Hotel Trends and Values in Western and Eastern Europe: Gaining Momentum

Elke Geieregger HVS London Hotel Tourism & Leisure Investment Forum Bucharest 3 May 2011
-1-

Overview
1. 2. 3. 4. Global/European Tourism Overview Hotel Performance in Europe in 2010 with Focus on CEE Hotel Value Trends Outlook for 2011 and Beyond

-2-

International travel increase forecast at 4% in 2011...

-3-

 but Europe not yet back to pre-crisis levels

-4-

2. Hotel Performance in Western and Eastern Europe 2010: Gaining Momentum

-5-

RevPAR bottoms out in 2009 Renewed growth in 2010

Source: STR

-6-

Most markets record RevPAR growth in 2010

(Biggest improvers/chasers in Western and Eastern Europe)
Prague Sofia Budapest Bucharest Bratislava Tallin Moscow St Petersburg Warsaw Dublin Copenhagen Athens Zurich Stockholm Munich Frankfurt -15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0%

Source: STR - RevPAR change in Euro

-7-

3. Hotel Values in Western and Eastern Europe

-8-

Hotel Transactions Double in 2010

-9-

Q3/Q4 2010: Acceleration of Transactions

- 10 -

Top and Bottom Five

Percentage Change in Hotel Value per Room ()

- 11 -

Values have bottomed out across Europe

- 12 -

Western and Eastern Europe: still value shortfalls compared to peak 2007/10 ()
2007 2008 2009 2010 % Change 2010/09 4% 8% -1% 12% 2% 5% -8% 2% -1% -16% % Change 2010/07 -5% -16% 5% 13% -25% -17% -44% -36% -32% -42% Paris London Geneva Zrich Rome Warsaw Bucharest Prague Budapest Bratislava 601,700 623,400 395,300 412,900 453,500 208,800 204,000 249,500 191,300 196,600 566,200 479,600 463,700 436,200 373,500 200,400 160,300 197,100 158,600 166,800 545,900 483,900 419,300 416,500 335,200 164,000 123,600 157,000 131,900 135,500 568,700 524,400 413,200 466,600 341,700 172,500 113,700 159,500 131,000 114,000

- 13 -

4. Outlook for 2011 and Beyond

- 14 -

Value increase in 2011/2012 ( Cumulative Forecast)

Source: HVS London.

- 15 -

Tourism Outlook
Economic recovery in a number of EU countries Impact of Middle East unrest EU outbound travel closer to home Increased importance of BRIC countries Moderate increase in travel forecast for Europe

- 16 -

Performance Outlook
Healthy occupancy growth in 2010 in most markets Selective average rate growth in 2010, turnaround more widespread by H2 2011 Crisis has globalised the competition Value for Money is here to stay Increase in business travel and corporate budgets expected Conference & banqueting business slowly recovering Adjust hotel business mix to drive rates Strong cost-cutting measures in 2009/10; cost structures adapt from crisis mode in 2011

- 17 -

Investment Outlook
More hotel capital expenditure/refurbishment US transaction activity is up Equity chasing for deals Distressed selling? Continuing shortage of debt finance, new lending and development finance

- 18 -

Thank you! Elke Geieregger Associate Director HVS London Office +44 20 7878 7747 + 44 79 1224 0964 egeieregger@hvs.com www.hvs.com
- 19 -