pandox upgrade - no 1 2010 (eng)

Up Grade

M A R K E T I N F O R M AT I O N F R O M PA N D O X

InterContinental Montreal: Hotel of the Year12P .

High acquisition interest at this year’s industry conference4P .

New star system in Europe8P .

Recovery on a wide front – but continued price preassure

S P O T l I g h T

T R E N D S | I N T E R I O R D E S I g N I N FA S h I O N

#12010

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Printing: Jernström Offset, Stock-holm, May 2010. May be reprinted only with the permission of Pandox.

Cover photo: Pandox’s hotel InterContinental Montreal, Canada. Upgrade can be ordered from Pandox or read at www.pandox.com

Pandox Upgrade. Market information from Pandox – published approximately three times a year.

Editors: Anders Nissen, Annelie Sundström Aguilar, Anette Paulsson

Despite what industry analysts believed, there is still very little business being done in the hotel market despite an impro-vement in the financial

situation and continued low interest rates. The peak in 2007 saw hotel transactions worth around USD 120 billion on a global scale. The market has almost disappeared since then, with a decline of some 90 per cent.

Most industry experts believe that the market will explode in 2010 – mainly because the banks will be forced to sell properties they had to take over due to bad depts, so called distressed assets. Jones Lang LaSalle, a significant and respected organisa-tion, forecasts that the transaction volume for 2010 will increase to USD 11–13 billion, from USD 9.4 billion in 2009. At present, even this moderate figure seems a little optimistic.

Strong will but great uncertaintyIn our view, there are a couple of reasons as to why so little business is being done. People are willing to make transactions, but sellers are expecting prices which are too high. A lot of calculations are being done on the basis of what the market looked like in the peak years of 2007 and 2008. Of course, potential buyers are not accepting this as they value objects on the basis of what the market looks like now and is expected to look like over the com-ing few years. Another reason is the uncertainty prevailing concerning the development of interest rates. There is no doubt that current interest rates will go up, which buyers have included in their yield requirements – but the key points are how quickly will they go up, and how high will they go? A third factor is finance. Borrowing money is still difficult, and so a lot of investors have disappeared from our sectional market.

There is another important reason why people are less willing to do business. Most of the deals done over the past few years have involved finan-cial players. They often do not have any expertise

in the industry and so they have bought at high prices. Now a lot of these players have major prob-lems, but they are staying afloat thanks to low inter-est rates and the passiveness of the banks – which in turn are linked with the many state guarantees presented and which reduce pressure on the banks to act. So what should we expect to see in the future? A realistic scenario would be an increase in the amount of business done towards the end of the year. However, we will need many years to return to the historical levels of both vol-ume and value that we saw during the last boom.

Knowledge – a must for successHow should hotel property prices be assessed now? The simplest way to go about it is to forecast the income. Large, well renovated hotels with good management will continue to do well. And the price of these will rise, albeit slowly. The major difficulty lies in pricing the risk in connection with acquisi-tion. What return requirements should be set for the property? We currently have historically low interest rates which will rise – as stated, the only questions are when and how quickly, and how high will they go? Moreover, financing an acquisition has now become a lot more expensive. In some instances, the banks have quadrupled their mar-gins and are also demanding more equity. Both of these factors are having a major impact on the value of hotel properties. This situation is driving us back towards some kind of ”back to basics” sce-nario. The only secure way of increasing hotel value in future will involve active development work. In turn, this will demand broad, in-depth specialist expertise on how to run hotels successfully. It can be concluded that the players that are familiar with the hotel industry will dominate on the buying side when the market turns.

However, this development is being held back by the way in which the media operate. At the moment, newspapers are competing for positive news. According to journalists, most curves are showing an upward swing. As a result a lot of peo-ple are being led to believe that the hotel industry is emerging from the crisis. But unfortunately this is

not the case, even though life is slightly easier now and the risks have been reduced to a certain extent.

Positive trend, but tough for the Nordic monarchiesDevelopment in the USA was uneven for the first quarter this year – the occupancy rate was up by more than 2 per cent, while prices fell by around 4 per cent. Hence income for the hotel industry was down 2 per cent. However, the trend is good. Looking at the 25 biggest markets, development was overwhelmingly positive compared with 2009. In New York, the occupancy rate was up 10 per cent and the price was relatively stable. March was the best month for the hotel market in the city in 16 months. Similar trends can be seen in London and on major markets in the Eurozone. Stockholm also saw a good start to the year, although March was disappointing. The decline in Stockholm, YTD March, stands at around –3 per cent; here, more than the entire decline is due to a poorer price. It is forecast that this development will continue throughout the second quarter as well. Copenha-gen is still seeing a poor business climate. Although demand is up, this has taken place at the expense of a lower price, and the market is gradu-ally being undermined. 2010 is going to be a tough year in Copenhagen.

All the best,Anders Nissen

PS. The Allsvenskan football league has started, and the final games in the handball cham-pionships are taking place. So there’s a lot to keep track of. I’m going to have a little wager on Drott going to the till final, but once they’re there they’ll have to give in to the strong Sävehof team. And 9 July will be the decider of the Handball World Championships. Exciting! That’s when we’ll find out who Sweden will be playing towards in the opening match to be held on 13 January 2011.

Will we see more business this year?

A wORD TO gO

2 MARKET INFORMATION FROM PANDOX

NewsNovember

Berlin will have its first Hampton by Hilton. This hotel will be opening in the lat-ter half of 2010 and have 214 rooms.

Tristar Investment Holding has entered into an agreement relating to the opening of a new Four Seasons Hotel in St Petersburg. This hotel will be opening in 2011 and will be located at the palace of Prince Lobanov-Rostovky. Renovation of this historical building is estimated to cost USD 125 million.

Rezidor has entered into an agree-ment regarding a 150-room hotel in Russia. This hotel will be run under the Park Inn banner and be situated in the town of Yaroslavl.

December

Westmont Hospitality is behind a takeover of Renaissance Paris Hotel Le Parc Trocadero, with 116 rooms. This hotel is being sold by Strategic Hotels & Resorts for a price of EUR 35.5 million.

Millennium & Copthorne Hotels is launching a new international brand under the name of Studio M. This brand will be aimed at people who travel fre-quently on business or privately. The first hotel will be opened in Singapore during the second quarter of 2010.

Hilton will open its first Hilton Garden Inn in Poland in the summer of 2010. This hotel is located in Krakow and has 154 rooms. Another two hotels will also be opening over the year, in Rzeszow and Warsaw. Poland has been identified as one of the company’s biggest growth markets in Europe.

Accor is selling five hotels to Invesco Real Estate for a total of EUR 154 mil-lion. The sale includes the Novotel Muenchen City in Munich (307 rooms), Novotel Roma la Rustica and Mercure Corso Trieste in Rome (149 and 97 rooms respectively), Mercure Zabatova in Bratislava (175 rooms) and Pullman Paris La Défense in Paris (384 rooms). All these hotels will continue to be run by Accor.

Travelodge reports that they will be developing ten properties in the UK, for a total investment of GBP 61 million. Three of these hotels will be situated in London and two in Manchester. Other hotels will be opening in Liverpool, Bristol, Cannock, Camberley and Andover. In total, Travelodge will be adding 1 133 new rooms.

March

Marriott International will be opening its second Courtyard by Marriott in Switzerland. The 175-room Courtyard by Marriott Basel will be run as part of a franchise agreement.

Scandic will be adding four hotels in Southern Finland. These hotels will be situated in the towns of Riihimäki, Järvenpää and Lahti. The fourth hotel will be built in Helsinki, in connection with the Paasitorni Congress Centre.

Hilton will take its first steps into Norway. Doubletree by Hilton, Oslo City Centre will open this spring. The hotel will initially have 59 rooms, but once it is renovated in late 2010 it will have another 44 rooms.

Marriott International reports that they will be doubling their number of hotel rooms in Europe by the end of 2015. The company currently has 174 hotels with 40 000 rooms, so they are intending to increase that figure to 80 000 rooms.

Easyhotel is opening in Germany, with its 125-room easyhotel Berlin, Hackerscher Markt in Berlin. This will be the 12th easyhotel hotel in Germany.

Berlin is to have its first Sheraton. Starwood has entered into a rental agreement with Chamartin Meermann Immobilien for the 464-room hotel which will be situated next to the central station in Berlin. Construction work will commence in late 2010.

April

Carlson and Rezidor report that For-mosa International Hotels Corporation will be buying the hotel section run under the Regent brand. The takeover includes global rights to the name of Regent, hotel running and rental con-tracts, as well as the licence for Regent Seven Seas Cruises.

Scandic is building a hotel in Tampere, Finland, and will thereby have three hotels in the town. This hotel will have 207 rooms and be located near the railway station. Construction is expected to commence in August 2010.

Rezidor will be taking over the running of ten Reval properties in Russia and the Baltic States. These will be run under management contracts with the owners of Reval Hotels, Norwegian property development company Linstow.

hOTEl wORlD

February

Choice Hotels International makes its debut in Poland – at six locations simultaneously. These hotels are owned and managed by a Polish property com-pany, a subsidiary of property develop-ment company Salwator Capital Group. These hotels will be situated in the cities of Dzwirzyno, Katowice, Krakow, Poznán and Wroclaw.

The 418-room Park Inn Stockholm Waterfront Hotel, which is currently being built, is to undergo a change of name even before it opens. This hotel, which will be opening in 2011, will be named the Radisson Blu Waterfront Hotel, Stockholm. It will be the sixth Radisson Blu in Stockholm.

Courtyard by Marriott Stockholm in Kungsholmen, with its 278 rooms, opened recently and was the first Courtyard by Marriott in Scandinavia. It is also the biggest Courtyard in Europe.

InterContinental Hotels’ first hotel in Denmark is the 266-room Crowne Plaza Copenhagen Towers, 85 metres tall. Danish company Copenhagen Hotel Management is running the hotel as part of a 20-year franchise agreement.

MARKET INFORMATION FROM PANDOX 3

“Probably pretty accurate...”ThIS yEAR’S INDuSTRy cONFERENcE IN BERlIN

This year’s big meeting in Berlin was a mix of ill-concealed uncer-tainty and self-confidence based on access to capital. Some had failed to recover from the extensive decline in the market in 2009, while others were already ready and willing to face an upturn.

As usual, the hotel industry’s answer to the Oscars took place in Berlin in early March. There are many similarities – the grand music prior to every new topic for discussion, the prestige of being the pre-senter/master of ceremonies, and the importance of being seen at this event, of all the events during the year.

The number of delegates was up on last year’s low. Indeed, it could be stated that even the visitor statistics for the most important conference of the year is tracking the RevPAR development. So this year’s increase was a sign that we have reached the bottom, even as regards hotel performance.

If the number of delegates leads development in the hotel industry business cycle, we can but guess that the F&B supply during the meeting will come late in the cycle. Gone were the oysters, champagne and celebrity chefs. Both the quality and the quantity of the food had been scaled back, and the choice of sausage casserole with rice and two kinds of cold cuts seemed much of a much-ness. Even though most people wandered round telling everyone they had capital in spades and that 2010 was the year to invest, the energy failed to really make an appearance.

The golden years of the quotationA gathering of some of the sharpest minds in the industry shared their experiences and prophesied the future.

The boom was unsustainable”

As with previous booms, this was also doomed to come to an end. 2009 was a tough year, but we can already see changes in the demand pattern

which seem to indicate that the trend is turning and – hopefully – that we have reached the bottom. However, Eric Danziger, CEO of Wyndham Hotels, felt it was a little sad that the industry seemed to be celebrating the fact that things were currently “less bad”. Hubert Joly, CEO of Carlson, adopted a more specific stance, reporting that they had decided that the crisis is over.

A more bright version was put forward by the person who felt that a downturn is nothing to be upset about. What we have been reminded of once again during this recession is that the next time, we have to have enough money to cover our loan. Or, as a wise man once said: “we learned a lot in 2009”.

Fortunes will be made this decade”

With this being the first year of the new decade and also the bottom of an economic cycles, we can only hope that we will earn some money over the coming decade. One of the panels was asked when we might be in a position to return to 2007


Uncertain transactions market

ThE MARKET ON ThE MARKET

The hotel industry took a nosedive in 2009, RevPAR in Europe fell by over 20 per cent in places. The transactions market also reached the bottom – but in terms of value, transac-tions fell by just 13 per cent. Banks and other major hotel owners have largely opted to sit and wait for the recession to be over. The low number of deals has preserved value in the industry. So does a price adjustment await, or can we just pick up where we left off at the peaks of 2007 for a trip back to the next boom?

Completely in alignment with financial develop-ments, transaction volumes in Europe fell by around 50 per cent in 2009, finishing up at a his-torically low level of EUR 3 billion. This can be compared with EUR 6 billion in 2008 and EUR 18-20 billion in 2006 and 2007. So even though the overall volume was halved, the value only fell by about 13 per cent.

Security top priorityIn general, it could be stated that the underlying financial unrest led to safe, “secure” investments due to both more cautious action but also as a result of the tighter demands of the banks. Com-panies preferred to do slightly smaller deals in their own countries rather than running major international takeovers. Portfolio acquisitions, which by their very size often include a large amount of borrowed capital, were hit very hard. In earlier years, portfolio acquisitions represented around three-quarters of the overall transaction volume in Europe. This figure fell to 50 per cent in 2008, and it stood at just 34 per cent in 2009.

To reduce the element of risk, it also became more popular to make acquisitions in familiar environments in respect of both the hotel market and legal structures, but also because such transactions use the same currency as the home-land. In 2009, 60 per cent of all transactions took place on a domestic level. The corresponding figure for 2008 was just 38 per cent. Classic hotel cities such as Paris and London seem to be the second most secure option, after investments in companies’ own countries. At the International Hotel Investment Forum in Berlin earlier this year, it was clear that these cities were considered a safe bet. A moderator even had to prevent his panellists from replying “Paris” or “London” to his questions in order to force other views out of them.

Situation no longer settledDevelopments in the hotel market, technology and society make it harder to value properties these days. The location of a hotel has long been considered a safe parameter. But city centres are expanding at a tremendous pace, and “what’s hot and what’s not” in cities changes quickly and has a massive impact on flows. Being linked to a major worldwide brand has also been regarded as some kind of acknowledgement of success. But in today’s international, technology-friendly world, the value of belonging to a large family has

levels, and the response was that any time between 2011 and 2013 is possible, the biggest common denominator being 2012.

Cash is king”It was obvious that the emphasis had shifted. From persistent chattering about loan to value over the past year, we now found out that cash flow and interest cover are what are valued. IRR is obsolete. So is the industry just treading water? We have to earn enough money to be able to pay our interest, rather than striving to earn enough money to cover our investments – and make a profit.

Extend and pretend”There was a lot of eager talk of all the distressed assets to emerge onto the market as a result of underperforming hotels with heavy debts operating in a tough market. Both panellists and visitors stated clearly that they had money to invest. But what was every bit as apparent was that nobody had so much as caught a glimpse of any distressed assets. The banks seemed to want to hold onto their depreciating assets until their value firmed up. “There are distressed assets, but in markets where nobody wants to be,” announced Patric Fitzgibbon of Hilton Worldwide.

Yields have become more intelligent”

Whether this means that both yields and value have endured over the latest recession remains unstated. The shortage of acquisitions has actually stopped the transactions market from a fall in value. The market has declined in terms of both quantity and quality, but the price per hotel room has not fallen in relation to the RevPAR losses of up to 20–30 per cent that we saw last year.

If the location, timing and branding

is right – yes we can make a deal”So what can we say? Everything is for sale – at the right price. And we all want to buy, too - at the right price. Interest from buyers bears witness to the fact that back to basics is the name of the game, with secure cities such as London, Paris, Munich and New York on the interest list.

been undermined. “Reach is no longer a chain advantage”, to quote Robert Hornman, Manag-ing Director of WORLDHOTELS.

Value not increased by low activityMost people hope that the acquisitions market will pick up. During the same conference, a lot of people were waving their cash around. Interest was broad as regards geography and types of hotel. But the lack of acquisitions is causing frus-tration in the market. A lot of people are opportu-nitists just waiting for distressed assets to be dumped to the market. But this has not hap-pened to any great extent so far, as bankers and other major owners do not want to realise their losses. Instead, they are sitting on their holdings and hoping for improvement soon.

There is a risk that this behaviour will lead to excess supply once the floodgates open; as will probably be the case once the market has made some decent progress on recovery and growth has got underway. Theoretically, excess supply could lead to competition on prices and hence delayed price adjustment. It is unlikely that the market will avoid a reduction in value simply because transaction volumes are low. And believ-ing that massive increases in value just because the hotel market is starting to move seems even less likely. More likely is the fact that the excess supply will lead to a blip in the curve and a slower recovery of transaction value than we want to see.

Russel Kett, moderator at the introductory debate at the major international hotel confer-ence, did at least do his bit. At the end of a dis-cussion on capitalism and the global hotel prop-erty market, he summed up the input and views of delegates with the words “Buy, buy, buy and bye-bye!”.


Transaction volumes, EUR billions

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3

6

9

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15Portföljförvärv

Singelförvärv

09080706050403020100

Portfolio InvestmentSingle Asset InvestmentSource: HVS Research

Last year sapped the life out of the hotel industry. But what was per-ceived as a steep decline may pos-sibly be followed by a steep upturn. Volumes began to return in late 2009. Prices are generally still on the wane, but the rate of decline is diminishing in most areas. An even though the recovery came about quickly, record levels are not expected for the year. The market is probably seeing fast recovery rather than fast growth.

2009 was a difficult year for the hotel industry. The USA as a whole lost almost 17 per cent over the entire year in terms of both occupancy and average price in equal measure. But towards the end of the year, a trend shift took place and the market turned fairly quickly. Demand increased as early as January 2010, but because of additional supply there was no growth in occupancy. Demand has continued to rise over the entire first quarter, and occupancy finished on an increase of 2 per cent. However, the average price is continuing to fall, finishing on –4 per cent. All in all, RevPAR fell by around 2 per cent in the first quarter.

Recovery in demandThis pattern is typical of what we are currently seeing in major international cities – recovery in demand but ongoing price losses. In the USA, the luxury seg-ment is seeing the greatest growth, with around 10 per cent on occupancy over the first quarter. But the price is trailing and has lost almost 7 per cent.

New York ended with a RevPAR loss of 26 per cent for 2009 as a whole. Occupancy fell by almost

Sharp decline followed by

sharp upturn?Volume growth back, but prices still has a long way to go

FOcuS ON ThE MARKET

6 per cent, while proce declined by more than 21 per cent. However, demand began to return towards the end of the year, and recovery has been apparent since the start of the year. Occupancy rose by almost 12 per cent over the first quarter of 2010. RevPAR was dragged down slightly by the price, but it still ended on an increase of more than 7 per cent.

London beats 2008 peakLondon did not experience such tough times last year and ended on a RevPAR reduction of 4 per cent. As the recovery started a lot earlier here, the city was able to achieve a slight increase in occu-pancy over the full year. The weak pound is attract-ing leisure travellers, but numbers of business and conference guests are also up.

The first quarter of 2010 continued along the same positive lines. Occupancy increased by almost 6 per cent, and price also rose to a corre-sponding extent. London saw occupancy of 78 per cent in total over the first three months of the year, which can be compared with the 74 per cent seen


Occupancy

Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10

New York 3% 0% 4% 8% 10% 16%London 4% 9% 8% 6% 5% 5%Paris –1% 3% 2% 3% 7% 11%Berlin –5% 3% 3% 6% 1% 7%Brussels 1% 0% 1% 6% 3% 4%Copenhagen 5% –6% 29%* 2% 2% 4%Helsinki –7% –7% 3% –1% 21%** 19% Oslo –5% –2% 1% –8% –7% –10%Stockholm –1% 0% 5% 0% 7% –2%

* United Nations Climate Change Conference (COP15)** Baltic meeting

Occupancy has begun to rise in most cities. Volumes started to recover in late 2009, and the occupancy growth rate is on the increase.

Average price

Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10

New York –18% –17% –11% –8% –5% 1%London –4% 3% 3% 3% 5% 7%Paris –7% –2% –6% –5% 0% 3%Berlin –15% –2% –3% 9% 6% 6%Brussels –14% –11% –10% –8% –6% –5%Copenhagen 3% –11% 67%* –14% –14% –15%Helsinki –11% –9% –10% –11% –8% –9%Oslo –8% –1% 0% –4% –4% –4%Stockholm –5% –1% –3% –3% 2% –9%

* United Nations Climate Change Conference (COP15)

In general, prices are falling. Only Berlin and London have seen price growth throughout the entire first quarter.

in 2009. This is also higher than both 2007 and 2008, both of which saw occupancy levels of 76 per cent over the first quarter. At GBP 124, the average price is also at a record high; compare this with the GBP 122 seen at the 2008 peak.

However, developments may change in Lon-don. Both supply and price increases may threaten ongoing growth in occupancy. The majority of hotel projects planned for Europe are located in the United Kingdom. London is the destination with the highest number of planned hotels and also the highest number of hotels under construction. There is a risk that occupancy will fall unless demand increases at the same rate as supply. The relatively early increase in average prices – in terms of the financial situation – may also scare off travel-lers. Raising prices at the wrong time can push away potential demand.

General price lossesQuite the opposite – and perhaps a more correct view for other major international cities – is true of the development of Brussels over the first quarter. The RevPAR level for the first quarter stood at 14 per cent here over the peak year of 2008, but at just 1 per cent in 2009. Occupancy has increased by 5 per cent to date this year, while the price has fallen by almost 6 per cent. Amsterdam, Copenha-gen, Frankfurt and Prague have also seen price losses over the first quarter of 2010.

In Paris, RevPAR was up 6 per cent over the period January to March this year. Occupancy increased by 7 per cent, while price declined by 1 per cent. The city is a long way behind the levels seen in 2008. RevPAR for Paris for the first quarter of 2010 is 20 per cent lower than the levels seen in the peak year. All segments are showing growth in occupancy, but in fact most of the growth is being seen among two-star hotels, while growth in the four-star segment is trailing in second place.

Mixed forecast for tourismThe underlying flows of tourists increased over the latter part of 2009. And the World Tourism Organi-sation (UNWTO) is forecasting an ongoing increase of between 3 and 4 per cent for the 2010 full year. Asia is expected to see the highest growth, while Europe and America are expected to see a slightly slower recovery. However, the World Travel Tour-ism Council (WTTC) is rather less positive, not expecting to see any growth at all.

In the United Kingdom, the weak pound is expected to encourage tourism in 2010. Condi-tions are still tough, and volumes will not reach record levels. But on the other hand, visitors will spend more on their travels. In Europe as a whole, growth of 2.4 per cent is forecasted for 2010, with further growth of almost 4 per cent in 2011.

Variable start to year in Nordic regionThe recovery is expected to be a little slower in the northern parts of Europe. In Helsinki, RevPAR fell by no less than 17 per cent in 2009. 2010 has got off to a better start, however, and the January to March period is almost 2 per cent above the previous year. Demand has started to increase, and occupancy is 12 per cent above the first quarter of 2009. How-ever, the price is continuing to fall and diminished by more than 9 per cent over the period.

Oslo lost 10 per cent in 2009. The situation is still trying, and both occupancy and average price are continuing to decline over the first quarter of 2010. Losses in both parameters are leading to a continuing RevPAR downturn in excess of 10 per cent for YTD March.

Like Oslo, Stockholm lost almost 10 per cent in 2009. But unlike its Norwegian neighbour, the Swedish city has seen volumes start to recover, and for January to March 2010 occupancy in Stockholm is up by around 1 per cent. However, the price is still in decline and RevPAR has fallen by more than 2 per cent over the quarter.


The recovery began very early in London, and now both price and occupancy are on the increase. However, there is a risk of occupancy growth weakening due to the price increase – among other things – which has come early given the economic situation.

London RevPAR, Quarter 1

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201020092008

In London, RevPAR beat the peaks seen in 2008 in both February and March.

Paris RevPAR, Quarter 1

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2002010

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2008


201020092008

Paris is still some way below its earlier peaks, but both February and March saw better performance than last year.

Brussels RevPAR, Quarter 1

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1002010

2009

2008


201020092008

Brussels is still at the same levels as last year.

The market barometer shows where selected cities lie in the business cycle. Assessment is based on analyses of each location. Allowance is made for macroeconomic developments, developments within the hotel industry, the

business cycle, progress in the hotel market and how well developed and liq-uid the hotel property market is. Note that hotel business cycles are similar in pattern but different in time.

SWEDEN

PEAK Umeå DEclinE

Jönköping, Lund, Helsingborg, Gothenburg, Malmö, Uppsala, Sundsvall, Luleå

Growth _

lEvEllinG out _

In Umeå, demand is still ticking. The price is at more or less the same level as last year, and for the rolling twelve months RevPAR stands at +5 per cent. 2010 has continued along the same lines. Demand has been falling in Jönköping for some time now, the price has caught up and stands at a negative for the rolling twelve months. Jönköping stands at around 6 per cent in 2009 levels for the first two months of the year.

In Malmö, demand has been on the increase for eight months now if we look at the rolling twelve months. However, this is having no effect on occu-pancy due to additions to the market. Both compe-tition and the economic situation are putting pricing under pressure. Helsingborg is still losing both occupancy and price. RevPAR stands at around –4 per cent on a rolling twelve-month basis.

Gothenburg is losing on both demand and

price. The first two months of the year follow an earlier trend towards a 3–5 per cent decline in occupancy and around 1 per cent decline in price, but March was even worse. The Stockholm market is losing around 7 per cent on price on a rolling twelve-month basis, but demand has started to return. The rate of decline in occupancy is tailing off, and January to March combined show an increase in occupancy by almost 1 per cent.

Pandox market barometerMARKET OvERvIEw FIRST quARTER 2010

DEcrEAsinG DEclinEStockholm, Stockholm 5, Karlstad

Greater need for guiding lights

Hotel classification has been on the cards for a long time. There is no one global standard – there are several. Every country has had its own, and sometimes there has not even been an official standard. Work on improving coordi-nation has finally paid off, both nationally and internationally.

Norway will see the introduction of a national quality assurance system over the next year. According to Trond Giske, Minister of Trade and Industry, this system is groundbreaking on an inter-national level. The new grading places emphasis on both environment and service, but also on the views of guests. Hotels can even lose stars if their guests are unhappy with them.

cuRRENT TRENDS

However, views are divided on the need for a nationwide classification system in Norway. Oppo-nents are of the view that the Norwegians know their market so well that they do not need guidance when it comes to choosing hotels. 70 per cent of the Norwegian market is made up of domestic demand, and 40 per cent of hotel guests are on return visits. Therefore, they do not need help to make their choices, according to some.

Price no longer equals qualityA grading system in the hotel industry is not an entirely easy thing to implement. The basic notion is that there is a correlation between price and quality. When the majority of all hotels use revenue management and prices are also under pressure

from Internet-based sales outlets, the relationship can be eliminated. So is price no longer an acknowledgement of quality? Well, if not then maybe a classification system is even more important.

Other countries in Europe have gone even fur-ther and are now coordinating their hotel classifica-tions. At an initial stage, Hotelstars Union will include 17 000 hotels in Germany, Austria, Switzer-land, the Netherlands, Hungary, the Czech Repub-lic and Sweden. Classification began on 1 January 2010. The new system is made up of 270 criteria and includes additional points for “softer” values such as quality assurance and guest surveys, as well as for room areas, conference facilities and wellness facilities.


DEFINING THE VARIOUS FACETS OF THE HOTEL BUSINESS CyCLE:

GROWTH Occupancy is rising relatively rapidly and prices are starting to rise. High potential and low risk.

PEAK Occupancy rising/levelling off and prices increasing rapidly. Good potential and low risk gradually rising to high risk.

DECLINE Occupancy and prices decreasing due to lower demand or overcapacity. Low potential and high risk.

DECREASING DECLINE Decreasing volumes becoming more stable – continued pressure on prices. Some potential and high risk.

LEVELLING OUT Occupancy rising with unchanged prices. High potential and decreasing risk.

PEAK – DEclinE

Oslo

Growth London, Berlin, Paris

lEvEllinG out Amsterdam, Brussels

INTERNATIONAL

Helsinki has seen a decline in demand for a long time now, but occupancy now stands at +12, YTD March.

The price is running at a decline rate of around 9 per cent, both on a rolling twelve-month basis and for the first three months of the year. Oslo is also continuing to decline, but with no positive signals. RevPAR stands at –13 per cent for January–March 2010.

In Copenhagen, the price is continuing to fall beyond 10 per cent. However, the negative demand trend has reversed. Occupancy has seen positive growth over January to March 2010. In Berlin, the 2009 full year ended on a RevPAR loss of no less than 19 per cent. However, the rate of decline began to diminish over the last quarter of 2009, and both price and occupancy were up over the first quarter of 2010. For YTD March,

the city stands at 11 per cent over the first quarter of 2009.

In London, the recovery started early and both average prices and occupancy have now been on the increase since the last quarter of 2009. The first quarter ended with RevPAR up 11 per cent, an increase driven by growth in occupancy and price in equal measure.

DEcrEAsinG DEclinEHelsinki, Copenhagen, Prague, Vienna

More about the hotel marketINFORMATION FROM PANDOX

Would you like to know more about the hotel market in general and Pandox in particular? Here are two good sources of knowledge where you can find information.

Annual report 2009 The Pandox annual report can be ordered by sending an e-mail to [email protected] – give us your name and address and we will send a copy out to you by return. The annual report can also be read at www.pandox.com

Annual Pandox Hotel Market DayThe event of the year in the hotel industry! Mark 25 November in your diary right now. As usual, we’ll be presenting national and inter-national hotel market trends and a current topic in our industry.

Report on Pandox business operations 2009

o n e o f t h e l e a d i n g h o t e l P r o P e r t y c o m Pa n i e s

The Pandox Spirit


The right design for 2010

Strong brands doing everything in their power to leave their mark on as many industries as possible isn’t uncommon. And now the fashion industry is wanting to cosy up with the hotel industry. The latest one is a world-famous designer who’ll be designing a number of rooms at Claridge’s in London. The question is whether she’ll stick with the politically correct but hot trend when it comes to choosing colours.

International architectural and design company J/Brice Design International has a lot of hotels on its conscience. They say that 2010 sees the start of “the decade of the guest” and state that the “loca-tion, location, location” mantra has been replaced with “compare, compare, compare”. This is based on today’s transparent society, where people can

easily run searches on all the hotels in the world to find something to suit. “Fashion now drives hotel concepts and design, and the memorable hotels of the 2010 decade will be made up of sexy sophisti-cation, daring interiors and mood-evoking colours,” says Jeffery Ornstein, CEO for the company.

Fashion oracle more correct than interior designerOrnstein wants to ban the expression “hotel design” and replace it with “hotel fashion”. He thinks design focuses too much on the building, while the word fashion places emphasis on guests instead. It seems his views are shared by several people. Mis-soni, Armani and Moschino are examples of leading fashion houses with their own hotels. World-famous designer Diane von Furstenberg is the latest person in the fashion industry to make inroads into the hotel industry. She’ll be designing a number of rooms at Claridge’s in London. The rooms will have the origi-nal hotel furniture, but intermingled with her pat-terns and colours.

Luxury goods company LVMH (Louis Vuitton Moët Hennessy) also has plans to start running hotels. The company has been running the five-star

Cheval Blanc in the French Alps since 2006 and is now thinking of growing this brand. Egypt and Oman are at the top of the list. LVMH does not intend to own any hotels, but instead plans to run these operations through management companies.

Colour mix at the topHotelchatter.com goes so far as to select a single colour for 2010. They’ve caught on to the trend set by architects Stonehill & Taylor back in 2008 when they created the concept for the Best West-ern President Hotel on Times Square in New York. The design was inspired by the Presidential Elections in 2008 and was built up around “cen-trist purple” – a mix of Republican red and Demo-crat blue. Hotellchatter.com points out a number of hotels in New York that have followed this trend and has also found a number of such hotels beyond the borders of the USA.

Strong red shades, clear yellows and mossy greens are other colours to follow. By way of a contrast, grey also appears. And do something unexpected, create a Wow factor, says Jeffery Ornstein.

TRENDS: INTERIOR DESIgN IN FAShION


…you can stay in a “dog house”. The Dog Bark Park Inn is a bed & breakfast in Cottonwood, Idaho. The hotel is built to look like a massive bea-gle, and the hosts have also specialised in making wooden dogs out of trees which have died.

…you can head for bed in Milan and wake up in Zurich. Accor has a truck which is going to be spend-ing 45 days travelling through nine European cities. The tour starts in Paris on 17 May and ends in Brussels on 24 June. The hotel room on the truck has a double bed, a flatscreen TV and a bathroom.

…London is the dirtiest city in Europe. Trip-Advisor has held a survey on its website to find out which hotel is the dirtiest. London hotels are listed in six of the top ten spots. But top of the pile was the Grosvenor Hotel in Blackpool, and the Villaggio Club Porto Ainu in Budoni, Italy came second.

…the trendiest hotel in the world is in Amster-dam. CitizenM Hotel Amsterdam City was voted the trendiest hotel for 2010. The year before, the same hotel won three Hospitality Design Maga-zine awards. The hotel was named best designed hotel and also won the awards for the best designed hotel rooms and public areas.

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A little bit of every-thing from various corners of the hotel world

The right design for 2010quality hotel Park Södertälje city

Opus Montreal

Grand Hotel Florida in Barcelona


Pandox newsNEwS FROM ThE wORlD OF PANDOX

InterContinental Montreal – HOTEL OF THE YEAR 2010! Quebec Tourism Awards has awarded InterContinental Hotel Montreal “Hotel Of The Year 2010” in the four and five-star hotel category. This is a strong acknowledgement after some very hard work on restructuring and repositioning!

New Brand Manager at Hotel BLOOM!No, this isn’t the little sister of General Manager Christel Cabanier, alias Miss BLOOM! And no, Christel hasn’t hired a lookalike either. This is Margot Muys, the new Brand Manager at Hotel BLOOM! Margot will be managing and coordinating marketing activities at Hotel BLOOM! together with “6+1”, the new advertising and PR agency for the hotel.

Sous chef at Hotel Berlin, Berlin – second in World ChampionshipsSusanne DeOcampo-Herrmann, sous chef at Hotel Berlin, Berlin, recently won silver at “Culinary Challenge” in Singapore together with the German team of chefs. Nine teams from three continents competed to show their best in the kitchen for three days. The chefs in the German team will soon be meeting up again, and this time at Hotel Berlin, Berlin – but they won’t be heading for the kitchen this time. “We’d like to pay homage to the fantastic efforts of the team in Singapore by inviting the entire team to spend a luxury weekend at the hotel,” says General Manager Cornelia Kausch. One thing is certain: the three biggest hotels in the capital will be playing host to some very critical diners!

Gala dinner at Holiday Inn Brussels AirportIn March, Holiday Inn Brussels Airport hosted IHG’s Business Performance Meeting. Kirk Kinsell, President of the EMEA Intercontinental Hotels Group, and many others from the IHG organisation were all present.

More stars for Quality Hotel Park Södertälje CityThis hotel has been awarded another star by SHR and can now be justifiably proud of being the only four-star hotel in Södertälje and its surroundings.

Swedish Hollywood Wife at Scandic Park Maria Montazami spent a couple of days at Scandic Park in Stockholm in connection with her participation in the QX Gay Gala. She stayed in a suite with views over Humlegården. Maria is one of the main charac-ters in TV3’s famous programme Svenska Hollywoodfruar – Swedish Hollywood Wives – and a favourite with many of the people who follow the series.

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The newly renovated InterContinental in Montreal. This hotel is also gracing the cover of this Upgrade issue. Margot Muys, Brand Manager at Hotel BLOOM!

Hollywood Wife Maria Montazami


pandox upgrade - no 1 2010 (eng)

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