MKG Group’s preliminary look at the European Hotel Activity Review 2016 reveals which hotel groups are the top ten operators on the continent as of January 1st, 2016.
According to the report, the end of 2015 was marked by a few major M&A announcements. In their quest for better profitability, shareholders encourage mergers and acquisitions that generate economies of scale or complete global presence. At the top one rule prevails: “Big is beautiful”, or big is powerful… It is thus that Starwood Hotels group will soon join the ranks of Marriott International and Accorhotels will strengthen its position in the luxury segment with the absorption of Fairmont-Raffles. The ranking of European hotel groups as of January 1, 2016 anticipates and takes into account these announcements that are yet to be officially approved at general meetings and by the respective competition authorities.
With its new Chinese shareholder, Louvre Hotels group also began to revive growth in Europe, through acquisitions in Germany and Poland, which will be included in next year’s ranking, once the group’s brands are carried by their new properties.
External growth trends risk continuing if the Carlson group pursues its intention to sell its hospitality division or if the British group Travelodge changes hands again. This is what happened to the French group B&B Hotels, which shifted from Carlyle to PAI Partners, without losing its?independence in terms of management. Among German groups, the tourism giant TUI is also revising its position in the hospitality sector by selling its subsidiaries.
This means nothing is set and in the years to come there will be a transformation of Europe’s hospitality landscape. The will of Chinese groups to become more active outside their borders is heightening this sensation further to taking control over NH Hotel Group, Club Med and Louvre Hotels. “Who’s next?” we might rightly ask… In fact, initially, three Chinese groups seemed to be interested in acquiring B&B Hotels and, more recently, we?learned to our surprise that a subsidiary of Jin Jiang International now holds more than 5% of the shares of the Accorhotels group. To what end? The age of major transactions continues.
Continuing growth of tourist influx
Despite a still uncertain market, the?bet on economic recovery and on the?continuing growth of tourist influx results in a new increase in the global hotel chains supply. While 1.6% growth may appear modest, it represents a net addition of almost 27,000 rooms, limited to 28 countries of the European Union. Thus, it does not include some countries with a strong growth rate such as Russia and its former satellites and Turkey.
Despite the weight of Economy hotels in three major countries in Europe (France, United Kingdom and Germany) the upscale and midscale categories are strongly dominant in the European Union of 28 countries. Together these two segments represent more than 75%?of the total supply of hotel chains. It signifies that a great number of countries still have not reached the economic level to develop a strong domestic market favourable to Economy and Budget hotels. Except in Poland and Spain, the presence of economy hotel chains is very weak in many countries. This situation will not evolve rapidly considering the growth rate of the uspscale segment, already very dominant that gained another 2% in 2015. One can explain it through the development of private labels and “luxury collections” that absorb former independent hotels, searching for an international distribution through the strength of hotel groups.
Within the European Union, local actors are masters at home, and thus American brands only represent one fifth of the total supply, while French brands account for one quarter, British, Spanish and German brands. One can better understand why American groups are willing to consolidate and establish strong local bases to roll out their brands in neighbouring countries, sometimes using new propositions with a local flavor such as Moxy or AC?Hotels.
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