Hotel development in a recession

The worldwide effects of the recession seems not to have stayed the hands of developers around the world. Europe has endured steep revpar cuts akin to the US as a recent report in the Wall Street Journal details: "occupancies fell 8.9% in the first three months of the year compared to the same period
last year, according to STR Global, an industry research group. Hardest
hit were those in Eastern Europe, down 19%, and southern Europe, down
16%."

Yet as BusinessWeek reports "big chains such as Intercontinental, Marriott and Starwood
were now launching niche luxury brands in Europe, in a bid to offer
clients more glamour for the money they were prepared to spend on
hotels. Last month, British-based Intercontinental opened its first boutique hotel in London, named Indigo. Marriott International was also launching a boutique brand in 2010,
with hotels set to open in Paris, Madrid, as well as Washington,
Chicago and Los Angeles. Sheraton-owner, Starwood plans to open its first
European luxury hotel in Barcelona this year and two in London next
year."

One of the fastest growing hotel markets, India has seen the sharpest occupancy drops since the financial crisis and "major hotel chains have slashed room charges by up to 30 per cent
because of falling occupancy rates on account of the recession." But a (well-founded) belief in the country's overall potential sees a continual spate of development deals. Le Meridien (Starwood) plans no less than five new hotels  Local real estate major Emaar MGF launched yet another hotel in Jaipur and another regional player in the south of India, the Muthoot Pappachan group, plans a several hotels there.

The US is not to be outdone with the Washington Post reporting that Disney is planning a 500 room resort outside Washington D.C. Also in the fray in the big league category is Kansas City with its 1000 room hotel proposal downtown. Like most others these projects, if they come to fruition, are planning on opening in a revived economy at least two years hence.

Published by

Vijay Dandapani

Co-founder and president of a New York based hotel company for 24 years. Grew the firm to five hotels in Manhattan and also developed a greenfield project at MacArthur airport, New York. Speaker at numerous prestigious forums including Economy Hotels World Asia, Lodging Conference, NYU, Columbia University Real Estate Roundtable, Baruch College's Zicklin School and ALIS. President and ceo of New York City Hotel Association since January 2017.

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