Blog List
2 Apr, 2013
IHIF Asia Pacific's letter from the editor

Dear Readers of Hotel Management Asia,

It is with great pleasure that we bring to you the International Hotel Investment Forum Asia-Pacific newsletter. It is brought to you by Questex Media, which has in the past delivered to you a weekly e-newsletter from Hotel Management Asia. We have renamed the newsletter to better align it with our prestigious IHIF Summit series. Our Asia-Pacific conference takes place in Bangkok this May 15-16. 

Each week we will bring to you a roundup of the latest hotel transaction and investment news coming out of the Asia Pacific region, the most dynamic region in the world for new hotel activity. I look forward to shedding light on this exciting hotbed of activity each week with the International Hotel Investment Forum Asia-Pacific newsletter.

Please email me with news of your own, or with comments.

Meagan Drillinger 

By :Meagan Drillinger

5 Jun, 2012
Can hotel development in Spain save the economy?

While the world waits to see how Greece's elections will impact its role in Europe and the eurozone, other eyes are turning to Spain. The country's economy has been in decline for years, and there have been rumors that it, too, may drop the euro.

But in spite of the worrisome fiscal situation—or perhaps because of it—hotel development in the country is continuing at a brisk pace.

Consider this recent story from the AFP: Tarifa, a "jobs-starved" town in southern Spain is causing an uproar by agreeing to build 350 homes and a batch of hotels with 1,400 rooms on unspoiled land along a pristine beach. The town hall has approved 904,000 square feet in construction on an area of 70 hectares (170 acres). The mayor, Juan Andres Gil Garcia, says it will help the economy in a region with a 33-percent unemployment rate, the highest in Spain, which in turn has the highest in Europe. Environmental and citizen groups are protesting, claiming that the hotel will spoil the empty beach that is the town's greatest asset.

But other hotel brands are investing heavily in the country's hotel scene, with several new developments in recent weeks and in the pipeline.

For example, Sheraton Hotels & Resorts has debuted in Madrid with the opening of the Sheraton Madrid Mirasierra Hotel & Spa. Owned by Comercial Mirasierra Group, the hotel is part of Starwood's multi-billion expansion plan to open more than 60 Sheraton hotels around the world in the next three years.

Located nearby Barajas Airport, adjacent to "Cuatro Torres" and close to the IFEMA Congress and Convention Centre, the Sheraton Madrid Mirasierra is a conversion of the former Mirasierra Suites Hotel. The opening follows a renovation and re-branding t.

Starwood currently has 17 hotels throughout Spain under seven of its nine brands. These hotels include the W Barcelona, the Westin Palace in Madrid, the St. Regis Mardavall, the Marques de Riscal, the temple of Spa lovers Le Meridien Ra, and impressive Sheraton Golf resorts in the Canaries and Majorca. Starwood is also investing heavily into restoring some other hotels, including the historic Hotel Alfonso XIII in Seville which recently re-opened following a multi-million dollar renovation and the Hotel Maria Cristina in San Sebastian which is scheduled to re-open this autumn.

The Financial Channel is reporting that Marriott Hotels & Resorts has completed its year-long refurbishment of Mallorca Marriott Son Antem Golf Resort and Spa on the Spanish island. The lobby and its bar received the bulk of the attention, with new open-air "chill out lounges" on the hotel patios. The 142 bedrooms and eight suites had a more cosmetic treatment. And the Rezidor Hotel Group has opened its first hotel on the Spanish resort island of Gran Canaria, according to Luxury Travel Advisor. The Radisson Blu Resort, Gran Canaria is situated on the island’s south western coast, near the village of Arguineguín; a little more than half-an-hour away from Las Palmas.

These are in addition to other major developments that we mentioned in April, which include a "mini Las Vegas" in either Madrid or Barcelona and a project from Madrid-headquartered Meliá Hotels International in the Balearic town of Magaluf.

But whether any of this development will help remains to be seen. If, as Tarifa suggests, new hotels create new jobs, the impact to the country's overall economy cannot be ignored. According to Bloomberg, tourism is the biggest contributor to the country's economy, and any slowdown in hiring, at a time when unemployment already tops 24 percent, will make it more difficult for the government to meet its pledge to slash its deficit by more than half this year. Growing investor concern about Spain's public finances and the need to shore up the banking system has fueled speculation the country will be the next to need a bailout.

By :Jena Tesse Fox

15 May, 2012
Hotel fundamentals strong in Poland

Investors looking to Europe may well want to keep an eye on Poland, whose hotel market was one of the best performing in Europe in 2011, according to Jones Lang LaSalle Hotels latest Hotel Intelligence report, published on HospitalityNet. Warsaw hotels posted an 8.3-percent appreciation in room yield when compared to 2010, the report says, and notes that the country's investment market has gained pace due to the overall "impressive economic performance."

"Warsaw in particular has seen an impressive rebound in hotel performance since the dip in 2009," Angus Wade, EVP CEE, Jones Lang LaSalle Hotels, said in a statement. Growth in hotel trading performance in 2010 and 2011 was driven by a substantial increase in both occupancy and average room rates. The UEFA European championship in 2012 is expected to support further growth in performance and during the summer months hotels are expected to operate at full capacity, allowing hoteliers to charge higher rates.

Another major demand generator will be a sound Polish economy, which is expected to grow by 2.3 percent in 2012. "Although growing slower than in 2011, the Polish economy will remain one of the best performing in Europe," Wade said. "Demand for business travel is therefore expected to remain robust and the market can expect a further expansion of its MICE sector."

Christoph Härle, CEO continental Europe, Jones Lang LaSalle Hotels, noted that the Polish hotel market is relatively immature compared to other major European capitals, with branded hotels representing only a small market share of the total bedroom stock. "However, branded supply is growing with Marriott and Hilton planning to launch new hotels in Warsaw and other key Polish cities. The supply in pipeline is still comparatively limited and we are likely to see an increasing number of major international brands to enter one of Europe's most dynamic hotel markets."

One of the largest recent transactions in Poland was the sale of the Jan III Sobieski, which was bought by Norwegian property company Wenaasgruppen for an undisclosed price. The property was rebranded to the Radisson Blu Sobieski.

Meanwhile, Poland also provides the best-value five-star hotel accommodation, according to a survey published recently by the Press Association.

Poland's capital Warsaw is one of seven European destinations in the top 10 most affordable luxury hotel list compiled by Based on average room prices per night last year, Warsaw's five-star hotels cost $134 on average.

By :Jena Tesse Fox

8 May, 2012
UK businesses fear post-Olympic downturn

Reuters is reporting that hotel company Millennium & Copthorne is concerned that a "post-Olympic hangover" could impact growth in London.

Wong Hong Ren, M&C's CEO, said that the company was seeing strong demand for its London hotels during the Olympic period, but was worried that the impact of Europe's economic woes would deter cash-strapped Europeans from visiting the UK capital once the games and festivities are over.

The company posted a 31.5 percent increase in first-quarter pretax profit, and is looking to diversify its customer base as visitor numbers from Greece, Spain, Ireland and Italy show no signs of improvement.

M&C said RevPAR rose by 5.6 percent on a like-for-like basis, driven higher mainly by pricier rooms, with a 7 percent increase in London. However, the "Rest of Europe" region underperformed, with RevPAR declining 5.4 percent as nearly half of all euro zone economies struggle to get out of recession.

Similarly, a finance expert in Stoke-on-Trent has warned the Olympics will not provide much in the way of an economic boost, local website ThisIsStaffordshire is reporting.

Richard Platt, divisional director at investment management firm Brewin Dolphin's Festival Park office, said the firm believed this summer's event would lead to only a "short term boost, at best," and that while London may see long-term benefits of investment in infrastructure, he does not expect the overall economy to improve.

"A study by the European Tour Operators Association found that hosting the Olympics did not have a positive effect on tourism in either Greece or Sydney," he told the site, claiming that those Games had the opposite effect. "The main beneficiaries will be the hotel industry (due to short term increased prices), London pubs and southern train and bus operators."

While the long-term effects of the Olympics cannot be predicted with any real certainty, it seems premature to start worrying about post-Games fallout before the first event takes place. While London has famously stepped up hotel development in recent years, and has a wide range of options, events will also be held outside of the city, and those looking to avoid the crowds will almost certainly take a holiday elsewhere, leading to increased numbers throughout the country. We'll have to wait until the summer to see if Edinburgh and Cardiff see a windfall from the Olympics, but it seems likely that many businesses will come out ahead.

By :Jena Tesse Fox

11 Apr, 2012
Egypt's tourism and hotel scenes struggle

Egypt's hotel scene is continuing to struggle, and even foreign companies are feeling the impact. At the end of March, Reuters noted that Swiss-listed Egyptian property and hotels group Orascom Development reported a full-year net loss of $76.82 million due to the political turmoil in Egypt and elsewhere in the Arab world last year.

The firm reportedly took "extraordinary charges" in 2011 of $90 million, which included provisions, revaluation of investment properties, and legal fees connected to the political events in Egypt. Orascom Development made a profit of $103 million in 2010, after minority interests. But revenues in its hotels segment fell 29 percent due in part to one month of virtually zero occupancy in Egypt's El Gouna and Taba Heights during the first quarter of 2011 and also because guests traded down from five-star to four-star hotels.

It also said its real estate and construction segment revenues fell 71 percent due to a 50-day halt in construction activities in Egypt and a slowdown in demand for homes.

Last week, Property Magazine International said that hotels in Egypt have started to recover, but they remain a long way from their previous highs prior to the Arab Spring, citing the latest HotStats survey of full-service hotels in six MENA cities by TRI Hospitality Consulting.

Hotel performances in Cairo and Sharm El Sheikh have stayed low since early 2011 when the uprising and related violence started. Full service hotels in Cairo reported occupancy of 41.2 percent and ADR of $110.19 in February. TrevPAR for the month was $91.13 and GOPPAR stood at $36.1.

Occupancy levels in Sharm El Sheikh have remained relatively steady since December 2011 and stood at 52.0 percent in February. ARR for the month was reported at $42.26 while GOPPAR levels remained low at $11.0. Although the monthly performance indicators for February 2012 for both cities show substantial growth over the same period last year, such a comparison may be irrelevant as the hotel performance last year reflected the aftermath of a violent start of the Egyptian Revolution which saw widespread protests and related violence across the country.

Tourist arrivals in Egypt has declined by 32 percent to 10.2 million visitors and revenues dropped by 30 percent to $9 billion in 2011 following the political uprising in the country. Although the street protests and violence have reduced, the risk of sporadic violence remains. Nevertheless, Egypt’s Ministry of Tourism has issued a positive outlook for 2012 and expects the country to receive 12-13 million visitors and revenues to improve to $11 billion during the year.

And it's not just hotels feeling the pinch: The Egyptian Gazette is reporting that the country’s nightlife is also struggling. Some nightclubs have already shut down amid rumors that wealthy Islamists are buying them out in a bid to turn them into Sharia-compliant businesses.

The article also hints that a businessman with connections to the Muslim Brotherhood offered $3 million for the Hor Moheb Hotel in el-Haram. But the offer has been rejected—with the owner reportedly asking for $4 million. There are also rumors that businesspeople related to the Salafist Al-Nour Party and the Muslim Brotherhood are thinking of turning all nightclubs into shopping centers for clothes and domestic appliances, and despite denials from Islamists and officials, four of them were sold last month.

All of which begs the question: If the Muslim Brotherhood can help support a struggling industry, should international businesses look to start negotiating with the organization? While Egypt's political future remains unclear, cooperation between the Brotherhood and secular companies may provide stability and a way for Egyptians to determine their own business model. On the other hand, if the Brotherhood's policies make international relations too difficult, Egypt's international reputation could become even more unsteady. We'll just have to wait and see...

By :Jena Tesse Fox

9 Apr, 2012
Battle of the hotel reality shows

About two years ago, I received a phone call from a production assistant at a television network that I forget (was it Fox? Was it Travel Channel? I wish I had a better memory.), interested in bouncing some ideas around for a show he described that would be "like Kitchen Nightmares, but with hotels." The point of the call--to see if I could suggest any strong, ahem ... personalities who could possibly jibe with the whole Gordon-Ramsay-yelling-at-management-for-entertainment types. Could I? Could I? Of course I could, and I did.

Now fast-forward a few years later and whoever those producers were, they didn't take my advice (and no, I'll never reveal the names I suggested). Instead, what we have now are two new hotel reality shows: Fox's "Hotel Hell," with Gordon Ramsay, set to debut in June (and which incidentally is casting!), and TONIGHT'S "Hotel Impossible" on Travel Channel, hosted by Anthony Melchiorri, NYC hotel development veteran and current head of Argeo Hospitality.

They're both pitched as fix-it reality shows, in which the expert descends upon a poorly performing hotel, inn or bed-and-breakfast, applies his personal brand of fixer-upper (I think we all know that Ramsay's involves a lot of yelling), and we see how he and his team can turn a hotel around from operations to design practically overnight.

Of course the properties already under the knife are independents, because really--what brand would allow scrutiny like this?

Tonight's premiere episode of "Hotel Impossible" brings Melchiorri to Long Island's Gurney's Inn, in Montauk. Set your DVRs and let's talk about it tomorrow on Facebook. Hey, better a reality show like this than, say, "Real Housewives of the Hotel Industry," right? Now there's an idea ...

By :Stephanie Ricca

19 Mar, 2012
IHG details name, development plans for Chinese brand

IHG finally announced its branded entree into the Chinese hotel market with Hualuxe Hotels and Resorts, in a move that asserts IHG's challenge to Western brands that have already begun to capitalize on the large Chinese middle class. The brand will appeal to the upscale Chinese traveler by combining traditional Chinese customs and traditions with a more luxurious, intimate environment than many Western brands bring to the country, according to the company. The Wall Street Journal reports that the franchise will follow the same model as IHG's other brands in China.

"Hualuxe takes the best aspects of renowned Chinese hospitality and applies IHG’s international scale, powerful systems and unparalleled insights into the Chinese market to deliver a traditional high-end consistent experience,” said IHG CEO Richard Solomons in a release. "IHG is already the largest international hotel operator in China, with more than 160 hotels across 60 cities and sees the opportunity for this brand to be in over 100 cities in China in the next 15 to 20 years. IHG has already signed over 20 letters of intent which are now being converted into contracts and we expect the first hotel to be open in late 2013 or early 2014."

The brand will launch in a variety of primary, secondary and tertiary cities around China. While IHG was the first Western hotel company to enter China three decades ago, it faces an uphill climb in the country compared to a few competitors. Hilton recently opened its 14th hotel in the country, while luxury brands like One&Only are beginning their push into China. China Daily reports that amenities like tea lounges and foot massages will create a unique touch point for the brand among luxury-minded Chinese.

By :Andrew Sheivachman

16 Mar, 2012
Fundamentals near 2007 peak levels

After a year of turmoil in the global financial markets, one hotel industry veteran sees smoother sailing ahead for hotel owners. The Plasencia Group released its annual Lodging Investment Roadmap, which finds a hotel market primed to enter a fresh up cycle, despite a lack of easy construction financing available.

“We believe that the lodging sector as a whole will be back up to 2007 peak levels this year,“ said Lou Plasencia, chairman and CEO of The Plasencia Group. “Many markets are already hitting those levels and that’s very much the case in the Sun Belt states. Bottom line profitability is actually very strong as a result of people operating properties in a much more lean fashion during the recession and those practices are still in place.”

His forecast calls for minimal development outside of the most primary U.S. markets, while 21 weaker markets will see their profitability stabilize in 2012. “Other than in New York or Las Vegas, we don’t see any major increases in full-service supply in any major market,” said Plasencia. “That is primarily due to a lack of construction debt. There is very little financing available for construction financing. The other variable is that people are saying, ‘why should I spend two or three years getting permits, ramping up and then stabilizing’ when I can buy an existing hotel in a distressed situation and be cash flowing fairly quickly.”

Expect private equity groups and joint ventures to propel the bulk of acquisitions in 2012. According to the report, about $21.7 billion on 232 hotel CMBS loans will come due this year and require refinancing. This could mean historic levels of hotel foreclosures. “Smart equity in full-service is going after existing product by recapitalizing existing hotels,” said Plasencia. “Very little new construction is going on except high net-worth individual money. We may see private-public ventures going up, but I don’t see any new supply increases of any significance.”

Opportunistic buyers will have the opportunity to acquire debt on hotels below replacement cost. “It’s the forced owners that will be selling, lenders that had no desire to be real estate owners that must by charter move properties off their books after three years without an extension,” said Plasencia. “A lot of lenders were waiting to sell until opportunity funds improved and now there’s a clear sign that numbers are improving. Lenders want to be selling into an up market.”

By :Andrew Sheivachman

15 Mar, 2012
A new focus on interactive content

A new wave of signage technology requires a new approach to creating content that appeals to guests and accurately reflects the image of a hotel brand.

“We’ve taken signage to all new levels by using more of an applications approach,” said Erick Domareck, national account manager for full-service hospitality at Four Winds Interactive.

Four Winds worked on Marriott’s trailblazing GoBoard interactive sign, and works with brands such as InterContinental Hotels Group, Marriott International and Omni Hotels & Resorts on interactive signage projects. “On a lot of our signs, we’ve borrowed a lot of user elements behind all the smartphones and the tablets,” Domareck said. “By taking that applications approach, we’ve made it more user friendly from the guests’ perspective.”

Some see a shift in the attitude of hotel owners. “It’s good to get away from the guestroom and try to understand the public area because it’s not the easiest of [sections] and has also been a bit amateurish in a sense,” said Juan Aguirre, VP of business development at Acentic, a provider of hotel TV platforms. “It’s been a bit flat apart from showing meeting room information and running an advert for a bar. It’s not exactly a turn on for hoteliers and I think that’s changing.”

A more advanced signage system can also interact with property systems, allowing integrated control of displays across a property. “There are numerous solutions out there, from extremely basic PowerPoint players all the way up to the more enterprise solutions like ours and the other big players,” said Domareck. “Higher-end full-service hotels are going to select the more professional established firms because we are 100 percent dedicated to digital signage applications, allow our solutions to evolve and add new apps to our solutions sets. We can also integrate with every event management system, like Delphi, NGS or OPERA. A lot of the smaller one-off companies don’t have the software backend to facilitate that integration.”

By :Andrew Sheivachman

13 Mar, 2012
The business case for digital signage

During an economic downturn that left operators strapped for CapEx dollars, digital signage in public areas tended to be a low priority for most hoteliers. Recent reductions in the cost of TVs, in addition to shifting guest expectations, mean that brands are putting a new focus on exploring the opportunities presented by digital signage as a touch point and potential revenue generator.

“Ninety-five percent of LG’s revenue comes from the consumer product stream, so it drives availability of technology,” said Dan Smith, director of digital signage for LG. “Smart TVs are starting to come into their own on the retail level for consumers. In general, something similar to what a tablet does today is what TVs will do in coming years. But when we’re talking about this all in one solution, there are limits.”

New models from vendors such as LG and Samsung include limited built-in slideshow technology that can allow a hotelier to simply display information or slideshows on screen. “The high-end industrial devices have twice the life expectancy and require a separate media player,” said Smith. “They need video rendering, where they can render live video or Flash video. Our system is not designed to layer and render multiple layers of video; I don’t think they’re going to get that far because it adds too much cost to panel.”

Despite the increased costs of a high-quality screen and a separate media player, digital signage investment gives hotels a more robust set of tools to reach guests. “The hotel industry is doing much better financially, so now many chains are looking to improve branding and the customer experience at the same time,” said Smith. “Anything dynamic is far more exciting for the customer. Instead of looking through pamphlets, guests can see videos and do some interactive delving into actual things. From the hotel side or owner side, their intent is to create branding to drive loyalty and repeat visits. It’s far more compelling to present a concept via digital signage, and more effective than trying to train people behind the desk. The message will always be the same.”

By :Andrew Sheivachman

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