Pre-”crunch” – sale prices might have risen because of increased projected earnings…
● Expectation of current buyers is to sell in 3-5 years’ time – who will those buyers be…?
● Issues – debt provision, human capital, sustainability – but…– Effect of current market turmoil? – Have we reached the end of the cycle?
“Credit Crunch” – Today’s Update…
● US investment market, CMBS – stagnant, nervous
● Middle East – no effect yet
● Deals in Europe – many stalling, few completed
● Larger ones – longer to come to fruition
● Quality assets & operators – interest prevails, little or no impact so far
● Secondary assets / larger portfolios – tougher
● Banks – reducing LTVs 5%–10% points
● Interest rates up 50–90 bp’s
● Yields moving out by 0.25%–1%
● Short term issue – 3-6 months…?
Thank you!
Russell KettManaging DirectorHVS International
7-10 Chandos StreetCavendish SquareLondon W1G 9DQ
Tel: 020 7878 7700Fax: 020 7878 7799
