1 Hotel cover.indd - Nicola Cottam

industry overview
Industry overview
by Katherine Doggrell, Editor, Hotel Report
Introduction: Xyxyxyxyxt
The hotel sector was able to report a return to the highs of 2000 by the close of 2006, with more money than ever
chasing deals, more consumers favouring hotels over sofas thanks to the budget market, and more varied and
imaginative offerings thanks to the hotels themselves.
Global hotel transactions were set to reach the $70bn (£35.6bn) mark by the end of the year, a rise of 38%, making
2006 the strongest year on record, according to Jones Lang LaSalle Hotels (JLLH).
According to Arthur de Haast, global chief executive of JLLH: “Buyers outnumber sellers by three to one globally
and stock is scarcer still in Europe where buyers exceed sellers by five to one.”
Sector breakdown: Luxury
The luxury sector made headlines in 2006 as the value of transactions for single trophy assets rose to unprecedented
levels. Leading the upward momentum was the Eu200m (£133m) sale of the Four Seasons in Milan to Italian real
estate company Statuto Group by Quinlan Private, which priced the rooms at Eu1.7m (£1.1m) each.
This has led to industry concern that the amount of money being drawn into the sector (driven in part by investments
from investors backed by oil money seeking trophy assets as long-term investments) is artificially pushing
up the price of deals, to the extent where they are unsustainable.
Another budding development was the arrival of high-end fashion houses, with Italian leather designers Ferragamo
opening five in Florence alone. Joining Ferragamo were Bulgari, Camper and Moschino. The UK is expected to
see its first such hotel this year, branded under the Missoni label.
There are, however, concerns that fashion is fickle and styles quickly go out of vogue, with a hotel that is hip one
minute becoming passé the next.
Sector breakdown: Mid-range
At last year’s International Hotel Conference in Rome, talk – in addition to the magical “it’s all good until 2009”
prediction – was of mid-market growth.
March 2007 Hotel Report Guide to UK Hotels 2007 l © William Reed Publishing 6