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Analysis

Reclassification among leading European groups

Despite the persisting crisis in Europe, growth in the hotel supply continues and the favourable trends of several markets (United Kingdom and Germany) benefit to some groups that are moving ahead in the leading group to the detriment of others that were forced to rationalize their portfolio.

The growth rate of the hotel chain supply leapt slightly in 2014 with respect to the previous year. The dynamic is not truly bullish but the about 23,000 additional rooms in the chain supply correspond to 1.4% growth versus only 1% in 2013. Moreover, no segment has lost speed this year, contrary to the slight weakness on the luxury hotel segment in 2013.

During this period of ongoing crisis, the Budget and Economy segments are experiencing the strongest supply growth, although in the end, the Midscale and Upscale segments accumulate the highest quota of rooms in the European supply. Only some large countries such as France, the United Kingdom and Germany have a large Budget and Economy hotel supply. In the rest of Europe, the primary hotel groups prefer upper brands targeting international clientele.



On the Midscale and Upscale segments, properties that have left the inventory were replaced by hotels in similar categories but with higher capacities, which explains the global increase in number of rooms despite a decrease in number of properties. The cost of land and the supply shortages in large cities tends to encourage large capacity properties on available plots of land.

The distribution of the supply by category was not upset by the changes in 2014: one quarter in the Budget and Economy supply, one third for the Midscale segment and close to 45% for the Upscale.
The same is not necessarily true for the ranking of hotel groups. New brands developed under franchise caused some significant changes in the Top 20 of European groups.  With a very comfortable lead, Accor has no immediate rival. Thanks to its brands Holiday Inn and Holiday Inn Express IHG has climbed to second place, ousting Best Western which had more exits from its network than new entries. While Louvre Hotels Group stagnated, Whitbread continued to grow fast with Premier Inn. Despite the steady advancement of Radisson Blu, Carlson Rezidor lost two places due to the restructuring of its Park Inn and Park Plaza network. Hilton Worldwide, which pushes its brands DoubleTree and Hampton, and Meliá Hotels, which is increasing the presence of InnSide, settle into 6th and 7th place respectively. The Spanish group NH is cleaning its network while Marriott is multiplying openings with new brands: Moxy, Edition, AC and Autograph...

In the second part of the TOP 20, TUI moves farward again and Wyndham expand by strenghtening its eponymous brand. B&B Hotels is dynamic in both France and Germany. Scandic grows through its takeover of Rica, which make it boom in Norway (out of the EU 28). The Israeli group Fattal added 10 Leonardo hotels to its inventory by converting its recent acquisitions. The Asian group Penta is on the rise. Inversely, Barcelo and the brand Quality by Choice Hotels seriously cleaned out their network.



Top 10 of European Hotel Groups:

  • Accor: The confirmed leader of Europe’s hotel industry, the Accor group concentrated almost all development on its economy brand Ibis with its Budget and Styles ranges. Ibis Styles is one of the priorities with a target of 60 new addresses in France alone by 2016. With exception to a new Sofitel, the other brands (Novotel, Mercure, Pullman MGallery) have remained stable. The year 2014 was marked by dynamic asset management, combining sales and acquisitions to the benefit of Hotelinvest which gains strength, without significantly changing the size of the Accor’s supply. An example is the deal negotiated in Central Europe with Orbis, a subsidiary of the group. In fact, development relies largely on the franchisees which had a difficult year, particularly in France. There is a clear contrast between France where results grew by only 1% and the rest of Europe where that growth was 6.1% for 2014. Europe has 86% of the group’s assets and 72% of its turnover.
  • IHG: The first change in the European ranking, IHG climbed a position thanks to openings in 2014 boosted by the development of Holiday Inn and Holiday Inn Express, which compensates for the exit of 2 InterContinental properties from the European network. After a difficult start in Europe, Hotel Indigo appears to have found its way and its positioning: Paris and Madrid followed London and Berlin, Hamburg, Birmingham, York, Newcastle and Lisbon are soon to come. Fifteen or so properties are operating with 11 projects underway. The group continues to sell off its last assets such as InterContinental Paris Le Grand, which it sold to a Qatari investment fund. Thanks to the dynamism of the British and German markets, IHG posts a RevPAR up by 6% in a Europe that was not so dynamic. Its financial results regularly revive rumors about OPAs or partnership swith other hotel giants, but this is regularly refuted by management. After opening in Marseille in 2013, InterContinental continues colossal works on the Hôtel Dieu in Lyon.
  • Best Western: The cooperative Best Western is subject to the uncertainties of the major chains that must manage its members’ entries and exits. After years of regular growth, the balance for 2014 in Europe is down by 3.7%. The chain is also pushing to improve its range by favoring the arrival of new Best Western Plus (full service properties) and Best Western Premier (4* and 5*).  A selection of its finest properties also joined the BW Premier Collection label that made its début in Sweden last year. The network also adapted to Gen Y clientele with the launch of its concept Vibe, an affordable boutique hotel that encourages socialization in its larger common areas. The Best Western group now has five segments to fit its customers’ different expectations while encouraging diversity at its properties. In 2014, business in Europe stagnated due to a difficult first semester marked by a drop in arrivals from the United States.
  • Louvre Hotels Group: Born on the economy hotel segment of its leading brand Campanile, Louvre Hotels Group is now unfurling on all segments following the integration of Golden Tulip and Royal Tulip. 2014 will have been a year of stabilization for the fourth European group that experienced a net drop by some 700 rooms across all rooms. While Kyriad and Première Classe expand their European perimeter, Campanile, Golden Tulip and Tulip Inn show shrinking supplies. The Concord brand is undergoing restructuring, several properties have moved under the brand Golden Tulip, such as Marseille. Now only 2 hotels at the Gare Montparnasse and Geneva fly the banner in Europe. The owner, Starwood Capital, was negotiating the sale of the Groupe du Louvre which should pass under the Chinese group Jing Jiang in 2015. This major event should boost international development, especially in Asia, and generate more activity for hotels in Europe.
  • Whitbread: Nothing seems to stand in the way of the rapid development of Premier Inn on its domestic British market. Even after the boom of the summer Olympics in London, the 1st economy brand in the kingdom is continuing its expansion at a rapid rate with some 4,300 new rooms. The restructuring of the economy segment in the United Kingdom is not yet over and involves many conversions and new build properties. With new, more “compact” concepts, Premier Inn is gaining strength in city centers. The launch of Hub by Premier Inn in 2013 is headed in this direction. The goal remains clear: 75,000 rooms in 2018, or 11% of the global supply in Great Britain. The market continues to soar with growth in the RevPAR close by to 10% in the last fiscal year. At the beginning of 2015 Whitbread will have a new director for the group’s hotel division, Paul Flaum, who will replace Patrick Dempsey.
  • Hilton Worldwide: Growth is also in the cards for Hilton Worldwide which focuses on its midscale brands to better penetrate the European market. While the eponymous brand remains stable, the same is not true for DoubleTree, the spear head for European development with 6 openings in 2014, thanks to real estate support from the owner of Hilton Worldwide, Blackstone. It encouraged the conversion of recently acquired hotels and pushed for new-build properties. The same is true for Hampton by Hilton and Hilton Garden Inn which follow in their footsteps a bit behind them. This growth allows it to gain a rung in the European ranking. And realizations from the pipeline are expected in the years to come in order to strengthen its position. After losing several management contracts in Paris, Geneva, Cannes, Brussels, Hilton is gaining the terrain by hanging its banner on the former Concorde Saint Lazare in Paris and the former Méridien, in Brussels. Hilton Worldwide counts on its new brand Canopy to make its foray into the lifestyle market.
  • Melià Hotels International: After a difficult period on its Spanish domestic market, the group Melia Hotels International is recovering and relaunching development in Europe. ME will arrive in Milan and Barcelona, a brand new Melia Hotel with 370 rooms will open at La Défense and the brand Sol is giving itself an important facelift to regain market shares as well. In the meanwhile, the year 2014 will have been modest in terms of development. While it is still in its early stages, the brand Innside is gaining strength throughout Europe and is poised to expand. But most of the 30 openings in the year have been on the American and Asian continents that were more dynamic to support the activity. The pipeline grew by thirty or so future contracts guaranteeing the opening of 17,000 rooms in three years, mostly in Asia and the Middle East. The group is cleaning its accounts and managing its assets to lighten the debt.  The RevPAR is once again up by some 5% in EMEA where it is boosted in particular by the upscale brand ME by Melia.
  • Carlson Rezidor: The European subsidiary of the Carlson group only moderately grew in 2014 and fell two rungs with respect to last year. While Radisson Blu remains one of the most dynamic brands on the upscale segment, managing the portfolio of Park Inn by Radisson contracts led to substantial cuts that affected the averall supply nine Park Inn hotels left the inventory, and in Europe the brand Park Plaza, managed independently by Rezidor but as part of Carlson Hotels, terminated operations at 5 hotels. The 5 new Radisson Blu properties in Europe cannot compensate for all of them. The pipeline has been filled with original projects such as the future Radisson Blu in Bordeaux. It is also important to remember that the ranking only takes into account countries in the European Union, whereas Rezidor has a good presence in Turkey, Russia and CIS countries. The Horizon 2017 plan calls for fifteen openings that are strongly centered on emerging countries in the Middle East and Africa.
  • NH Hotel Group : Since becoming CEO of the group eighteen months ago, Federico J. Gonzalez Tejera has endeavored to breathe new energy into NH Hotel Group by reworking segmentation and rationalizing its supply. The five year plan first involved stopping loss-making operations and selling properties on the economy segment. The new drop in the supply in 2014 reveals this strategy that aims to take off again on sound foundations. Six openings under its NH brand are already scheduled in Spain by 2018. The launch of NH Collection, which includes upscale hotels in association with Preferred Hotels, is well perceived by clientele. The group’s financial difficulties are disappearing with the renegotiation of loans and the increased power of the Chinese shareholder, HNA. Repayment deadlines are now guaranteed. Despite recent difficulties, the group remains N°1 in Spain, Italy and among leaders in the Netherlands and Germany, two countries where the recovery is underway.
  • Marriott International : Step by step Marriott International is closing in on its goal to double its capacity in Europe before 2018. To achieve this target, in addition to eponymous brands Marriott Hotels and JW Marriott that will open in Venice, the American group has expanded its range with its Autograph Collection, which associates independent luxury hotels, as it did in Zurich or Barcelona; Renaissance which is gaining strength on the lifestyle segment as in Paris St-Cloud; Residence Inn for long stays; Edition on the Boutique segment which is now present in Istanbul and London; AC Hotels throughout the continent; and Moxy, the new midscale brand inaugurated in Milan in a partnership with Ikea. “The next two years are looking particularly interesting on the European market, as we plan to open 38 hotels,” remarked Amy McPherson, managing director of Marriott International in Europe. The group is also interested in the British, Irish, Russian, Turkish, Italian and German markets.


European brands throughout the year

Under their mother brand, the three derivations ibis, ibis styles and ibis budget are leaders in the race to gain a few points. The milestone of 130,000 rooms sold will soon be reached when Best Western and its Premier and Plus brands shrink by 3,500 rooms. Mercure is waiting for the effects of the brand’s relaunch to regain strength. Which is not the case of Premier Inn, which is clearly in tune with the expansion of the British market.

Supported by its owner the Carlyle Group and by Foncière des Murs, B&B continues to build new properties while turning more to franchise. Motel One, winner of the Grand Prize at the Worldwide Hospitality Awards adds of 10 hotels to its portfolio in its effort to reach 75 properties in Europe before 2020. After a pause, Kyriad, Louvre Hotels’ non-standardized brand seduces new franchisees in France, while Golden Tulip, which operates the same way in the rest of Europe, loses ten units. 2014 was also difficult for the brands Quality Inn and Comfort Inn by Choice Hotels which strengthened its quality requirements and lost thirty or so franchisees, whereas it grew in France.

Among the group of brands losing ground, NH, the eponymous brand of the Spanish group is clearing its networks of hotels that no longer meet profitability requirements and are unable to improve their range. A dozen or so are paying the price for this policy. Special mention may be made of Leonardo Hotels which benefit from rebrandings of hotels purchessed by its awner and the German TUI, which massively invested in expanding its supply in Southern Europe, and notably in Greece through its Atlantica brand.

Under their mother brand, the three derivations ibis, ibis styles and ibis budget are leaders in the race to gain a few points. The milestone of 130,000 rooms sold will soon be reached when Best Western and its Premier and Plus brands shrink by 3,500 rooms. Mercure is waiting for the effects of the brand’s relaunch to regain strength. Which is not the case of Premier Inn, which is clearly in tune with the expansion of the British market.

Supported by its owner the Carlyle Group and by Foncière des Murs, B&B continues to build new properties while turning more to franchise. Motel One, winner of the Grand Prize at the Worldwide Hospitality Awards adds of 10 hotels to its portfolio in its effort to reach 75 properties in Europe before 2020. After a pause, Kyriad, Louvre Hotels’ non-standardized brand seduces new franchisees in France, while Golden Tulip, which operates the same way in the rest of Europe, loses ten units. 2014 was also difficult for the brands Quality Inn and Comfort Inn by Choice Hotels which strengthened its quality requirements and lost thirty or so franchisees, whereas it grew in France. 

Among the group of brands losing ground, NH, the eponymous brand of the Spanish group is clearing its networks of hotels that no longer meet profitability requirements and are unable to improve their range. A dozen or so are paying the price for this policy. Special mention may be made of Leonardo Hotels which benefit from rebrandings of hotels purchased by its owner (Fattal Hotels) and the German TUI, which massively invested in expanding its supply in Southern Europe, and notably in Greece through its Atlantica brand.



This article is an extract of the 2015 European report

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