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Hotels and games: the new tandem

Sports and investment: today this couple is thriving. American billionaires and investment funds such as Colony Capital are putting billions of euros into European clubs and their athletic facilities. And it is not without any ulterior profit making motives, which is where the hotel industry enters the game.

How can investments funds and the glorious uncertainty of sports fit together? This uncertainty is just what comes into play in the search for a stable financial model. The Olympique Lyonnais, which has just made an IPO, has only one goal in mind: “stop relying on the results of sports events,” according to Olivier Blanc, general manager in charge of communications for Olympique Lyonnais. OL Phone, OL Voyages, OL Café, OL Taxis: the brands and derivatives created around Olympique Lyonnais are multiplying. Lying at the heart of this diversification strategy: the stadium. Dubai International Capital and Colony Capital have both been attracted as much by the growth prospects of a wellknown brand as by the potential appreciation of the principal real estate property of an athletic club: its stadium.On a larger scale, other megaprojects are ongoing such as the Dubai Sports City, which will have an 18-hole golf course, the Manchester United football school and four stadiums with capacity for 100,000 spectators. In the middle of this miniature Olympic village will be the The Cube, a luxury condo-hotel in a 27-floor tower. At Las Vegas, Ultimate Sports Entertainment has just announced the launch of an equally gigantic, 4 billion dollar project. This destination in and of its own north of the city will include a casino, sports and leisure facilities. The main room seating 26,000 has been designed to host an NBA team year round. Swimming, shooting and combat sports will also be present... A 5,500-room hotel with 4,000 affordable rooms, 1,000 up market rooms and 500 luxury suites has been planned.This is because the future of clubs is no longer played only out on the field, but increasingly around it. In the future, a sports facility worthy of this title will no longer be limited to the playing field but will include a leisure complex with a restaurant, shopping center, reception halls. And, in many cases, a hotel. Rooms with a new kind of view.The nearly complete transformation of the Twickenham Stadium stands as proof. The reconstruction of London’s "Rugby Temple" will have cost 125 million euros to increase its capacity from 75,000 to 82,000 seats. The redevelopment of the South Stand will include a 156-room Marriott hotel, a Virgin Active fitness center, a conference center, a theater, shops and offices for the Rugby Football Union, the primary beneficiary of the operation. “We decided to include a hotel for commercial reasons. It will allow us to finance this new stand,” explained Sarah Baxter in our pages in January 2003.Having outgrown its Gerland Stadium, the club that has been champion of France five times is preparing to move to the suburbs of Lyon. Olympique Lyonnais will become a property owner at Décines —in France, the vast majority of stadiums are owned by municipalities. “We have opted for a private solution. In order to achieve a financial balance, the project cannot be limited to a football stadium,” emphasizes Olivier Blanc. All the more so since the club made a call to tender in order to establish its expansion on the European scene. “The Décines project is in its final stages and will include a hotel. A team sponsor through its Novotel brand, Accor is an obvious partner,” admits the club’s manager.These multi-functional complexes are already prosperous across the Atlantic, but they are relatively new in Europe. The phenomenon should rapidly expand with the arrival of the "sports business" era. In the United Kingdom first and foremost where major clubs are quick to leave places filled with history to move to ultramodern facilities. Liverpool will desert the mythical Anfield Road for Stanley Park. Chelsea FC could leave Stamford Bridge for a more lucrative venue. The Arsenal Club just moved into Emirates Stadium last summer. This was a costly transfer - 600 million euros – but it should be turned to profit rapidly thanks to 22,000 additional seats. Revenues per match doubled from 23 million to 58 million euros. And the Emirates Stadium doesn’t have a hotel.Also on that side of the Channel, Millenium & Copthorne is a recognized partner of athletic clubs. The hotel group has created several successful partnerships and has management contracts for two properties at the Stamford Bridge Stadium of the Chelsea FC and at the Madejski Stadium in Reading, headquarters of Reading Footbal Club and of the London Irish Rugby Club. Its success is such that the hotel is adding 60 rooms to reach 200 units next June 1. “We have a growing and successful experience in this type of operation,” confirms David Curtis Brignell, director of franchising, branding & regional marketing, Europe. Thus, Millenium & Copthorne is involved in two new projects for 2008. The group will participate in a joint-venture to the operate a 149-room hotel at the Sheffield United Stadium, Bramall Lane. And at the Doncaster Racecourse, it will shift away from football. “This hotel will play an important role in making Doncaster Racecourse a world class leisure destination,” rejoices Mark Elliott, managing director of Arena Leisure, developer of the site’s renovation.Can stadium and hotel coexist? The cross-interests of the two parties are highlighted by Serge Platonow, managing director at Colony Capital: “A stadium is like a hotel: it is necessary to optimize its occupancy.” “They have a limited number of days each year in which they are fully utilized, but the costs of operating the venues continue 365 days a year. Often they will have existing restaurants, perhaps exhibition areas and will attract events on non-race or nonmatch days. A hotel is a logical extension,” outlines the director of Millenium & Copthorne.While the property may operate at full speed on days when there are matches, the hotel nonetheless remains a hotel and must diversify its sources of clientele. With one priority: business clientele. “The hotel has not been created to accommodate fans, but to create a business pole around the stadium,” explains Olivier Blanc. With the banquet and conference spaces it provides, seminar and incentives clientele are the key focus. A leisure pole (karting or bowling, this is under consideration) is also planned for the pleasure of those participating in the events taking place at the future Olympique Lyonnais Stadium.This marriage of convenience has every chance of being a winner if the project is well studied. First in function of the existing competition: “if you look around Twickenham, there is no other hotel with this capacity,” observes Sarah Baxter. The city of Le Mans, in France, is also turning towards a stadium-hotel complex to replace the current Léon Bollée stadium that cannot be expanded. Less ambitious than Olympique Lyonnais and due to its location this 65-room hotel will most likely be positioned on the economy segment. The same choice was made at Newcastle, with the Travelodge St-James, adjacent to St-James Park.The decision whether or not to integrate a hotel in a stadium depends in great part on its location. “As in any multi-functional complex, it is necessary to study every element of the project and the project on the whole,” remarks Serge Platonow. “A ‘holistic’ approach is essential,” approves David Curtis-Brignell, “and working as part of the whole location and not being seen as a separate enterprise is the key to success.” The hotel under construction at Doncaster will benefit from the development of a nearby business and industrial park. In the suburbs of US capital Washington, DC, in Anacostia, Poplar Point Stadium is part of a plan to revitalize this old dormitory town in an economically attractive area. The result of a public-private partnership, a 27,000-seat stadium is preparing to rise out of a multi-functional complex with a 500- room hotel, a concert, shops and offices.The proximity of stadiums also appeals to hotel industry players. The hotel scene in Paris’s Seine Saint-Denis suburb should change radically. The German hotel group Estrel would like to build a gigantic 1,200-room complex on 80,000 sq.m (including 20,000 sq.m of congress facilities) just outside the Stade de France. It will be the equivalent of its accommodations and business meeting complex in Berlin. When it opens before 2009, it will become the largest congress, leisure and hotel complex in Europe.On a larger scale, other megaprojects are ongoing such as the Dubai Sports City, which will have an 18-hole golf course, the Manchester United football school and four stadiums with capacity for 100,000 spectators. In the middle of this miniature Olympic village will be the The Cube, a luxury condo-hotel in a 27-floor tower. At Las Vegas, Ultimate Sports Entertainment has just announced the launch of an equally gigantic, 4 billion dollar project. This destination in and of its own north of the city will include a casino, sports and leisure facilities. The main room seating 26,000 has been designed to host an NBA team year round. Swimming, shooting and combat sports will also be present... A 5,500-room hotel with 4,000 affordable rooms, 1,000 up market rooms and 500 luxury suites has been planned.

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