A year in perspective - Hospitality Net• on-going Middle East crisis • terrorism in Europe 4...
Transcript of A year in perspective - Hospitality Net• on-going Middle East crisis • terrorism in Europe 4...
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A year in perspective- a review of the European hotel market and outlook
Nick van Marken Chris Rouse Mark Finnie
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Nick van Marken
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Where were we pre-9/11?
Economic environment
• volatility in global markets (notably TMT sector)
• slowdown in the US; stagnation in Japan
• uncertainty over growth in Germany
• debt default in Argentina
• foot and mouth outbreak in UK coming under control
Political
• on-going Middle East crisis
• terrorism in Europe
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Global industry outlook pre-9/11
US - slowdown evident
Europe - southern - strong- northern - variable- overall revPAR growth positive
Asia-Pacific - mixed - general recovery in progress
Middle East - mixed - Intifada impact
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Europe - revPAR % change to August 2001
14
29
1311
8 8
3
(3)
11 11
3
13
8
1
(6)
(2)
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
Mosco
w
Milan
Barcelo
na
Madrid
Geneva
Lisbo
n
Athens
Rome
Paris
Frankfu
rt
Brusse
ls
Prague
Berlin
Dublin
Lond
onAmste
rdam
Recovery Growth potential Peak Supply risk Slowdown
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Post - 9/11 - “all bets were off”
Immediate impact• global crisis of confidence
• airlines slash routes and staffing
• significant decline in US outbound traffic
Market impact• significant decline in gateway city revPAR
• upscale sector most affected
• provincial markets relatively insulated
• balance sheet pressure; capex cuts
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revPAR % change by market tier - Sept-Dec 2001
-35
-30
-25
-20
-15
-10
-5
0Amsterdam Frankfurt London Paris Madrid Rome
Top Mid Lower
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Where did we end 2001 - revPAR % change
Number of citiesAug YTD 2001
<0%
0-10%
10%+
7
13
9
10%+
0-10%
<0%
1710
2
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Europe & US - tracking each other? - monthly revPAR % change - 01/02
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
Janu
ary
Februa
ry
March
April
May
June July
Augus
tSep
tembe
r
Octobe
rNov
embe
rDec
embe
r
Janu
ary
Europe (€) US$
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revPAR performance - Europe (2000-02)
-25
-20
-15
-10
-5
0
5
10
15
20
25
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
(% c
hang
e)
2001 20022000
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revPAR performance - London (1999-02)
-50
-40
-30
-20
-10
0
10
20
30
40
Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
(% c
hang
e)
2001 20022000
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revPAR performance - Paris (1999-02)
-40
-30
-20
-10
0
10
20
30
Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
(% c
hang
e)
2001 20022000
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revPAR performance - Berlin (1999-02)
-30
-20
-10
0
10
20
30
40
50
Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
(% c
hang
e)
2001 20022000
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revPAR performance - Rome (1999-02)
-30
-20
-10
0
10
20
30
40
Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan(% c
hang
e)
2001 20022000
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revPAR performance - Madrid (1999-02)
-20
-15
-10
-5
0
5
10
15
20
25
Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan(% c
hang
e)
2001 20022000
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revPAR performance - Amsterdam (1999-02)
-20
-10
0
10
20
30
40
50
Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
(% c
hang
e)
2001 20022000
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So, what of the future?
Economic/political• Improving outlook• Uncertainty over US intentions in Middle East• Potential volatility - notably oil price
Market• Improved travel outlook - upturn in airline passengers• Gateway revPAR decline is decelerating rapidly• Transaction activity has and appears likely to continue• Values should continue to trend upwards
We will, however, continue to live with uncertainty
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Chris Rouse
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0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
1999 2000 2001 2002 YTD
Euro
M
Euro Zone Other Non-Euro ZoneUKSource: Insignia Hotels
Transaction volumeEuro versus non-Euro zone
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20
-
0
200
400
600
800
1,000
1,200
1,400
France Germany Italy Sweden Netherlands Spain
199920002001
Source: Insignia Hotels
EUR
O M
Transaction volumeMajor Continental European markets
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0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
France Germany Italy Sweden Netherlands Spain UK
199920002001EU
RO
M
Source: Insignia Hotels
Transaction volumeMajor European markets
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Major corporate transactions
Group Buyer Price(€m)
Principal Hotels Nomura PFG 395Heritage Hotels Macdonald Hotels
Bank of Scotland 374Posthouse Hotels 6 Continents 1,293Swissôtel Holdings Raffles Holdings 268Scandic Hotels Hilton Group 971Le Meridien Group Nomura PFG 3,148Astron Hotels (2002) NH Hotels 161Total 6,610
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Compass’ disposal of Forte Hotels
Entity Buyer Price(€m)
Cavendish Hotel De Vere Hotels 97Cumberland Nomura PFG 240Regent and Strand Palace* London & Regional 170Heritage Hotels Macdonald Hotels 347Posthouse Hotels 6 Continents 1,293Le Meridien Group Nomura PFG 3,148Return of Forte Name Sir Rocco Forte 0Total 5,295
*unlikely to compete
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European transactions by country
Europe 1999 (%) Euros 6.9 bn
64% 8%
6% 9% 3%1%4%
5%
SpainFranceSwedenItalyIrelandGermanyOtherUK
Europe 2000 (%) Euros 5.8 bn
26%
31% 7%
4%
22%
3%7%
Europe 2001 (%) Euros 11.3 bn2%
23%
1%2% 9%
63%
Source: Insignia Hotels
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Impact of foot and mouthon the regional UK market
0
10
20
30
40
50
Jan Feb Mar Apr May Jun Jul Aug Sep0
100
200
300
400
500
600
700
800
900
1,000
RevPAR, £ FMD Cases
FMD
Cas
es
Rev
PAR
, £
Source: Andersen, DEFRA
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Transaction volume per month 2001
0
200
400
600
800
1,000
1,200
1,400
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Tran
sact
ion
Volu
me
(bar
s)M
Eur
os
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
Roo
ms
Sold
(lin
e)
Source: Insignia Hotels
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Sources of investment capital (%)
AsiaMiddle EastUSEurope
2000
0.8% 0.4% 2.3%
96.5%
2001
95.7%
2.4% 0.9% 1.0%
1999
1.9% 8.2%0.4%
89.5%
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Sources of investment capital (€m)
0
500
6,000
7,000
8,000
9,000
10,000
11,000
12,000
1999 2000 2001
Asia
Middle East
US
Europe
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European yields
Hotel Country Yield
(%)
Posthouse Hotels UK 12.7
Villa Magna Spain 10.6
Le Meridien Worldwide 10.0
2 Hotels Sweden 9.0
12 Meridien UK 7.6
11 Hilton Hotels UK 6.9
Heathrow Park UK 5.7
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Mark Finnie
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2001 - A pretty uneventful year!
Jan 1 Dec 31Accor €45 €41Hilton Group 209p 211pNH Hoteles €13 €11Six Continents 729p 680pWhitbread 550p 549p
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2001 - Key events for the market
• Trading - pre- and post
• M&A
• New sources of funding
• Equity market review
• Outlook
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M & A
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New sources of funding
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Hotels sector vs property sector
Source: DATASTREAM
1997 1998 1999 2000 2001 200255
60
65
70
75
80
85
90
95
100
105
UK HOTEL SECTOR
UK PROPERTY SECTOR
Note: Share price performance relative to FT All-Share
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Equity markets - winners and losers
NB: Relative to Eurostoxx
(3%)
+6%
+13%+16%
+23%+26%
Hilton Group Whitbread SixContinents
Accor NH Hoteles Sol Melia
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Multiple expansion
Note: 2001 EBITDA multiple - European hotel sector
8.4x
7.8x
7.6x
January 2001 June 2001 December 2001
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Constrained supply growth
• The most reassuring aspect of all? Source: Jones Lang LaSalle
0
5
10
15
20
25
London
Paris
Stockholm
Berlin
Frankfurt
Mad
rid*
Barcel
ona
Brusse
ls*Amste
rdam
Pragu
e*Euro
pe aver
age
% g
row
th
1990-92 1998-00
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Outlook - M &A
Willing buyers Willing sellers
?
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A final thought . . .Who is being ‘long-term’ now?
Capex budget Share price
(%)
Hilton Cut +22
Accor Cut +30Sol Melia Deferred +9Millennium & Copthorne Deferred +24NH Hoteles Cut +11Whitbread Deferred +35
Note: Share price movement since September 20