of June this year (covering hotels in both the confirmed planning and construction stages) show a near 66 per cent hike to 57,150 rooms in the midscale category, compared with the same month in 2016. Europe also saw a 20 per cent increase
in the June midscale pipeline, with some 17,000 new rooms on the way. The Asia- Pacific market, in contrast, does not seem to be so in thrall to the millennial traveller: new development of midscale hotel rooms in the region was just under 5 per cent ahead in June, year-on-year, although the budget
companies, with the Marriott-Starwood merger last year a key turning point. Not only did it put significant clear water between it and rivals Hilton and IHG, but it also signalled CEO Arne Sorenson’s intention to pile on the pressure. Just over one-third of all hotel rooms being built in North America – and nearly one-fifth of those worldwide – are due either to be managed or put under a franchise contract by Marriott, according to analysts. And there is a lot more to play for. While North America is on the way to becoming
segment saw a buoyant 86 per cent hike. (see panel, below).
The global hotel market, moreover, con- tinues to expand. Data from consultancy Hospitality ON reveals that the worldwide supply of hotel accommodation last year – covering both branded and unbranded properties – grew by 3.6 per cent over the previous year. “The rate of increase was the strongest in 15 years,” it says.
Powering this rapid growth has been the M&A activity of the leading global hotel
a mature market, with broadly 70 per cent of hotels operating under a chain badge and only 30 per cent unbranded, Europe offers more potential. The brand versus indepen- dent split in Europe on average is estimated at 55 per cent for unbranded independents and 45 per cent for branded chains, although the chains’ growth is accelerating. Elsewhere in the world, brand penetra- tion is more mixed. While the Asia-Pacific region is already tilting towards having a majority – albeit small – of branded accom- modation providers, both South America and the Middle East and Africa remain
Budget hotels – the long march
is not confined to just the major US and European brands – the Chinese are on the march as well. But it’s not the global luxury sector that is being targeted, as has previously been the Chinese strategy: instead, it is the budget market that is the new name of the game. Spurred by signs of overcapacity in their domestic budget market, Chinese hotel groups have turned their attention to the West. One of the country’s leading low-cost brands, 7 Days Inn, with some 2,500 hotels in China, has over the past year opened properties in the Austrian cities of Linz, Salzburg and Vienna, with plans for Berlin, Munich, Leipzig and Venice under way. These will also get the upscale Premium version of the brand.
7 Days is no lightweight in the hospitality sphere: it is ultimately owned by China’s Jin Jiang International Hotels, now the fifth largest chain operator in the world by room numbers. Another leading Chinese operator, Huazhu Hotels, ranked 12th in the world and owner of the Hi Inn budget brand, has linked up with France’s Accorhotels (ranked number six) for expansion overseas, including in the budget sector. Underpinning this global push is the huge surge in Chinese outbound travellers, who made some 40 million overseas trips last year and, with many likely to be travelling abroad for the first time, welcome a recognisable brand. This theme is not unique to the Chinese: German budget chain Motel
One, a small family-run chain of more than 50 hotels mainly found in Germany, has also started to branch out, with six in the UK, including a second hotel in Manchester, which opened in the summer. Motel One’s theme is stylishly designed hotels at a budget price with the newly opened second Manchester property, for example, reflecting the city’s industrial past.
And Sir Stelios Haji-Ioannou is ramping up expansion of his budget easyHotel group, with 25 properties at present divided between the UK and the Continent, by recently announcing long-term franchised expansion plans into Iran, Sri Lanka and Nepal. The world is truly becoming smaller thanks to the long march of the budget brands.
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