Hotel presentation Michael Widmann for PKF hotelexperts

1. Hotel & Event Profit
Congress of Hotel Business
5-6 October 2006, Hyatt Regency Hotel, Warsaw
Future of the Hotel Industry
Michael Widmann, PKF hotelexperts, Wien
www.pkfhotels.com

2. PKF hotelexperts Vienna
• part of PKF (with more than 500 locations worldwide,
including 20 hotel consulting offices)
• specialised in: feasibility studies, valuation (single assets
and portfolios), operator selection, negotiation of
management/lease contracts, project development
consulting, architectural consulting
• focus of PKF hotelexperts Vienna on hotels/hotel projects
in Central/Eastern Europe
www.pkfhotels.com

3. Global growth markets
• China (Shanghai...)
• Russia (Moscow...)
• Gulf (Dubai...)
• India
• Eastern Europe
• regions with gas/oil/natural resources (Kazakhstan,
Azerbaijan, Sudan etc.)
• coasts (beaches/warm weather/year-round potential)
• gambling areas (Las Vegas, New Orleans, Macau)
• cruises
www.pkfhotels.com

4. Challenges regarding hotel real estate
• lack of possibilities for alternative use
• in many countries: lower rent in comparison to office
buildings - but higher investment per sqm
• hotels' return on investment depends on category (five
star hotels generally have lowest ROI)
• long start-up phase of hotels
• shorter (re) investment cycles
• growing expectations of hotel guests (especially
regarding resorts)
www.pkfhotels.com

5. General hospitality industry trends
• separation of hotel real estate and management
• hotel groups listed on stock exchanges
• sale of assets by hotel groups
• mergers & acquisitions
• international investors, private equity funds etc. on
buying spree (especially from UK, USA, Arab
countries)
• professionalised operations (yield management,
controlling, benchmarking etc.)
www.pkfhotels.com

6. Demand trends
• continuing trend towards short vacations & spontaneous
decisions
• event-oriented leisure planning
• cheap, cheap, cheap or luxurious, luxurious, luxurious
• city hotels: efficient & functional
• resort hotels: romantic & sensual
www.pkfhotels.com

7. Supply trends
• all-inclusive offers
• growing variety of accomodation options (serviced
apartments, budget hotels, design hotels etc.)
• price, price, price or service, service, service
• usual classification becomes obsolete
• differing products for short and long stays
• specialised wellness offers
• focused investments: USPs instead of covering all
bases
www.pkfhotels.com

8. Hotel types
senior c. hotel
sport hotel
airport hotel
economy hotel spa hotel
budget hotel
luxury hotel boarding house
grand hotel
resort hotel
businesshotel
womens' hotel art hotel
hospital hotel
country hotel pavillon hotel
all-suites hotel atrium hotel
design hotel
childrens' hotel baby hotel
vacation villas
motel
family hotel apartment hotel railway hotel
seminar hotel .......... hotel
club hotel
www.pkfhotels.com

9. Changes regarding contracts
• major international hotel groups do not want to sign
lease contracts
• if lease contracts are signed, they usually carry
significant restrictions (cap clause, term limitation, ...)
and unfavourable conditions for owner
• growing trend toward management contracts
• number of franchise contracts growing (but high costs;
also: significant risk if concept without proven success)
• hot trend: shared ownership concepts (time sharing,
fractional owbership) and sale & lease-back options
www.pkfhotels.com

10. Success factors
• competitive environment (other hotels or markets)
• general environment (demographical, economical,
social, cultural and political factors)
• competence, qualification and motivation of
management and employees
• marketing & technological know-how
• image of hotel and its brand
• access to distribution channels
• long-term (cyclical and other) developments
• good or bad luck
www.pkfhotels.com

11. Success factor: intelligent overall planning
kitchen
FOOD & BEVERAGE
restau- bar
rants
MEETINGS & wellness
sports
EVENTS
pool
foyer solarium
sauna
SPA
LOBBY
reception fitness
recep-
tion SHOPS
beauty
PARKING
ROOMS
www.pkfhotels.com

12. Success factor: intelligent room's layout
• good ideas and bad ideas
www.pkfhotels.com

13. Market potentials
• hotel investments with an eye on operating costs
(staffing, energy, water, maintenance)
• avoidance of unnecessary facilities and services
• strong focus on main target groups
• innovative lifestyle products in all segments
• specialised/differentiated wellness offer
• hotels with USP/quot;photo opportunityquot;
www.pkfhotels.com

14. Growth of global chains
• the big get bigger...
country hotels rooms
1 InterContinental UK 3.520 536.318
2 Wyndham USA 6.403 518.435
3 Marriott USA 2.656 479.882
4 Accor France 3.894 453.403
5 Choice USA 4.810 388.618
6 Hilton USA 2.161 349.965
7 Best Western USA 4.110 310.245
8 Starwood USA 748 229.247
9 Carlson USA 881 147.624
10 Hyatt USA 412 99.364
www.pkfhotels.com

15. Strategies of growth for hotel groups
• mergers & acquisitions
• franchising (except luxury segment)
• management contracts (instead of lease contracts &
ownership)
• liquidity through divestments (sale & manage-back)
• shared ownership projects
• market & product segmentation strategies
• global branding
www.pkfhotels.com

16. Phases of hotel development in CEE
• #1: 4* hotels in Warsaw, Budapest, Prague
• #2: 4* hotels in Bucharest, Sofia, Bratislava, Zagreb,
Moscow, St. Petersburg etc.
• #3: 3/4* hotels in main Central European cities
• #4: 5* hotels in Budapest, Prague, Moscow & St. P.
• #5: 3/4* in major cities in Russia/Ukraine
• #6: 4* hotels in Tblissi, Baku, Almaty, Astana, ...
• #7: budget hotels in Poland, followed by other
countries
• #8: lifestyle hotels in CEE
www.pkfhotels.com

17. Hottest CEE markets
from the perspective of a hotel group development
manager:
• Moscow
• Kiev
• St. Petersburg
• secondary cities in Russia (and partially Ukraine)
• coast of Croatia & Montenegro
• quot;Stansquot; (especially Kazakhstan) & Caucasus region
• secondary cities in Poland, Czech Republic, Hungary,
Bulgaria, Romania
www.pkfhotels.com

18. Development opportunities in Poland
• one 5*+ hotel in Warsaw
• selected mid-segment (2/3*) hotels in Warsaw
• budget hotels in all Polish cities
• mid-segment hotels in secondary Polish cities
• 4* resort hotels in selected tourism destinations
www.pkfhotels.com

19. How to earn good money with hotels in Poland?
• stay away from 4/5* hotel projects in Warsaw for the
next five years
• invest in budget hotels (multi property development
necessary) in Warsaw and in all secondary cities
• invest in no-frills mid-segment hotels in major
secondary cities
• lifestyle and design-oriented products in all segments
• develop shared ownership/sale & lease-back projects
in key tourism destinations (Sopot, Krakow, ...)
• select hotel groups and brands which fulfil future
expectations
• keep an eye on investment expenditures & planning
www.pkfhotels.com

20. Key issues to influence success
• select right partners
• plan intelligently
• control costs
• make product sexy
www.pkfhotels.com

21. Contact info
Michael Widmann
PKF hotelexperts GmbH
Hegelgasse 8
1010 Vienna
Austria
telephone +43 1 5120707
facsimile +43 1 5120607
e-mail michael.widmann@pkfhotels.com
internet www.pkfhotels.com
www.pkfhotels.com