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European Hotel Sector Review of 2007. Russell Kett Managing Director HVS – London Amsterdam – 16 January 2008. Key Trends for European Hotels. Occupancy and room rate Hotel valuation Transactions. Europe – Still the RevPAR King. Seasonally Adjusted RevPAR. $115. $103. $99. €87. $64.

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European hotel sector review of 2007

European Hotel Sector Review of 2007

Russell Kett

Managing Director

HVS – London

Amsterdam – 16 January 2008


Key trends for european hotels
Key Trends for European Hotels

Occupancy and room rate

Hotel valuation

Transactions


Europe still the revpar king
Europe – Still the RevPAR King

Seasonally Adjusted RevPAR

$115

$103

$99

€87

$64

Sources: HotelBenchmark™ by Deloitte; Smith Travel Research





Key trends for european hotels1
Key Trends for European Hotels

Occupancy and room rate

Transactions

Hotel valuation









Key trends for european hotels2
Key Trends for European Hotels

Occupancy and room rate

Transactions

Hotel valuation




Outlook and expectations
Outlook and Expectations

Most locations – RevPAR growth, now mainly rate driven, profits up, values up…

Strong buyer demand prevails – yields unlikely to fall further – now is a great time to sell…

Pre-”crunch” – sale prices might have risen because of increased projected earnings…

Expectation of current buyers is to sell in 3-5 years’ time – who will those buyers be…?

Issues – debt provision, human capital, sustainability – but…

Effect of current market turmoil?

Have we reached the end of the cycle?


Credit crunch today s update
“Credit Crunch” – Today’s Update…

US investment market, CMBS – stagnant, nervous

Middle East – no effect yet

Deals in Europe – many stalling, few completed

Larger ones – longer to come to fruition

Quality assets & operators – interest prevails, little or no impact so far

Secondary assets / larger portfolios – tougher

Banks – reducing LTVs 5%–10% points

Interest rates up 50–90 bp’s

Yields moving out by 0.25%–1%

Short term issue – 3-6 months…?


Thank you
Thank you!

Russell Kett

Managing Director

HVS International7-10 Chandos StreetCavendish Square

London W1G 9DQTel: 020 7878 7700Fax: 020 7878 [email protected]


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