Pandox Upgrade - Nr 2 2013 (Eng)


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Pandox Upgrade - Nr 2 2013 (Eng)

  1. 1. Up Grade 2 # 2013 M a r k e t I N F O R M AT I O N F R O M PA N D O X – O N E O F T H E L EA D I N G H O TE L P R O P ERT Y C O M PA N I E S I N E U R O P E The world returns to growth positive outlook on many hotel markets S po t ligh t P. 6 Future trends for the hotel industry P. 8 Hostels – a smoking hot market 10 p. Handball a path to prosperity in Kenya
  2. 2. JUST A WORD US leads the way in the hotel market The European hotel market is in an early recovery phase. Despite some contradictory signals, there is significant support for this view. The macro economic situation has stabilised, most economists talk of lower global risks. Indications from the banking sector point to a renewed increase in credits given, which, in turn, is an important catalyst for increased activity levels in general, as well as an increase in travel specifically. We can already see this within the hotel industry – demand in Europe has increased by 2.2 per cent this year up until September and it is particularly noticeable in the transient volumes. The trend is positive as we can see that both international and domestic travel is increasing – making up two large sectors that drive growth simultaneously. We can also see an increased demand in the meeting and conference segment, particularly in cities with a high proportion of international visitors. In addition, we can see that the stable demand within individual tourism and short breaks remains intact. If you look at the US, which is normally 2–3 quarters ahead of Europe in the demand cycle, we can see that good growth is generated. RevPAR has improved by 5.6 per cent during this year, with price as a component accounting for half of the growth. The short term trend is encouraging with firmer prices improving the bottom line. When looking at cities in the US, Chicago (+5.9 per cent), Los Angeles (+6.9 per cent) and Miami (+11.0 per cent) are worth a s ­ pecial mention. New York has seen strong growth over the last few years and is currently clocking an impressive 7.1 per cent increase in RevPAR on a rolling 12-month average. The high level of activity in the US is good news for Europe. We can see ripple effects forming strong patterns of growth in large international markets such as Paris, Berlin and Amsterdam. London’s revenue development is worth a special mention – despite the fact that new capacity makes up a large slice of the market, partly due to the demand generated by the 2012 Olympics, the city’s RevPAR is stable compared to 2012. If you look at the Scandinavian hotel market from the same perspective, we can see that revenues will gradually improve and that the factors for a solid end of the year are in place. With this in mind, we can look at 2013 as a rollercoaster ride; a weak start formed a sharp initial drop in revenues while the end should prove to be smooth. The greatest improvement can be seen in Copenhagen which has experienced growth of 5.4 per cent in RevPAR, albeit from low levels. Helsinki is in a worrying negative trend, partly due to a weak economy and partly due to comparisons with a fairly strong 2012. In Stockholm, we can see a slight decrease in revenues with the conference segment impacting negatively on weekday occupancy rates while the demand at weekends has remained ­ table. s With the current trend as the starting point, we can expect to see a stronger start, in general, in 2014 compared to this year. Stockholm, in particular, has a stronger conference and congress year to look forward to, with a scope for increased average price due to a shift in segments. The challenge for the Scandinavian and European hotels next year is to successfully increase the average price charged. Despite a decent demand situation over the last five years, room prices have barely moved since 2007. Pandox UpGrade Market information from Pandox – published approximately three times a year. Editors: Anders Nissen, Marika Hilldoff, Ingrid Löwy Address: Pandox AB (publ) P.O. Box 15 SE-101 20 Stockholm, Sweden Tel.: +46 (0) 8 506 205 50 Fax: +46 (0) 8 506 205 70 E-mail: Visiting address: Vasagatan 11, 9th floor, Stockholm 2 This is a worrying development as a higher average room price is a vital component for a much needed improvement in the hotel industry’s profitability. Building less new hotels would be one way to increased profitability. New capacity can sometimes illuminate a city, but an increased supply and fiercer competition can also result in profitability issues. When new hotels are built, the winners are often the municipality, through increased tax revenues and higher employment, as well as the building companies that win the contract and consultants that can profit on their advice. I was a panel member during a debate at HotE in London, one of the larger conferences in the European hotel industry and one that primarily caters to the financial markets. The debate concerned which contract form, lease or m ­ anagement agreements, resulted in the highest value growth for the hotel property. The answer was unanimous: the lease structure is the more sophisticated format. The reason that emerged was that it creates a balance between owner and operator through a share in revenues as well as investments, while a management agreement has the opposite effect with the owner taking 100 per cent of the risk while the operator benefits on the upside – that is not how you build a good ­ artnership. p This is not exactly news to me, having been involved in the hotel business for some time. What did surprise me at HotE though, was that a large number of the audience had little experience in how a lease agreement works. It was particularly apparent that a number of advisors, often London-based, couldn’t explain the benefits of a lease agreement and instead recommend investors, who often run a passive investment model, to agree management deals with cunning international hotel operators, resulting in an unequal share of the risk. In my world, this is poor advice indeed and this is definitely a subject to revisit. Writing this, I still don’t know if Sweden has managed to qualify for the World Cup in Brazil. What if we miss out on another large competition – it would feel very empty come June 2014! An exciting championship that we are sure to be able to look forward to, is the European Handball Championships in Denmark. Sweden’s group is scheduled to play in Copenhagen and the first game is against Montenegro on the 13th of January at 20.00. The other teams in the group are Croatia and Belarus. In case of a play-off, we will probably face France, Poland and Hungary. Handball is for real. There aren’t any also-rans in a European championship. Every game is a battle, often settled in the last minutes. The Danes love their handball and a great party is planned. When Denmark faced Spain in the last Handball World Cup final, more than 60 per cent of the population watched it on TV. This is thought to be a record across all categories. The topic of this year’s Hotel Market Day is ”Demographics and changes in consumption patterns”, a current and interesting subject. We are very proud to present a number of international speakers, such as Richard Dobbs from McKinsey Global Institute and Chris Sanderson from the Future Laboratory, as well as exciting Swedish names such as Klas Eklund from SEB and Scandic’s Magnus Berglund, as part of the programme. Yours sincerely, Anders Nissen Graphic design and production: Hallvarsson & Halvarsson Photos: Ulf ­ lomberg, Markus B B ­ äckström, Peter Hoelstad, IStock et al. Cover: The Hotel, Brussels. UpGrade can be ordered from Pandox at or read at Printing: TMG Sthlm, November 2013. May be reprinted only with the p ­ ermission of Pandox. market information from Pando x
  3. 3. News Hotel world JUNE/JULY/AUGUST Choice acquires three large hotels. Nordic Choice Hotels acquires Amaranten, one of the largest hotels in central Stockholm, as well as Hotel Skt. Petri and Hotel Vesterbro in Copenhagen. In addition to acquiring the properties, Nordic Choice Hotels will also take over operations from First Hotels. Fabege signs a 20-year lease with The Winery Hotel in Solna. The new hotel will be opening at the end of 2015. Apart from 184 rooms, the property will also house a winery and a ”vinotheque”. highly designed. The name of the new chain will be HTL. The first new hotel will open with 275 rooms in May 2014 on Kungsgatan in central Stockholm. The goal is set for 20 hotels based on the HTL concept within the next 5 years, achieved mainly through c ­ onversions of office space. Comfort Hotel Winn opens in Umeå. Umeå’s new hotel – Comfort Hotel Umeå – was inaugurated on the 14th of September. The hotel boasts 185 rooms and is situated in the Forsete neighbourhood, between Kungsgatan and Rådhusesplanaden. The property reaches 52 meters above ground while under ground, the hotel sits above the new shopping centre Utopia which will open on October 24th. Interior architect Anders Björkén is the designer. Scandic Karlstad City relaunch. On the 13th of September, after 18 months of refurbishment, Scandic Karlstad City reopened with 41 new rooms, a new r ­ estaurant, function room, meeting room and a new Spa area featuring Jacuzzi and sauna. The number of rooms has increased to 145. New hotel at the Ulriksdal train station in Solna. Peab will to build a hotel at the Ulriksdal station which (including retail space) will have a total floor space of 8 000 square meters. A 15 year lease has been signed with the Gothenburg based hotel operator, Ess Hotels, who will run the hotel which is expected to open around the new year 2015/2016. The hotel will have around 200 rooms and be marketed under the Park Inn brand. SEPTEMBER Gothia Towers add 5-star sister hotel. On September 1, the doors were opened to Hotel Upper House which comprises 49 rooms, a restaurant and a three story Spa. Upper House has been built on top of the Gothia Towers second tower and covers floors 18 to 25. During spring 2014, the hotel will be expanded with the addition of ten Deluxe Suites. Scandic launches new hotel concept. Scandic has introduced a new brand for its new range of city hotels which will have lower room prices and also smaller rooms than its Scandic brand. The hotels will have p ­ remium city centre locations within the Nordics, be space efficient, have smart digital features and be market information from Pandox Story Hotels opens at a second venue. Story Hotel Signalfabriken is situated in the regenerated area near Torget 1 in Sundbyberg. The hotel opened on the 26th of September featuring 83 rooms, gastro lounge and bar. Another Story Hotel will open in Malmö in 2016 and the group is also looking at options to locate in Copenhagen, New York and Istanbul. OCTOBER Host Hotels & Resorts acquires Sheraton Stockholm. US-based REIT Host Hotels & Resorts has acquired the Sheraton property in Stockholm. The deal was completed towards the end of the summer with, also US-based, Blackstone on the selling side. The property covers 22 000 sq m with 454 rooms. It is Host’s first foray into the Nordics. Blackstone completed a major renovation project of the property in 2006, shortly after its purchase, with a total bill well past the 100 million Krona mark. The ”Gallerian” shopping mall in Stockholm may host three new hotels. AMF properties is planning for three new hotels in a space near ”Gallerian” shopping mall in the quarter which currently hosts Swebank’s HQ. Annordia (formerly HåP Konsult AB) has developed a new concept comprising three hotels in different categories with a total of around 700 rooms. The hotel draft is currently being marketed to hotel operators and bids are to be submitted during November. Another Malmö hotel. A new hotel containing about 160 rooms is planned to be built in, what was, ­ kånska S Dagbladet’s premises in central Malmö approximately 300 meters from the Central Station. The hotel will cover 7 000 sq m of which 3 200 sq m is in a completely new extension. The property will remain owned by Skånska Dagbladet through a foundation. NOVEMBER Hotel property transaction volumes in EMEA up 50 per cent. According to JLL, hotel investment volumes across Europe, Middle East and Africa (EMEA) reached €8.2 billion September YTD 2013, a 53 per cent increase compared to the same time last year. In terms of portfolio sales, Private Equity firm Gecina sold four Club Med holiday villages for €280 million as part of the company’s strategy to focus on the remaining core business assets, while Spanish-based Derby Hotels Collection bought the remaining 50 per cent stakes in the Caesar Hotel in London and the Banke Hotel in Paris for €240 million from Investment Fund Grupo Metropolis. 3
  4. 4. Focus on the market Turnaround – accelerating recovery Solid recovery in the world economy Five years on from the Lehman crash, many countries, Eurozone countries none the least, are still combating weak growth. Experts believe that the tipping point has been reached though, and that a brighter global economic picture is now emerging. The Eurozone has returned to positive growth, the US and Japanese economies are continuing on the path of expansion and China and Brazil are showing signs of improved growth. However, we still have risks in the form of political wrangling in the US, high national debts within the Eurozone and sluggish economic expansion in some of the emerging markets such as India, Turkey and Indonesia. International outlook Clear signs of recovery in the US and levelling out in China After a number of years of financial cuts, the US economy has retained more balance due to increased economic activity. Property prices are rising, households are enjoying increased purchasing power, employment is on the rise and unemployment is expected to continue to fall to the 6 per cent mark already in 2014. Political risk has not receded though. The political wrestling between the Republicans and the Democrats over the budget is negatively impacting the economy and makes it harder to predict the future. However, most commentators believe that the US is on the verge of a great leap in the economy during 2014– 2015 and that annual growth will hit 2–3 per cent. In China, growth figures have improved somewhat, alleviating the pressure on global markets, and during the third quarter, the economy strengthened further compared to previous periods. 4 An upturn in Japan is also in the cards. For other emerging markets, such as India, Brazil and Turkey, there are still risks of increased financial turbulence and high levels of inflation. Europe is on the right track, but progress is slow The clouds over Europe have lifted somewhat over the past six months. After 18 months of falling GDP, the Eurozone exited recession during the second quarter of 2013, recording quarter-on-quarter growth – albeit from a low starting point. Among the green shoots observed, the German economy sets itself apart with a more positive development than expected, making it the driver of the successive stabilisation in Europe. The number of austerity measures has also shrunk, which bodes well for the future. There are still a number of challenges left for the Eurozone though. For example, Italy and France have not yet started to see an improvement in their competitiveness levels, while unemployment is still worryingly high and inflationary pressure low. Outside the Eurozone, the UK has experienced higher growth than expected over the summer. The service and the building sectors are particularly strong and growth indicators point to continued positive development. BRIGHTER OUTLOOK FOR SCANDINAVIA Sweden – the fastest growing Scandinavian e ­ conomy – in a recovery phase 2013 was a year signified by weak economic growth for the Swedish economy and GDP growth is predicted to reach a meagre 1 per cent. However, there are number of signs that point to better times ahead; the currency will strengthen compared to the Euro, growth will accelerate when export markets improve and strong household finances (to a large part due to an election friendly budget) will increase purchasing power. Sluggish wage growth will contribute to a slow rise in inflation though. Norway’s economy hits the bumpers Since last spring, the Norwegian market has gone from booming to anaemic. Falling house prices combined with a lower price for crude-oil and weak household demand are seen as the greatest risk factors for the Norwegian economy. Collectively, these factors contribute to put a dampener on GDP growth and the 2014 growth forecast has been lowered to around 1.5 per cent. Finland, stuck in recession In line with previous forecasts, Finland has the more negative outlook. The Eurozone crises and higher taxes are straining the economy, GDP is f ­ alling for the second consecutive year and drivers of growth are still absent. Much like Sweden, F ­ inland relies heavily on exports to a struggling Eurozone. A second important market is Russia, but with the Russian economy also in a deep dip, there are few short term signs of improvement for Finnish exports. Denmark sees the light at the end of the tunnel Denmark is arguably the Scandinavian country which has suffered the most from the financial c ­ rises with property prices dropping for several years. However, a recovery may be in sight. P ­ roperty prices, mainly in Copenhagen, have started to improve. Recovery is still slow, though, and the underlying strength of the increased growth is fairly weak. market information from Pando x
  5. 5. Hotel Market Overview The global economy is expected to strengthen further next year. This will obviously impact the hotel industry and have a particularly positive effect on the meeting and conference segment. In addition, increased consumer confidence will continue to grow the leisure sector, with an increased demand for holidays and city breaks. The forecast is positive as both national and international travel is increasing with these two large segments driving growth simultaneously. In most markets, volumes are considered to be at relatively good levels post the financial crisis, which establishes a good foundation for an increase in prices. For 2014, healthy growth is anticipated both in demand and rates. The US and New York The American hotel market also continues its positive development in the third quarter and continues to develop in tandem with the national economy. The short term trend is positive, a further firming of prices results in improved profitability. Since 2012, the US has seen a stable RevPAR growth of around 6 per cent and that was also the case at the end of September. Price continues to be the driver of growth thanks to a strong corporate segment. The New York market, which previously has performed below the US average, has experienced a strong start to the year and is showing growth in RevPAR of 6.5 per cent at the end of the third quarter. Contrary to previous quarters, where volume was the driving factor, price is currently supporting more than 50 per cent of growth. Other large hotel markets such as Chicago (+5.9 per cent), Los Angeles (+6.9 per cent) and Miami (+11.0 per cent) have also developed very well. Europe Normally, Europe lags the US by two to three quarters in the hotel market life-cycle which gives us hope for solid growth here as well. In addition, fewer uncertainties will hamper the European hotel market as the economy stabilizes. Thus, a positive trend is to be expected even it is yet to be seen clearly in the numbers. RevPAR change for the European market landed at 0.6 per cent at the end of September, compared to the same period last year. As previously, there are huge differences between countries, regions and segments. So far this year, the southern part of Europe has had the strongest development, while the northern regions have been the weakest in terms of yearly RevPAR growth. The PIIGS countries have shown particularly strong RevPAR growth with a majority of markets having managed a turn around after a sustained period of weak numbers. All the capitals in these ”crisescountries”, apart from Madrid, have seen visible RevPAR growth (YTD Sep): Dublin +10.3 per cent, Lisbon +6.5 per cent, Athens +6.3 per cent, Rome +1.5 per cent while Madrid came in at a negative – 6.8 per cent. The London market has seen more stable development than originally anticipated as good weather and a continuing post-Olympic boom is having a positive effect on tourism in the city. Despite the number of large events in 2012 with a marked increase in capacity in preparation for the 2012 Olympics and other events, the city’s RevPAR market information from Pandox is well in line with the previous year. At the end of September, RevPAR showed a negative –1.7 per cent growth mainly due to lower prices compared to 2012. The Berlin hotel market had a very good 2012 and the positive trend has continued in 2013, to a large extent because of promising tourism development. The future also looks bright. The hotel development pipeline will slow down after a decade of significant increase of supply and the new Berlin Brandenburg International Airport (scheduled for 2015) will improve international accessibility which will boost both the MICE and leisure ­ egments. During the first half of this year, s growth con­ inued, albeit at a slower pace, but the t autumn numbers show a drop in RevPAR com­ pared to a year ago. So far this year, the market has dropped by 0.7 per cent. Scandinavia The 2013 hotel year in Scandinavia got off to a weak start. The main markets have seen incon­ sistent development. All the markets in the Scandinavian capitals are facing the same challenge – how to increase the average price charged? The strongest growth was seen in Copenhagen which saw progressive expansion during the autumn and a RevPAR growth of over 10 per cent by the end of September. The market is growing from low levels and benefits from an improved e ­ conomic outlook as well as the fact that limited capacity has been added during the year. Oslo has enjoyed nice stable growth during the year, despite the large increase in capacity during 2012 (Scandic Fornebu, Quality Hotel Expo and Comfort Grand Central) and 2013 (The Thief). Helsinki is in a negative trend, partly due to a meagre macro-economic climate and partly due to comparisons being made to a strong 2012 with a number of large events. In 2012, and earlier, the local hotel market in Helsinki has been supported by a steady increase in visitors from Russia, a trend that flattened out during 2013 though. Therefore, the drop by 6 per cent in RevPAR didn’t come as a total surprise. Stockholm shows a slight revenue drop for the year with the conference segment negatively affecting weekday occupancy rates while weekend demand has remained stable. Underlying demand has been hit by a drop in the business travel segment which has had a negative impact on room prices at the same time as occupancy rates have been affected by an increase in available rooms. RevPAR was down 1 per cent with a short term forecast for flat growth after the third querter. A number of recently opened hotels, as well as a growing pipeline of projects, is however an indication that investors and operators still have faith in Stockholm as a future growth market. The hotel capacity is steadily growing, both in terms of numbers of hotels and in available rooms. In 2012, there were 297 hotels in the Stockholm County, about half of them located in the City of Stockholm. The number of hotel rooms in Stockholm County was 29,200 on average – an increase by over 5 per cent compared to 2011 and almost 50 per cent more than a decade ago. First Hotel Copenhagen. RevPAR growth development 2012 2013 YTD 2013 Q3 USA, total +7 +6 +5 New York +6 +7 +5 Washington –1 –1 – 5 +10 +6 +4 2012 2013 YTD 2013 Q3 Europe, total +5 +1 0 London +2 –2 –4 Paris +9 +2 –5 Berlin +9 –1 –6 Barcelona +3 +3 +13 Amsterdam +0 +5 +15 Brussels –2 +1 +8 2012 2013 YTD 2013 Q3 USA, % Chicago Source: STR (YTD September). Europe, % Source: STR (YTD September). Nordics, % Stockholm –5 –1 –2 Copenhagen +4 +5 +10 Helsinki +4 –6 –4 Oslo –3 +4 +3 Gothenburg –1 –2 –8 Source: STR and Benchmarking Alliance (YTD September). 5
  6. 6. Trends 2013 PandoxHotel Market Day The Hotel Market Day is a regular annual event arranged by Pandox since 1997. It is a dynamic meeting place for the hotel industry – a day filled with hot topics, interesting speakers and networking. topic of the day demographic changes! meet two of this years speakers Klas Eklund, Senior Economist at SEB and Magnus Berglund, Director of Accessibility at Scandic Hotels Change will never be as slow as today... Chart the correct course among the trends Concepts and labels of current trends are multiple and there are no clear or obvious definitions. Different oracles and trend strategists point to various trends while perhaps actually talking about the same thing? UpGrade presents a path out of the confusion and identifies the most important trends for the hotel industry. Just about every day, another oracle will come out in the media with a prediction on where the world is heading, how our lives will look tomorrow, next spring or in ten years. They paint scenarios in the short or the long term, referencing mega-, macro-, and micro trends. But what do those labels mean, and what sets them apart from each other? UpGrade has investigated the issue and, as far as we understand, this is the situation: Mega trends: Large global changes in society affecting all areas – state, markets and civil society – over the coming 10 –15 years. There is a long list of megatrends, but frequently the underlying phenomena is the same but described in different ways. Many future strategists define mega trends as our knowledge of what is likely to happen in the future, even if the trend can change direction or pace. Among other things, we know that the wealth of all humans in the Western world will be likely to increase by roughly 2 per cent per year. Another mega trend is that the proportion of elderly in western societies is increasing, while the proportion of youth is decreasing. Sometimes the term giga trend is mentioned to describe a trend that stretches over a longer time period with a time perspective of over 20 years. Macro trends: Normally concerns a 5 –10 year time period. Macrotrends describe subsets 6 of mega trends as well as groups of micro trends. Among other things, topics can include new ways of working, new distribution channels, changing family patterns and world events. The specific trends which describe global financial changes are often named, macro economic trends. Micro trends: Short-lived, intensive and t ­ angible changes that can be observed in, for example, marketing, technology or lifestyle. It can consist of local trends, pop culture, event driven trends such as the World Championship in football or the launch of a new book. Micro trends usually serve as evidence of mega- and macro trends and exist with a shorter time perspective. Klas Eklund, Senior Economist at SEB The most important future megatrends* 1 Ageing The world’s population is ageing. 2 Globalization Globalization is the fast growing global interconnectedness reflected in the expanded flows of people, capital, goods, services, information, technologies, and culture. 3  Technological development 4 Prosperity The majority of the population of OECD countries and large groups in formerly developing countries are now growing more prosperous. 5 Individualization Individualization is the shift from more collectivist societal norms to more individualism. Man’s fate is now more a question of interest and skill rather than obligation and tradition. 6 Commercialization The meeting of increasingly more human needs on the private market through trade that can be both supply and demand driven. 7  Health and environment Sustained development continues with renewed focus on corporate social responsibility (CSR) 8 Acceleration A generally increased pace of change. 9  Network organizing Cheaper transport, Adjacently, we have listed the ten most important megatrends according to the Copenhagen Institute for Futures Studies. But which of these have the greatest impact on the hotel industry? UpGrade asked Klas Eklund, Senior Economist at SEB, to share his view on these trends and in which way they affect the hotel industry. Klas points to three overriding trends which affect us all in a positive direction: better infrastructures, the Internet, mobile telephony and increasing prosperity have revolutionized the opportunities for communication and network organizing. 10 Urbanization Large-scale migration to urban areas continues. *The 10 most important megatrends according to the Copenhagen Institute for Futures Studies. market information from Pando x
  7. 7. Working life becomes more flexible Youth travel continues to grow As the pace of globalisation increases, companies are establishing offices in more locations, domestically as well as internationally, which results in an increased amount of travelling. Contrary to what many previously believed, one cannot fully substitute the physical meeting with telephone or video conferencing. Instead, the trend points to meetings and conferences becoming even more popular, which is also reflected in the industry statistics. Over the past ten years, the number of work related travels which included an overnight stay has increased enormously. The youth culture of travelling before starting higher education or obtaining a permanent position is well established in many western societies such as the Nordics. It is socially acceptable to take a few gap years. A large part of today’s youth are brought up in travelling families, they are accustomed to it and wish to continue doing it. This travelling culture is made even more accessible through increased supply and a continuous pressure to offer low-cost travel. This is obviously good for the travel industry, says Klas, but less fortunate for the job-market as a whole as the age at which a young person establishes him or herself on the job market increases, which in the longer term has a negative effect on the macro economic situation. The number of older travellers is increasing A hundred years ago, the average life expectancy in Sweden was around 60 years while the retirement age was set at 67 years. As a result, most new-borns never reached retirement age. Today, our average life expectancy is 81 years and it is calculated that 10 per cent of Swedes living today will reach 100. For those born after 2000, some statisticians believe that half of them will reach their 100th birthday. In general, today’s elderly, across the world, have more money and are in better health than previous generations, which, in turn, means that they will travel more frequently and stay longer at their destinations. Emerging new markets Travelling seniors and guests with disabilities –  The two groups, travelling seniors and guests with disabilities, are growing rapidly. This trend is visible across the globe – two new markets are emerging. The hotel industry is s ­ ignificantly affected and it is vital to keep up with these developments. The words belong to Magnus Berglund, Director of Accessibility at Scandic Hotels. Since 2003, Magnus has strived to increase the knowledge concerning guests who have special requirements, and how hotels can be adapted to serve them better. During the ten years in his position, Magnus has managed to create an Accessibility Standard, established a new training programme for hotel employees and collated and published information on the internet which also includes advice on accessibility at airports, during transit and in city centres. –  The trend is that people with special requirements become more and more influential, says Magnus. If the hotel cannot offer the right equipment and necessary aids, a company may choose to book their conference elsewhere. That means that, for example, a single wheel-chair user could determine the choice of conference venue for s ­ everal hundred guests. market information from Pandox However, for the hotels, it’s not just about being able to offer shower-chairs, height adjustable beds, hooks at different levels, vibrating alarm clocks and fire alarms, special aids in the room or an “allergy free” breakfast. First and foremost, it’s a question of attitude, about treating all guests as what they are, guests. And for the staff to acknowledge the individual client, while being attentive and flexible in meeting his or her needs. This is where Magnus has identified the main challenge for the future. –  Lack of knowledge makes the guest feel s ­ ingled out, which results in a poor overall experience, he says. What is encouraging though is that the overall knowledge increases as the number of guests with special requirements increases. Magnus also notes that several competitors have started to copy parts of Scandic’s work with accessibility, which can only be positive. –  If no one was copying our work, I would see that as a sign of failure, he says. And, speaking of highly designed boutique hotels, it really shouldn’t be more costly to include accessibility into the design solutions. With simple measures, we can achieve vast improvements, adds Magnus. Magnus Berglund en route with his service-dog Dixie. 7
  8. 8. Trends Smoking hot hostel market Rapid development in the hostel market The hostel market has experienced rapid development and gone through massive changes over the last ten years. According to a new report from property consultancy Savills, hostels today are in the same place as hotels were 15 years ago. Hostels have become a more accepted and tangible alternative to hotels. Supporting this trend is an increase in youth travel, a larger supply of low-cost flights and greater focus on affordable travel with a social dimension among a broadening target group. Many operators want to enter this market and we can expect to see a future increase in branded hostels. For most people, the word hostel brings back a number of memories and associations. The mind can quickly be transferred to bright memories of youth, to backpacking trips in Asia, but also to memories of budget hostels, catering mainly to younger guests, with sunken, poorly made beds and loud people next door. However, the hostel market in many European cities has gone through rapid development over the last decade. A whole new market has emerged and is expanding. More and more hostels are being introduced under a trademark and are marketed as trendy and social with a boutique feel. More than just a place to sleep The basic traits are the same today as before: affordable rooms, shared lodgings or communal dorms of different sizes, with or without a bathroom, separate dorms for women, self-catering and common social areas. Today, however, a number of parameters have been added to attract a broader, more mature and more knowledgeable group of guests: smart marketing, central locations and an acute awareness of social trends and new markets. Contemporary, hip designs have been introduced in the community areas where guests can mingle and meet new friends. Recurring events, cool bars and music gigs all create a fun social s ­ etting which also attracts local visitors who want to hang out with their friends for the evening. ”Flash-packers” replaces back-packers? The fundamental trend is that hostel guests are growing older and become more conscious. This was evident in another survey conducted by NHC (Nordic Hotel Consulting). In this survey, it becomes obvious that the age group 25–34 years is the largest category, making up more than half the demand for Europe’s hostels. One explanation for this is quite simply that the previous back-pack- ing generation has grown older, but despite the fact that they can afford more expensive lodging, they prefer to stay at places with a more relaxed, social atmosphere. This group, defined as ”flashpackers”, is on the up. Another surprise revealed in the survey is that couples made up the largest group of travellers while the back-packers were actually the smallest (please refer to Tourist Types in Hostels in Europe below). Expect more branded hostels in the future According to Savills, the hostel market is still very fragmented. Only 30 per cent of the hostels in major European destinations are run under a brand, as compared to the hotel market, where 80 per cent are run by a branded operator. The same report assigns the greatest growth potential for branded hostels to London and Paris, considering the current low supply and extensive youth tourism. Amsterdam, Dublin and Barcelona are also expected to show considerable growth over the next few years. Unlike budget hotels, however, hostels have more specific market and location criteria with a preference for gateway tourist destinations. The future expansion for hostels over the short term New brand in the Scandic family Scandic recently launched HTL, a new chain of hotels aimed at a new generation of travellers. The plan is to have 20 hotels up and running in the major Nordic cities within five years. Stockholm will see its first HTL as early as May 2014. The new hotel concept will offer the best city centre locations at the best prices, with smart digital solutions and quality design features. HTL will primarily be established through new builds and conversions, particularly of office buildings. Stockholm will lead the way for the new chain – in May 2014, the doors will open on central Kungsgatan and in 2015 on Upplandsgatan, near Norra Bantorget. As a result of the digital revolution and a global increase of tourism in general, new target groups and new types of demands among guests have sprung up, says Martin Creydt, Senior Vice President / CDO at Scandic. Centrally located hotels that can offer the latest digital services, mobile check-in and check-out for example, are more appreciated than full service hotels with large rooms, regardless of brand. We consider this development to be exciting and, as a result, have let our new hotel concept mirror these new trends. 8 As the product that we offer the customer is very different from the current Scandic brand, we have elected to create a new brand which better reflects the new concept. How do you define the target group for HTL? –  Price conscious travellers that prefer central locations with affordable rooms that are supported by a modern digital platform. Which will be the main features to attract the target audience? –  In addition to a central location near public transport hubs, HTL will offer high levels of design and quality in all aspects of room interior, public spaces and digital services. The heart of HTL will be the service-lounge where guests will be able to get breakfast and snacks around the clock. Is there a risk that HTL will cannibalize on your current clients? –  On the margin – most of Scandic city centre hotels are full service hotels offering everything from bars and restaurants to conference rooms and gyms. HTL is mainly a city centre room experience with the option to relax in an HTL-specific lounge-style. I’m sure that some Scandic guests will test the new concept and swap between the two depending on the purpose and nature of the stay, but the main part of HTL’s new customers will probably come from competing hotels which cannot offer a product that is as contemporary as ours. It is my hope that HTL will complement the range of hotels on offer in Stockholm and other ­ ities in c Scandinavia. Apart from a handful of luxury hotels and a few budget hotels in each city, most hotels offer the same things, regardless of brand. Therefore, HTL will be able to fill an empty niche – which we currently have named ”City compact” in our p ­ roject, and which hopefully will enjoy increased demand in the future. Martin Creydt, Senior Vice President / CDO at Scandic. market information from Pando x
  9. 9. Short survey hostel guests in Berlin will continue to be driven by private equity, attracted by the current low penetration of branded supply, low operational costs and ability to drive revenues through F&B and other add-on services. On the other hand, the ceiling in bed rates requires operators to have large sites in order to obtain the critical mass that delivers optimum returns. Price limit for a bed in dorm 20 – 25€ 45 – 70€ Why did they choose that hostel / How did they find it Berlin – a more mature market The Berlin hostel market is considered to be the most mature in Europe. The city has the highest number of hostel beds (an estimated 16,200), and guest nights of all European hostel markets. Almost 60 per cent of the Berlin bed supply is provided by branded international and national operators. This could be compared to the London hostel market, where only 40 per cent of the 16,000 available hostel beds are branded. Berlin is Germany’s most visited city and ranks among Europe’s top tourist destinations. The city is still a lot cheaper than London or Paris and has a reputation to be a young, hip and affordable destination, attracting visitors with history, culture, art, architecture, restaurants, festivals and nightlife. Generator Hostels is one of the brands that has successfully entered the Berlin market. Their recent opening of a second location in the city clearly demonstrates their belief in a continued positive trend in Berlin. Price limit for private room 5 0% of the people said they chose it based on recommendations from other friends 4 0% said they found the best lists and reviews at: or 1 0% said that they chose it because of the “vibe” and the atmosphere Tourist Types in Hostels in Europe (2010) Design, facilities and location v.s rate 8 5% said that they are willing to pay more to be able to be in a good location and enjoy a nice atmosphere Singles Backpackers Couples 1 5% said that if the difference between both rates is big they would consider stay in “worse” conditions Friends Organized tour groups Others Source: NHC Data What kind of service should be free for guests? 100 The main European hostel operators include Generator Hostels Equity Point Hostels AO Hotels and Hostels Meininger Hotels Plus Hostels St Christopher’s Inns Wombats Hostels 20% breakfast 20 0 100% answered WIFI 50% towels 50 50 100 Pandox @ The Distribution Event Pandox attended the first Hotel Analyst’s Hotel Distribution Event at the Intercontinental Park Lane in London. The full day event was the first of its kind for hotel analysts and the event attracted senior executives involved in sales, marketing and technology within hotel brands, operating companies and hotel property owners. The topics discussed were loyalty p ­ rograms, hotel guest data collection, reviews and reviewers and OTA’s vs hotels – as well as what future holds. Industry specialists from companies such as, Tripadvisor, Google, Hilton, IHG, Expedia, Citizen M, Accor, Choice Hotel Scandinavia and PWC attended the event. The loyalty panel debated topics such as “if a hotel should control its loyalty program internally or join forces with external companies such as Global Hotel Alliance who are working with several hotel chains. What is the difference between being a small hotel operator vs a big chain in terms of loyalty programs? Should the loyalty program aim to make the guest loyal to the hotel chain because of its service offering and product or alternatively the rewards which the loyalty programs provides? Pandox believes that the fundamental pillar of loyalty is guest satisfaction at the hotel level. market information from Pandox Reviews and “reviewing the reviewers” was the topic for another panel debate where Carlzon R ­ ezidor and Tripadvisor were two of the companies represented. One of the topics was if using T ­ ripadvisor as a guest, market and guest satisfaction research tool, replacing the old survey based approach, gives you all the answers? Questions were also raised about the majority of “positive” reviews on many sites and if those reflect an accurate picture of the hotel’s standard and guest satisfaction. Pandox’ concerns are that if the hotel industry only reacts to consumer reviews, it will lose its pro-activeness in product and service development. Google held a presentation and continued to deny that they will become an OTA. Google spoke about their move into the travel industry and their goal of controlling the entire circle in consumer behavior and actions when planning, booking and experiencing a trip. Google aims to provide internet tools for all the four stages in travel, DREAMING – RESEARCHING – BOOKING – EXPERIENCING. The presentation also consisted of interesting facts on device usage for Q2 in the UK: • An average UK smartphone user looks at their phones 150 times a day. • 23 per cent of UK consumers aged 16–64 own a tablet • For Google “Hotel queries” searches grew by 71 per cent for Mobile, Tablet 131 per cent and desktop declined –6 per cent. • 60 per cent of mobile hotel bookings are made for check in within 24 hours. Google is also continuing to develop Google Hotel finder where the goal is to provide a “one stop shop” when choosing a hotel , with info on location, reviews, prices, and hotel info on one screen. Pandox’ question is why Google is not moving into OTA’s – they seem to have the entire prerequisite for it? During the OTA debate with the dramatic title “The Big Face Off” Choice Hotels Scandinavia, HRS, Expedia and IHG participated. The topics mainly focused on how hotels and OTA’s can learn to get along in the future. Like it or not, the OTA’s are here to stay and it is up to the hotels and the various players in the OTA industry to find a better way to work with each other. Pandox views this development positively and therefore welcomes an environment with less friction. Overall Pandox viewed this event as very interesting and educational and believes that distribution is becoming an increasingly important part of the value chain for hotels. 9
  10. 10. theme social projects They call me ” Julius of Handball” He started out with nothing at the beginning of the 1990’s. In the summer of 2013, Julius Ndirangu participated in his 12th Partille Cup – together with Pandox’ Handball Movement, he has watched his Handball Club grow. Name: Julius Ndirangu Profession: Teacher and sports coach Family: Three brothers, four sisters. Married to Nancy. Two daughters, Brenda 16 and Sandra 3. Favorite sport besides to handball: In my youth I participated in steeplechase all the way up to the national level. Special talents: I am a talented swimmer with skills developed by swimming in Africa’s fastest river, The Gura. As a keen geographer I also enjoy occasional game drives. – To be able to showcase Sweden and a different culture for these children forms a memory which they will carry with them for life, he says. The African man sweeps his right hand across, from left to right. His face breaks into a broad smile. – Look here. There are several thousands of children that meet down here. They play handball, but it’s about so much more than that. They meet, talk and exchange experiences. It’s fantastic, he says. We are sitting in the heart of Gothenburg. The Astroturf of the classic football fields at Heden has been invaded – by handball players. Arriving from all corners of the globe, they have eagerly gathered to contest the 2013 Partille Cup. Julius M Ndirangu is the man behind Kenya’s contribution to the sum of 44 nations attending. – This is the 11th time I’m here. We wait all year for these days, to participate in the Partille Cup, he says. He’s in charge of the 41 Kenyan children and their four teams; two girls’ and two boys’ teams. – To be honest, we’re not doing that well on the field. These aren’t our best players. They couldn’t afford to travel. Those who are here are the children of the parents that could actually afford the flight ticket. Not scoring many victories on the handball field – the greater victory was gained from all the impressions gathered. – The best aspect of this is all the impressions that the children bring home. They become a little bit like ambassadors when they return home. They bring the Swedish life-style with them. How people behave. It’s more equal here, and it’s important for the children to see that. Kenya is a nation mostly known in sport for their runners. Julius himself became acquainted with handball when studying to become a teacher at the University of Nairobi at the end of the 1980’s. When he returned to his home town Nyeri at the beginning of the 1990’s he brought the game with him. The sport is well suited for children that endure tough living conditions. Property is expensive in Kenya, but handball pitches are small and cheaper to maintain. It’s a very good sport in that respect. But there were other problems. – I tried to introduce handball in schools, but it was difficult. Many headmasters were unwilling to accept the sport. Football, basket and running were the main focus. As a result, Julius changed strategy. – I started with the poorest kids in the slum. The sport requires little space and is cheap to play. The move was successful. Today, all of Nyeri’s schools have handball on the curriculum – and Julius is a celebrity. Activities in the Pandox sphere: The Shark project to enter next phase! One of the largest hotel projects in Scandinavia – ever The Shark project is a joint venture between P ­ andox and Scandic where SEK 1.6 billion is invested in the upgrade and development of 38 existing Scandic hotels in Scandinavia. The project was launched in 2012 and is due to be completed in 2015. City centre hotels that are part of the Shark p ­ roject are, for example, Malmen in Stockholm, Continental and Hilton Strand in Helsinki and the KNA hotel in Oslo with aforementioned Continental being one of the larger projects. At the moment, the hotel is undergoing a complete step-by-step renovation which, when finished at the start of 2015, aims to reconquer the position for the C ­ ontinental as the leading meeting hotel in the city. In Oslo, 35 rooms have been added and com10 pleted to the KNA hotel during the summer. The addition was very successful and has been well received by the guests. The project has moved on to include existing rooms which will be finished by the New Year when a much anticipated, complete update of the lobby and reception area, as well as the restaurant, bar and conference facilities, will be the next phase. Two thirds of the highway hotels complete As part of the Shark investment scheme, sub project Moby represents the development of a new generation of Highway hotels. The vision is to renew and develop a common concept with flexibility and non-traditional solutions that takes new family constellations, travel patterns and trends into consideration. Each hotel’s unique history will be integrated into different design elements, giving it a local feel. As part of the concept the homely and informal feel will be strengthened, more social meeting places will be created and all the rooms will receive a completely new interior and design. Most of Scandic’s Highway hotels are included in the Moby project, most of them situated in Sweden. Among those are classic and popular locations such as Kungens Kurva, near the E4/E20 motorway south of Stockholm, Backadal along the E6 at Gothenburg’s western approach, Klarälven on the E18 circular in Karlstad and Elmia on the E4 in Jönköping. The Moby project is progressing, on schedule, and around the New Year 2013/2014, about two thirds of all Highway hotels will have been completed. market information from Pando x
  11. 11. – I don’t know what to say, but I suppose it’s some kind of recognition. They call me “Julius of Handball”, in Nyeri. The rich and the poor can play on equal terms. That feels good. Julius founded the handball club Mount Kenya Sports Group. Aided by the Pandox Handball Movement, the club has witnessed explosive growth. From about a hundred members, the club has grown significantly to 812 members (June 2013) in just a couple of years. – We have managed to get an office. That is solely because we have been able to structure the activities with the help from Pandox. With that help, we have been able to organise everything properly. How does it feel seeing the organisation growing? – It feels like we are on our way to succeeding. With Pandox’ help, we are about to realise my dream which started from scratch 20 years ago. It feels fantastic. The conversation comes to an end. As a leader, Julius is constantly on the move. – We went to Liseberg yesterday. It was a huge experience for the children. Tomorrow we are taking the boat (Paddan). They are all gaining an experience here that they will carry with them for the rest of their lives. Pandox Youth Handball Movement. In November 2011, Pandox established a project called Pandox Youth Handball Movement in cooperation with the Kenyan handball association Mount Kenya Sports Group in the town of Nyeri. The overall objective is that the cooperation agreement shall provide young people with purposeful leisuretime, educational and training support, information and advice regarding healthcare and other items, as well as the possibility to carry out further social projects around the town of Nyeri. For further information regarding the project, please go to or Do you know that: Disturbing noise – is the no 1 nuisance for hotel guests TravelNews reports on an analysis of online guest reviews for over 5600 hotels in 20 famous tourist destinations carried out by rating analysis company ReviewPro. In 19 of the 20 tourist destinations that were analysed, hotel guests’ biggest complaint concerns noise. Hotel elevators is the second most frequent complaint, followed by smells. Negative references to airconditioning and heating systems are also near the top of the list, receiving twice as many negative mentions as complaints related to internet issues. The world’s first “7-star hotel” is the Burj Al Arab, in Dubai The luxury hotel opened in 1999 and was, at the time, the tallest freestanding hotel with its 321 meters. Using a clever marketing strategy, it was launched as “the world’s first seven star hotel”. However, the true classification is 5 Star Deluxe. The hotel doesn’t have any ordinary rooms but comprises 202 suites of which the smallest measures 169 square meters with the largest covering 780 square meters. The hotel is one of the world’s most expensive and a night will set you back between 500 and 15,000 US dollars. …the World’s oldest hotel – has been in business for 1,300 years Gun powder had barely been invented by the Chinese and the fall of the Roman Empire was still in recent memory when the Japanese Spa hotel Nishiyama Onsen Keiunkan opened its doors. The hotel is located next to hot springs in Hayakawa, Yamanashi Prefecture in Japan. Founded in 705, it is the oldest hotel and oldest company still in operation according to the Guinness World Records. The hotel has had 52 operators since it was founded. Furthermore, the world’s second oldest hotel, Hoshi Ryoku, is also in Japan. The hotel industry is the one that has the highest proportion of young managers in Sweden The number of young managers across all industries in Sweden has decreased from 15 to 11 per cent over the past ten years according to a report from Ledarna which travelnews. se has read. The hotel and catering industry tops the list having the highest proportion of young managers with 21 per cent of them under the age of 35. When comparing the proportion of young managers in Sweden to other EU-countries, however, Sweden lingers near the bottom together with Croatia, Denmark, Finland and Italy. The study also shows that the proportion of young managers has decreased more in private enterprises than public offices. Scandic Upplands Väsby market information from Pandox 11
  12. 12. Pandox news News from the world of Pandox A spectacular view! New eco label at Radisson Blu Dortmund hibition. on mini ex Louis Vuitt The Hotel, Brussels – inspirational, elegant and cosmopolitan The two-year period of renovation has been completed! The Hotel, on the Boulevard de Waterloo in Brussels, can definitely be called the premium landmark hotel of the European capital from now on. A total of 421 renovated rooms and suites, 12 completely new meeting rooms, no less than two ball rooms, a foyer on the first floor and The Urban Spa Fitness on the 23rd floor. ‘The Restaurant by Pierre Balthazar’ has an innovative and creative culinary concept and there is also a bar  lounge. The interior design is inspirational, e ­ legant and innovative. And no matter where you are in The Hotel, the view of the city is spectacular! “Louis Vuitton and travel” at The Hotel. The Hotel. wants to emphasis its elegant and cosmo­ olitan character by hosting temporary p Haute Couture-themed exhibitions. “Louis Vuitton and travel” is the first mini exhibition. Louis Vuitton has symbolized the art of travel since 1854, with objects that epitomize the French art de vivre. Today, the brand is one of the worlds leading fashion houses. Starting next year, The Hotel, will also have large showcases in the lobby and public areas. A Fashion Manager has been recruited especially to strengthen the partnership with the international fashion world and to put in place a fashion-related activity agenda for 2014. Wind of changes in Hotel Berlin, Berlin Be InnSpired at Crowne Plaza Brussels – Le Palace A new digital system, “InnSpire” has been implemented at Le Palace offering the latest and the best in digital entertainment, social media and technological advancements. Besides watching different TV programs, the guests can also order room service via TV, get live updates for different activities in the hotel, enjoy internet on the TV, post immediately on social media or synchronize their smart phones photos with the TV etc. New tasty popup space at Hotel BLOOM! In Hotel Berlin, Berlin a lot has happened. A new logo, new colours, and new designs – changes that reflect the dynamic, modern and unique p ­ ersonality of the hotel. Hotel Berlin, Berlin is also very excited about their new partner, World­ hotels, one of the leading global groups of independent upscale hotels. The Radisson Blu Hotel, Dortmund has been awarded the eco label – Green key – and is very proud of this award. In other news, Dieter Ulbricht (General M ­ anager) and new chef Sven Ruhr visited the kindergarten “Loewenzahn” in Dortmund and served healthy food to the kids. They spent the morning and lunch with the children who enjoyed the visit as much as the adults did. This beautiful showpiece is now parked inside the OO breakfast restaurant at Hotel BLOOM! in Brussels. By offering the waffles directly from the van, the hotel provides the guests not only with the opportunity to taste the famous Belgian waffles but enjoy the total experience of eating from a traditional waffle van, which are usually seen outside in the streets of Brussels. Come and enjoy a tasty Liege or Brussels style waffle with your own choice of toppings! Playing for success in Crowne Plaza Antwerpen Read more news about Pandox at Antwerp is designated as European Capital of Sports in 2013. During the year, Crowne Plaza Antwerp hotel has welcomed many champion sports teams, officials and international press from all over the world. This year, the hotel is also the proud sponsor of “UnitedAntwerp” – an umbrella sports association combining 5 major local Sports Clubs. International teams visiting Antwerp competing against the “United” teams have been hosted by the hotel, enjoying the hotel’s excellent gym spa as well as getting a good night’s sleep in preparation for the next day’s competition. Most recently, the well-known basketball Team “MACCABI” Tel Aviv stayed at the hotel.