hospitality: current trends & issues€¦ · giuliano gasparini, cre cre annual convention,...

Hospitality: Current Trends & Issues

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Hotel Properties - U.S. vs. Canada

Source: STR

U.S. CANADA

2015 2016 % Change 2015 2016 % Change

Total Properties 54,075 54,592 1.0% 7,459 7,469 0.1%

Total Rooms 5,051,239 5,115,739 1.3% 438,045 441,244 0.7%

Total Affiliated Properties 31,536 32,178 2.0% 1,835 1,876 2.2%

Total Affiliated Rooms 3,518,425 3,594,451 2.2% 221,239 224,839 1.6%

Percentage of Total U.S. CANADA

Total Affiliated Properties 58.3% 58.9% 0.6% 24.6% 25.1% 0.5%

Total Affiliated Rooms 69.7% 70.3% 0.6% 50.5% 51.0% 0.5%

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Hotel Market Performance

Source: STR

CANADA (CAD$)

2015 2016 2017F

Occupancy 64% 65% 66%

Average Rate

$144 $149 $157

RevPAR $92 $97 $103

RevPAR Growth

3.6% 5.0% 6.6%

Demand 0.2% 1.5% 2.5%

Supply 1.0% 0.9% 1.0%

U.S. (USD$)

2015 2016 2017F

Occupancy 65% 66% 65%

Average Rate

$120 $124 $127

RevPAR $79 $81 $83

RevPAR Growth

6.3% 3.2% 2.2%

Demand 2.9% 1.7% 1.7%

Supply 1.1% 1.6% 2.0%

Where are we in the cycle? - Europe

Giuliano Gasparini, CRE CRE Annual Convention, Montreal (24-27 Sept. 2017) 4

Where are we in the cycle? – Middle East


Development pipeline – Middle East + Europe


Middle East reported 93,984 (incl. Africa) rooms in 302 hotel projects

Major countries are:

• Saudi Arabia (40,145 rooms in 95 projects)

• UAE (32,604 rooms in 116 projects)

• Qatar (9,147 rooms in 37 projects)

• Egypt (4,775 rooms in 14 projects)

Supply increase +3.6%

Europe reported 75,755 rooms in 488 hotel projects

Major countries are:

• United Kingdom (16,276 rooms in 131 projects)

• Germany (13,499 rooms in 69 projects)

• Russia (8,350 rooms in 44 projects)

• Turkey (7,172 rooms in 42 projects)

Supply increase +17.5%

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Hotel Transaction Volume

Source: HVS, RCA, & Colliers Hotels International

Canada ($CAD)

U.S. ($USD)

Transaction activity


Major factors:

• Post-Brexit uncertainty

• Strong Euro

• Low oil price

• 2015 was record year

• Most high-return opportunities in south Mediterranean countries are finished


• Branded Residence off-plan sale reduces need to finance

• Searching for additional premiums: • Hotel-serviced real estate commands a high premium (approx. 20-30%)

• Hotel brand commands a premium (0-20%)

• Uniqueness of the development / architect commands a high premium (approx. 30%)

• Demonstrated large liquidity available for uber-luxury developments

• Real estate also uses brands related to fashion / automotive (Fendi, Bugatti, etc.)

Mixed Use Development trends in Dubai

Development trends in Dubai


Palm Jumeirah Opened 2006



Bulgari Resort & Residences Opening November 2017



Jumeirah Blue Waters Bay Est. opening Q2 2018



The Seahorse Floating House (The World, Dubai) Opening March 2017



Atlantis Residences @ The Palm Est. opening Q3 2018



Le Coeur de l’Europe (The World, Dubai) Est. opening 2019



Venice inspired resort Est. opening 2020



Underwater Hotel @ The World Islands Est. opening 2022

Implications for owners


NEGATIVE

• Less power against the operator (no alternatives)

• Difficult to identify CompSet

• Difficult to isolate performances (window dressing)

• Brand clashing (hence rebranding / PIP capex risk)

• Exclusivity zone no longer respected

• Diluted Operator – Owner relationship

POSITIVE

• Less payments on commissions hence more Profit

Implications for owners

Generic hotel company

• Commission: 18%

• Payment: US$ 4.6 m


Marriott (post-Starwood merge)

• Commission: 14%

• Payment: US$ 3.6 m

Marriott became more attractive as it generates more EBITDA for owners (under same market performance)

• Portfolio: 5,000 rooms

• Occ.: 75%

• OTAs account for 35%

OTAs generates 480,000 roomnights

• Average OTA rate: 150 US$

Major mergers / partnerships


2013 2014 2015 2016 2017

Who is next?


Middle East

Europe

North America

Why merging?


• Higher volumes, lower commission

• Less chains, less headquarter costs

• Larger variety of choice for clients

• Larger geographical/risk spread

hospitality: current trends & issues€¦ · giuliano gasparini, cre cre annual convention,...

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