1. Up
GradeM A R K E T I N F O R M AT I O N F R O M PA N D O X
# 1 2010
Recovery on a wide front
– but continued price preassure
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
SPOTlIghT
4 8 12
High acquisition New star InterContinental
interest at this year’s system in Montreal: Hotel
P. industry conference P. Europe P. of the Year

2. A wORD TO gO
Will we see more business this year?
Despite what industry in the industry and so they have bought at high not the case, even though life is slightly easier now
analysts believed, there is prices. Now a lot of these players have major prob- and the risks have been reduced to a certain
still very little business lems, but they are staying afloat thanks to low inter- extent.
being done in the hotel est rates and the passiveness of the banks – which
market despite an impro- in turn are linked with the many state guarantees Positive trend, but tough for the Nordic
vement in the financial presented and which reduce pressure on the monarchies
situation and continued low interest rates. The banks to act. So what should we expect to see in Development in the USA was uneven for the first
peak in 2007 saw hotel transactions worth the future? A realistic scenario would be an quarter this year – the occupancy rate was up by
around USD 120 billion on a global scale. The increase in the amount of business done towards more than 2 per cent, while prices fell by around 4
market has almost disappeared since then, the end of the year. However, we will need many per cent. Hence income for the hotel industry was
with a decline of some 90 per cent. years to return to the historical levels of both vol- down 2 per cent. However, the trend is good.
ume and value that we saw during the last boom. Looking at the 25 biggest markets, development
Most industry experts believe that the market will was overwhelmingly positive compared with 2009.
explode in 2010 – mainly because the banks will be Knowledge – a must for success In New York, the occupancy rate was up 10 per
forced to sell properties they had to take over due How should hotel property prices be assessed cent and the price was relatively stable. March was
to bad depts, so called distressed assets. Jones now? The simplest way to go about it is to forecast the best month for the hotel market in the city in 16
Lang LaSalle, a significant and respected organisa- the income. Large, well renovated hotels with good months. Similar trends can be seen in London and
tion, forecasts that the transaction volume for 2010 management will continue to do well. And the price on major markets in the Eurozone. Stockholm also
will increase to USD 11–13 billion, from USD 9.4 of these will rise, albeit slowly. The major difficulty saw a good start to the year, although March was
billion in 2009. At present, even this moderate lies in pricing the risk in connection with acquisi- disappointing. The decline in Stockholm, YTD
figure seems a little optimistic. tion. What return requirements should be set for March, stands at around –3 per cent; here, more
the property? We currently have historically low than the entire decline is due to a poorer price. It is
Strong will but great uncertainty interest rates which will rise – as stated, the only forecast that this development will continue
In our view, there are a couple of reasons as to why questions are when and how quickly, and how high throughout the second quarter as well. Copenha-
so little business is being done. People are willing will they go? Moreover, financing an acquisition has gen is still seeing a poor business climate.
to make transactions, but sellers are expecting now become a lot more expensive. In some Although demand is up, this has taken place at the
prices which are too high. A lot of calculations are instances, the banks have quadrupled their mar- expense of a lower price, and the market is gradu-
being done on the basis of what the market looked gins and are also demanding more equity. Both of ally being undermined. 2010 is going to be a tough
like in the peak years of 2007 and 2008. Of course, these factors are having a major impact on the year in Copenhagen.
potential buyers are not accepting this as they value of hotel properties. This situation is driving us
value objects on the basis of what the market looks back towards some kind of ”back to basics” sce- All the best,
like now and is expected to look like over the com- nario. The only secure way of increasing hotel value Anders Nissen
ing few years. Another reason is the uncertainty in future will involve active development work. In
prevailing concerning the development of interest turn, this will demand broad, in-depth specialist
rates. There is no doubt that current interest rates expertise on how to run hotels successfully. It can PS. The Allsvenskan football league has
will go up, which buyers have included in their yield be concluded that the players that are familiar with started, and the final games in the handball cham-
requirements – but the key points are how quickly the hotel industry will dominate on the buying side pionships are taking place. So there’s a lot to keep
will they go up, and how high will they go? A third when the market turns. track of. I’m going to have a little wager on Drott
factor is finance. Borrowing money is still difficult, However, this development is being held back going to the till final, but once they’re there they’ll
and so a lot of investors have disappeared from our by the way in which the media operate. At the have to give in to the strong Sävehof team. And 9
sectional market. moment, newspapers are competing for positive July will be the decider of the Handball World
There is another important reason why people news. According to journalists, most curves are Championships. Exciting! That’s when we’ll find
are less willing to do business. Most of the deals showing an upward swing. As a result a lot of peo- out who Sweden will be playing towards in the
done over the past few years have involved finan- ple are being led to believe that the hotel industry is opening match to be held on 13 January 2011.
cial players. They often do not have any expertise emerging from the crisis. But unfortunately this is
Pandox Upgrade. Address: Pandox AB Graphic design and production: Cover photo: Pandox’s hotel
Market information from Pandox Box 5364 Hallvarsson & Halvarsson InterContinental Montreal, Canada.
– published approximately three SE-102 49 Stockholm, Sweden Photos: Ulf Blomberg, Getty Images,
times a year. Tel.: +46 (0) 8 506 205 50 Shutterstock, et al. Upgrade can be ordered from Pandox
Editors: Anders Nissen, Fax: +46 (0) 8 506 205 70 or read at www.pandox.com
Printing: Jernström Offset, Stock-
Annelie Sundström Aguilar, E-mail: pandox@pandox.com
holm, May 2010. May be reprinted
Anette Paulsson Visiting address: only with the permission of Pandox.
Grev Turegatan 44, Stockholm
2 M A RK E T I N F ORM ATI ON F R O M PA ND O X

3. News
hOTEl wORlD
November February
Berlin will have its first Hampton by Choice Hotels International makes its Accor is selling five hotels to Invesco Marriott International reports that they
Hilton. This hotel will be opening in the lat- debut in Poland – at six locations Real Estate for a total of EUR 154 mil- will be doubling their number of hotel
ter half of 2010 and have 214 rooms. simultaneously. These hotels are owned lion. The sale includes the Novotel rooms in Europe by the end of 2015. The
and managed by a Polish property com- Muenchen City in Munich (307 rooms), company currently has 174 hotels with
pany, a subsidiary of property develop- Novotel Roma la Rustica and Mercure 40 000 rooms, so they are intending to
ment company Salwator Capital Group. Corso Trieste in Rome (149 and 97 increase that figure to 80 000 rooms.
These hotels will be situated in the cities rooms respectively), Mercure Zabatova
of Dzwirzyno, Katowice, Krakow, in Bratislava (175 rooms) and Pullman
Poznán and Wroclaw. Paris La Défense in Paris (384 rooms).
All these hotels will continue to be run by
Tristar Investment Holding has Accor.
entered into an agreement relating to
the opening of a new Four Seasons
Hotel in St Petersburg. This hotel will be Travelodge reports that they will be
opening in 2011 and will be located at developing ten properties in the UK, for
the palace of Prince Lobanov-Rostovky. a total investment of GBP 61 million. Easyhotel is opening in Germany,
Renovation of this historical building is Three of these hotels will be situated in with its 125-room easyhotel Berlin,
estimated to cost USD 125 million. London and two in Manchester. Other Hackerscher Markt in Berlin. This will be
hotels will be opening in Liverpool, the 12th easyhotel hotel in Germany.
Bristol, Cannock, Camberley and
Rezidor has entered into an agree- The 418-room Park Inn Stockholm Andover. In total, Travelodge will be
ment regarding a 150-room hotel in Waterfront Hotel, which is currently adding 1 133 new rooms. Berlin is to have its first Sheraton.
Russia. This hotel will be run under the being built, is to undergo a change of Starwood has entered into a rental
Park Inn banner and be situated in the name even before it opens. This hotel, agreement with Chamartin Meermann
town of Yaroslavl. which will be opening in 2011, will be Immobilien for the 464-room hotel
named the Radisson Blu Waterfront March which will be situated next to the central
Hotel, Stockholm. It will be the sixth station in Berlin. Construction work will
Radisson Blu in Stockholm. commence in late 2010.
Marriott International will be opening
December its second Courtyard by Marriott in
Switzerland. The 175-room Courtyard
by Marriott Basel will be run as part of a
Westmont Hospitality is behind a
takeover of Renaissance Paris Hotel Le franchise agreement. April
Parc Trocadero, with 116 rooms. This
hotel is being sold by Strategic Hotels & Carlson and Rezidor report that For-
Resorts for a price of EUR 35.5 million. mosa International Hotels Corporation
will be buying the hotel section run
under the Regent brand. The takeover
Millennium & Copthorne Hotels is includes global rights to the name of
launching a new international brand Regent, hotel running and rental con-
under the name of Studio M. This brand tracts, as well as the licence for Regent
will be aimed at people who travel fre- Scandic will be adding four hotels in Seven Seas Cruises.
quently on business or privately. The Courtyard by Marriott Stockholm in Southern Finland. These hotels will be
first hotel will be opened in Singapore Kungsholmen, with its 278 rooms, situated in the towns of Riihimäki,
during the second quarter of 2010. opened recently and was the first Järvenpää and Lahti. The fourth hotel Scandic is building a hotel in
Courtyard by Marriott in Scandinavia. It will be built in Helsinki, in connection Tampere, Finland, and will thereby have
is also the biggest Courtyard in Europe. with the Paasitorni Congress Centre. three hotels in the town. This hotel will
Hilton will open its first Hilton Garden have 207 rooms and be located near the
Inn in Poland in the summer of 2010. railway station. Construction is expected
This hotel is located in Krakow and has InterContinental Hotels’ first hotel in Hilton will take its first steps into to commence in August 2010.
154 rooms. Another two hotels will also Denmark is the 266-room Crowne Norway. Doubletree by Hilton, Oslo City
be opening over the year, in Rzeszow Plaza Copenhagen Towers, 85 metres Centre will open this spring. The hotel
and Warsaw. Poland has been identified tall. Danish company Copenhagen Hotel will initially have 59 rooms, but once it is Rezidor will be taking over the running
as one of the company’s biggest growth Management is running the hotel as part renovated in late 2010 it will have of ten Reval properties in Russia and the
markets in Europe. of a 20-year franchise agreement. another 44 rooms. Baltic States. These will be run under
management contracts with the owners
of Reval Hotels, Norwegian property
development company Linstow.
M A RK E T I NF O R MAT I O N F R OM PAN DOX 3

4. ThIS yEAR’S INDuSTRy cONFERENcE IN BERlIN
“Probably pretty accurate...”
This year’s big meeting in Berlin If the number of delegates leads development in which seem to indicate that the trend is turning and
the hotel industry business cycle, we can but – hopefully – that we have reached the bottom.
was a mix of ill-concealed uncer- guess that the F&B supply during the meeting will However, Eric Danziger, CEO of Wyndham Hotels,
tainty and self-confidence based come late in the cycle. Gone were the oysters, felt it was a little sad that the industry seemed to be
champagne and celebrity chefs. Both the quality celebrating the fact that things were currently “less
on access to capital. Some had
and the quantity of the food had been scaled back, bad”. Hubert Joly, CEO of Carlson, adopted a more
failed to recover from the extensive and the choice of sausage casserole with rice and specific stance, reporting that they had decided
decline in the market in 2009, while two kinds of cold cuts seemed much of a much- that the crisis is over.
ness. Even though most people wandered round A more bright version was put forward by the
others were already ready and telling everyone they had capital in spades and that person who felt that a downturn is nothing to be
willing to face an upturn. 2010 was the year to invest, the energy failed to upset about. What we have been reminded of once
really make an appearance. again during this recession is that the next time, we
As usual, the hotel industry’s answer to the Oscars have to have enough money to cover our loan. Or,
took place in Berlin in early March. There are many The golden years of the quotation as a wise man once said: “we learned a lot in
similarities – the grand music prior to every new A gathering of some of the sharpest minds in the 2009”.
topic for discussion, the prestige of being the pre- industry shared their experiences and prophesied
the future.
senter/master of ceremonies, and the importance
of being seen at this event, of all the events during Fortunes will be
the year.
The number of delegates was up on last year’s The boom was made this decade”
low. Indeed, it could be stated that even the visitor
statistics for the most important conference of the unsustainable” With this being the first year of the new decade and
also the bottom of an economic cycles, we can
year is tracking the RevPAR development. So this As with previous booms, this was also doomed to only hope that we will earn some money over the
year’s increase was a sign that we have reached come to an end. 2009 was a tough year, but we coming decade. One of the panels was asked
the bottom, even as regards hotel performance. can already see changes in the demand pattern when we might be in a position to return to 2007
4 M A RK E T I N F ORM ATI ON F R O M PA ND O X

5. ThE MARKET ON ThE MARKET
Uncertain transactions market
levels, and the response was that any time The hotel industry took a nosedive in 2009, Transaction volumes, EUR billions
between 2011 and 2013 is possible, the biggest RevPAR in Europe fell by over 20 per cent in
common denominator being 2012. places. The transactions market also reached 15
the bottom – but in terms of value, transac- Portfölj
tions fell by just 13 per cent. Banks and other
major hotel owners have largely opted to sit 12 Singelfö
and wait for the recession to be over. The low
Cash is king” number of deals has preserved value in the
9
industry. So does a price adjustment await, or
It was obvious that the emphasis had shifted. From
can we just pick up where we left off at the
persistent chattering about loan to value over the
peaks of 2007 for a trip back to the next
past year, we now found out that cash flow and 6
boom?
interest cover are what are valued. IRR is obsolete.
So is the industry just treading water? We have to
Completely in alignment with financial develop-
earn enough money to be able to pay our interest, 3
ments, transaction volumes in Europe fell by
rather than striving to earn enough money to cover
around 50 per cent in 2009, finishing up at a his-
our investments – and make a profit.
torically low level of EUR 3 billion. This can be 0
00 01 02 03 04 05 06 07 08 09
compared with EUR 6 billion in 2008 and EUR
Extend 18-20 billion in 2006 and 2007. So even though
the overall volume was halved, the value only fell
Single Asset Investment
Source: HVS Research
Portfolio Investment
and pretend” by about 13 per cent.
There was a lot of eager talk of all the distressed
Security top priority
assets to emerge onto the market as a result of
In general, it could be stated that the underlying been undermined. “Reach is no longer a chain
underperforming hotels with heavy debts operating
financial unrest led to safe, “secure” investments advantage”, to quote Robert Hornman, Manag-
in a tough market. Both panellists and visitors
due to both more cautious action but also as a ing Director of WORLDHOTELS.
stated clearly that they had money to invest. But
result of the tighter demands of the banks. Com-
what was every bit as apparent was that nobody
panies preferred to do slightly smaller deals in Value not increased by low activity
had so much as caught a glimpse of any distressed
their own countries rather than running major Most people hope that the acquisitions market
assets. The banks seemed to want to hold onto
international takeovers. Portfolio acquisitions, will pick up. During the same conference, a lot of
their depreciating assets until their value firmed up.
which by their very size often include a large people were waving their cash around. Interest
“There are distressed assets, but in markets where
amount of borrowed capital, were hit very hard. In was broad as regards geography and types of
nobody wants to be,” announced Patric Fitzgibbon
earlier years, portfolio acquisitions represented hotel. But the lack of acquisitions is causing frus-
of Hilton Worldwide.
around three-quarters of the overall transaction tration in the market. A lot of people are opportu-
volume in Europe. This figure fell to 50 per cent in nitists just waiting for distressed assets to be
Yields have become 2008, and it stood at just 34 per cent in 2009.
To reduce the element of risk, it also became
dumped to the market. But this has not hap-
pened to any great extent so far, as bankers and
more intelligent” more popular to make acquisitions in familiar
environments in respect of both the hotel market
other major owners do not want to realise their
losses. Instead, they are sitting on their holdings
Whether this means that both yields and value and legal structures, but also because such and hoping for improvement soon.
have endured over the latest recession remains transactions use the same currency as the home- There is a risk that this behaviour will lead to
unstated. The shortage of acquisitions has actually land. In 2009, 60 per cent of all transactions took excess supply once the floodgates open; as will
stopped the transactions market from a fall in place on a domestic level. The corresponding probably be the case once the market has made
value. The market has declined in terms of both figure for 2008 was just 38 per cent. Classic hotel some decent progress on recovery and growth
quantity and quality, but the price per hotel room cities such as Paris and London seem to be the has got underway. Theoretically, excess supply
has not fallen in relation to the RevPAR losses of up second most secure option, after investments in could lead to competition on prices and hence
to 20–30 per cent that we saw last year. companies’ own countries. At the International delayed price adjustment. It is unlikely that the
Hotel Investment Forum in Berlin earlier this year, market will avoid a reduction in value simply
If the location, it was clear that these cities were considered a
safe bet. A moderator even had to prevent his
because transaction volumes are low. And believ-
ing that massive increases in value just because
timing and branding panellists from replying “Paris” or “London” to his
questions in order to force other views out of
the hotel market is starting to move seems even
less likely. More likely is the fact that the excess
is right – yes we can them. supply will lead to a blip in the curve and a slower
recovery of transaction value than we want to
make a deal” Situation no longer settled
Developments in the hotel market, technology
see.
Russel Kett, moderator at the introductory
So what can we say? Everything is for sale – at the
and society make it harder to value properties debate at the major international hotel confer-
right price. And we all want to buy, too - at the right
these days. The location of a hotel has long been ence, did at least do his bit. At the end of a dis-
price. Interest from buyers bears witness to the fact
considered a safe parameter. But city centres are cussion on capitalism and the global hotel prop-
that back to basics is the name of the game, with
expanding at a tremendous pace, and “what’s erty market, he summed up the input and views
secure cities such as London, Paris, Munich and
hot and what’s not” in cities changes quickly and of delegates with the words “Buy, buy, buy and
New York on the interest list.
has a massive impact on flows. Being linked to a bye-bye!”.
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
M A RK E T I NF O R MAT I O N F R OM PAN DOX 5

6. FOcuS ON ThE MARKET
Sharp decline
followed by
sharp upturn?
Volume growth back, but prices still has a long way to go
Last year sapped the life out of the 2009 was a difficult year for the hotel industry. The 6 per cent, while proce declined by more than 21
USA as a whole lost almost 17 per cent over the per cent. However, demand began to return
hotel industry. But what was per- entire year in terms of both occupancy and average towards the end of the year, and recovery has been
ceived as a steep decline may pos- price in equal measure. But towards the end of the apparent since the start of the year. Occupancy
year, a trend shift took place and the market turned rose by almost 12 per cent over the first quarter of
sibly be followed by a steep upturn.
fairly quickly. Demand increased as early as 2010. RevPAR was dragged down slightly by the
Volumes began to return in late January 2010, but because of additional supply price, but it still ended on an increase of more than
2009. Prices are generally still on there was no growth in occupancy. Demand has 7 per cent.
continued to rise over the entire first quarter, and
the wane, but the rate of decline is occupancy finished on an increase of 2 per cent. London beats 2008 peak
diminishing in most areas. An even However, the average price is continuing to fall, London did not experience such tough times last
finishing on –4 per cent. All in all, RevPAR fell by year and ended on a RevPAR reduction of 4 per
though the recovery came about
around 2 per cent in the first quarter. cent. As the recovery started a lot earlier here, the
quickly, record levels are not city was able to achieve a slight increase in occu-
expected for the year. The market is Recovery in demand pancy over the full year. The weak pound is attract-
This pattern is typical of what we are currently seeing ing leisure travellers, but numbers of business and
probably seeing fast recovery in major international cities – recovery in demand but conference guests are also up.
rather than fast growth. ongoing price losses. In the USA, the luxury seg- The first quarter of 2010 continued along the
ment is seeing the greatest growth, with around 10 same positive lines. Occupancy increased by
per cent on occupancy over the first quarter. But the almost 6 per cent, and price also rose to a corre-
price is trailing and has lost almost 7 per cent. sponding extent. London saw occupancy of 78 per
New York ended with a RevPAR loss of 26 per cent in total over the first three months of the year,
cent for 2009 as a whole. Occupancy fell by almost which can be compared with the 74 per cent seen
Occupancy Average price
Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10
New York 3% 0% 4% 8% 10% 16% New York –18% –17% –11% –8% –5% 1%
London 4% 9% 8% 6% 5% 5% London –4% 3% 3% 3% 5% 7%
Paris –1% 3% 2% 3% 7% 11% Paris –7% –2% –6% –5% 0% 3%
Berlin –5% 3% 3% 6% 1% 7% Berlin –15% –2% –3% 9% 6% 6%
Brussels 1% 0% 1% 6% 3% 4% Brussels –14% –11% –10% –8% –6% –5%
Copenhagen 5% –6% 29%* 2% 2% 4% Copenhagen 3% –11% 67%* –14% –14% –15%
Helsinki –7% –7% 3% –1% 21%** 19% Helsinki –11% –9% –10% –11% –8% –9%
Oslo –5% –2% 1% –8% –7% –10% Oslo –8% –1% 0% –4% –4% –4%
Stockholm –1% 0% 5% 0% 7% –2% Stockholm –5% –1% –3% –3% 2% –9%
* United Nations Climate Change Conference (COP15) * 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 In general, prices are falling. Only Berlin and London have seen price growth throughout the entire
occupancy growth rate is on the increase. first quarter.
6 M A RK E T I N F ORM ATI ON F R O M PA ND O X

7. London RevPAR, Quarter 1
120
2010
100
2009
80 2008
60
40
20
0
January February March Q1
2008 2009 2010
In London, RevPAR beat the peaks seen in 2008 in both
February and March.
Paris RevPAR, Quarter 1
200
2010
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.
2009
150
2008
in 2009. This is also higher than both 2007 and Mixed forecast for tourism
2008, both of which saw occupancy levels of 76 The underlying flows of tourists increased over the 100
per cent over the first quarter. At GBP 124, the latter part of 2009. And the World Tourism Organi-
average price is also at a record high; compare this sation (UNWTO) is forecasting an ongoing increase
with the GBP 122 seen at the 2008 peak. of between 3 and 4 per cent for the 2010 full year.
However, developments may change in Lon- 50
Asia is expected to see the highest growth, while
don. Both supply and price increases may threaten Europe and America are expected to see a slightly
ongoing growth in occupancy. The majority of hotel slower recovery. However, the World Travel Tour-
projects planned for Europe are located in the ism Council (WTTC) is rather less positive, not 0
January February March Q1
United Kingdom. London is the destination with the expecting to see any growth at all.
highest number of planned hotels and also the In the United Kingdom, the weak pound is 2008 2009 2010
highest number of hotels under construction. expected to encourage tourism in 2010. Condi-
Paris is still some way below its earlier peaks, but both
There is a risk that occupancy will fall unless tions are still tough, and volumes will not reach
February and March saw better performance than last year.
demand increases at the same rate as supply. The record levels. But on the other hand, visitors will
relatively early increase in average prices – in terms spend more on their travels. In Europe as a whole,
of the financial situation – may also scare off travel- growth of 2.4 per cent is forecasted for 2010, with
lers. Raising prices at the wrong time can push further growth of almost 4 per cent in 2011.
away potential demand.
Variable start to year in Nordic region
General price losses The recovery is expected to be a little slower in the
Quite the opposite – and perhaps a more correct northern parts of Europe. In Helsinki, RevPAR fell by Brussels RevPAR, Quarter 1
view for other major international cities – is true of no less than 17 per cent in 2009. 2010 has got off
the development of Brussels over the first quarter. to a better start, however, and the January to March 100
2010
The RevPAR level for the first quarter stood at 14 period is almost 2 per cent above the previous year.
per cent here over the peak year of 2008, but at Demand has started to increase, and occupancy is
80 2009
just 1 per cent in 2009. Occupancy has increased 12 per cent above the first quarter of 2009. How-
by 5 per cent to date this year, while the price has ever, the price is continuing to fall and diminished by
fallen by almost 6 per cent. Amsterdam, Copenha- more than 9 per cent over the period. 2008
60
gen, Frankfurt and Prague have also seen price Oslo lost 10 per cent in 2009. The situation is
losses over the first quarter of 2010. still trying, and both occupancy and average price
In Paris, RevPAR was up 6 per cent over the are continuing to decline over the first quarter of 40
period January to March this year. Occupancy 2010. Losses in both parameters are leading to a
increased by 7 per cent, while price declined by continuing RevPAR downturn in excess of 10 per
1 per cent. The city is a long way behind the levels cent for YTD March. 20
seen in 2008. RevPAR for Paris for the first quarter Like Oslo, Stockholm lost almost 10 per cent in
of 2010 is 20 per cent lower than the levels seen in 2009. But unlike its Norwegian neighbour, the
the peak year. All segments are showing growth in Swedish city has seen volumes start to recover, 0
January February March Q1
occupancy, but in fact most of the growth is being and for January to March 2010 occupancy in
seen among two-star hotels, while growth in the Stockholm is up by around 1 per cent. However, 2008 2009 2010
four-star segment is trailing in second place. the price is still in decline and RevPAR has fallen by Brussels is still at the same levels as last year.
more than 2 per cent over the quarter.
M A RK E T I NF O R MAT I O N F R OM PAN DOX 7

8. MARKET OvERvIEw FIRST quARTER 2010
Pandox market barometer
The market barometer shows where selected cities lie in the business cycle. business cycle, progress in the hotel market and how well developed and liq-
Assessment is based on analyses of each location. Allowance is made for uid the hotel property market is. Note that hotel business cycles are similar in
macroeconomic developments, developments within the hotel industry, the pattern but different in time.
SWEDEN
PEAK
DEclinE Umeå
Jönköping, Lund, Helsingborg, Gothenburg,
Malmö, Uppsala, Sundsvall, Luleå
Growth
_
DEcrEAsinG DEclinE
Stockholm, Stockholm 5, Karlstad
lEvEllinG out
_
In Umeå, demand is still ticking. The price is at In Malmö, demand has been on the increase for price. The first two months of the year follow an
more or less the same level as last year, and for the eight months now if we look at the rolling twelve earlier trend towards a 3–5 per cent decline in
rolling twelve months RevPAR stands at +5 per months. However, this is having no effect on occu- occupancy and around 1 per cent decline in price,
cent. 2010 has continued along the same lines. pancy due to additions to the market. Both compe- but March was even worse. The Stockholm market
Demand has been falling in Jönköping for some tition and the economic situation are putting pricing is losing around 7 per cent on price on a rolling
time now, the price has caught up and stands at a under pressure. Helsingborg is still losing both twelve-month basis, but demand has started to
negative for the rolling twelve months. Jönköping occupancy and price. RevPAR stands at around –4 return. The rate of decline in occupancy is tailing
stands at around 6 per cent in 2009 levels for the per cent on a rolling twelve-month basis. off, and January to March combined show an
first two months of the year. Gothenburg is losing on both demand and increase in occupancy by almost 1 per cent.
cuRRENT TRENDS
Greater need for guiding lights
Hotel classification has been on the cards for a However, views are divided on the need for a from Internet-based sales outlets, the relationship
long time. There is no one global standard – nationwide classification system in Norway. Oppo- can be eliminated. So is price no longer an
there are several. Every country has had its nents are of the view that the Norwegians know acknowledgement of quality? Well, if not then
own, and sometimes there has not even been their market so well that they do not need guidance maybe a classification system is even more
an official standard. Work on improving coordi- when it comes to choosing hotels. 70 per cent of important.
nation has finally paid off, both nationally and the Norwegian market is made up of domestic Other countries in Europe have gone even fur-
internationally. demand, and 40 per cent of hotel guests are on ther and are now coordinating their hotel classifica-
return visits. Therefore, they do not need help to tions. At an initial stage, Hotelstars Union will
Norway will see the introduction of a national make their choices, according to some. include 17 000 hotels in Germany, Austria, Switzer-
quality assurance system over the next year. land, the Netherlands, Hungary, the Czech Repub-
According to Trond Giske, Minister of Trade and Price no longer equals quality lic and Sweden. Classification began on 1 January
Industry, this system is groundbreaking on an inter- A grading system in the hotel industry is not an 2010. The new system is made up of 270 criteria
national level. The new grading places emphasis entirely easy thing to implement. The basic notion and includes additional points for “softer” values
on both environment and service, but also on the is that there is a correlation between price and such as quality assurance and guest surveys, as
views of guests. Hotels can even lose stars if their quality. When the majority of all hotels use revenue well as for room areas, conference facilities and
guests are unhappy with them. management and prices are also under pressure wellness facilities.
8 M A RK E T I N F ORM ATI ON F R O M PA ND O X

9. DEFINING THE VARIOUS FACETS OF THE HOTEL BUSINESS CyCLE:
GROWTH Occupancy is rising relatively rapidly and prices are starting to rise. DECREASING DECLINE Decreasing volumes becoming more stable – continued
High potential and low risk. pressure on prices. Some potential and high risk.
PEAK Occupancy rising/levelling off and prices increasing rapidly. LEVELLING OUT Occupancy rising with unchanged prices.
Good potential and low risk gradually rising to high risk. High potential and decreasing risk.
DECLINE Occupancy and prices decreasing due to lower demand or overcapacity.
Low potential and high risk.
INTERNATIONAL
PEAK
DEclinE –
Oslo
Growth
London, Berlin, Paris
DEcrEAsinG DEclinE
Helsinki, Copenhagen, Prague, Vienna
lEvEllinG out
Amsterdam, Brussels
Helsinki has seen a decline in demand for a long In Copenhagen, the price is continuing to fall the city stands at 11 per cent over the first quarter
time now, but occupancy now stands at +12, YTD beyond 10 per cent. However, the negative of 2009.
March. demand trend has reversed. Occupancy has In London, the recovery started early and both
The price is running at a decline rate of around seen positive growth over January to March 2010. average prices and occupancy have now been on
9 per cent, both on a rolling twelve-month basis and In Berlin, the 2009 full year ended on a RevPAR the increase since the last quarter of 2009. The first
for the first three months of the year. Oslo is also loss of no less than 19 per cent. However, the rate quarter ended with RevPAR up 11 per cent, an
continuing to decline, but with no positive signals. of decline began to diminish over the last quarter increase driven by growth in occupancy and price
RevPAR stands at –13 per cent for January–March of 2009, and both price and occupancy were up in equal measure.
2010. over the first quarter of 2010. For YTD March,
INFORMATION FROM PANDOX
More about the hotel market
tions 2009
ox business opera
Report on Pand
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 pandox@pandox.com –
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 Day
pirit
The Pandox S
The 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. one of t
he leadi
ng hotel Pr
oPert y c o m Pa n
i es
M A RK E T I NF O R MAT I O N F R OM PAN DOX 9

10. The right design for 2010
TRENDS: INTERIOR DESIgN IN FAShION
Strong brands doing everything in easily run searches on all the hotels in the world to Cheval Blanc in the French Alps since 2006 and is
find something to suit. “Fashion now drives hotel now thinking of growing this brand. Egypt and
their power to leave their mark on concepts and design, and the memorable hotels of Oman are at the top of the list. LVMH does not
as many industries as possible isn’t the 2010 decade will be made up of sexy sophisti- intend to own any hotels, but instead plans to run
cation, daring interiors and mood-evoking colours,” these operations through management
uncommon. And now the fashion
says Jeffery Ornstein, CEO for the company. companies.
industry is wanting to cosy up with
the hotel industry. The latest one is Fashion oracle more correct than interior Colour mix at the top
designer Hotelchatter.com goes so far as to select a single
a world-famous designer who’ll be Ornstein wants to ban the expression “hotel design” colour for 2010. They’ve caught on to the trend
designing a number of rooms at and replace it with “hotel fashion”. He thinks design set by architects Stonehill & Taylor back in 2008
focuses too much on the building, while the word when they created the concept for the Best West-
Claridge’s in London. The question
fashion places emphasis on guests instead. It ern President Hotel on Times Square in New
is whether she’ll stick with the seems his views are shared by several people. Mis- York. The design was inspired by the Presidential
politically correct but hot trend soni, Armani and Moschino are examples of leading Elections in 2008 and was built up around “cen-
fashion houses with their own hotels. World-famous trist purple” – a mix of Republican red and Demo-
when it comes to choosing colours. designer Diane von Furstenberg is the latest person crat blue. Hotellchatter.com points out a number
in the fashion industry to make inroads into the hotel of hotels in New York that have followed this trend
International architectural and design company industry. She’ll be designing a number of rooms at and has also found a number of such hotels
J/Brice Design International has a lot of hotels on its Claridge’s in London. The rooms will have the origi- beyond the borders of the USA.
conscience. They say that 2010 sees the start of nal hotel furniture, but intermingled with her pat- Strong red shades, clear yellows and mossy
“the decade of the guest” and state that the “loca- terns and colours. greens are other colours to follow. By way of a
tion, location, location” mantra has been replaced Luxury goods company LVMH (Louis Vuitton contrast, grey also appears. And do something
with “compare, compare, compare”. This is based Moët Hennessy) also has plans to start running unexpected, create a Wow factor, says Jeffery
on today’s transparent society, where people can hotels. The company has been running the five-star Ornstein.
10 M A RK E T I N F ORM ATI ON F R O M PA ND O X

11. Did you know...
A little bit of every-
thing from various
corners of the hotel
world
…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
quality hotel Park Södertälje city pile was the Grosvenor Hotel in Blackpool, and
the Villaggio Club Porto Ainu in Budoni, Italy
came second.
Opus Montreal
…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.
Grand Hotel Florida in Barcelona
M A RK E T I NF O R MAT I O N F R OM PAN DOX 11

12. Pandox news
NEwS FROM ThE wORlD OF PANDOX
InterContinental Montreal New Brand Manager at Hotel BLOOM!
No, this isn’t the little sister of General Manager
Christel Cabanier, alias Miss BLOOM! And no,
– HOTEL OF THE YEAR 2010! Christel hasn’t hired a lookalike either. This is
Margot Muys, the new Brand Manager at Hotel
BLOOM! Margot will be managing and coordinating
Quebec Tourism Awards has awarded InterContinental Hotel Montreal “Hotel Of The marketing activities at Hotel BLOOM! together with
Year 2010” in the four and five-star hotel category. This is a strong acknowledgement “6+1”, the new advertising and PR agency for the
after some very hard work on restructuring and repositioning! hotel.
The newly renovated InterContinental in Montreal. This hotel is also gracing the cover of this Upgrade issue. Margot Muys, Brand Manager at Hotel BLOOM!
Sous chef at Hotel Berlin, Berlin – second in
World Championships
Susanne 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
Susanne DeOcampo-herrmann
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
Gala dinner at Holiday Inn Brussels Airport the entire team to spend a luxury weekend at the hotel,”
In March, Holiday Inn Brussels Airport hosted IHG’s says General Manager Cornelia Kausch. One thing is
Business Performance Meeting. Kirk Kinsell, certain: the three biggest hotels in the capital will be
President of the EMEA Intercontinental Hotels playing host to some very critical diners!
Group, and many others from the IHG organisation
were all present.
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.
More stars for Quality Hotel Park
Södertälje City
This hotel has been awarded another star by SHR
and can now be justifiably proud of being the only Hollywood Wife
Maria Montazami
four-star hotel in Södertälje and its surroundings.
12 M A RK E T I N F ORM ATI ON F R O M PA ND O X