Hotel Industry Europe

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Europe - Hotels & Motels 0201 - 0520 - 2009

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INDUSTRY PROFILE

Hotels & Motels in

Europe

Reference Code: 0201-0520

Publication Date: October 2010

EXECUTIVE SUMMARY



EXECUTIVE SUMMARY

Market value

The European hotels & motels industry shrank by 4% in 2009 to reach a value of $179.3 billion.

Market value forecast

In 2014, the European hotels & motels industry is forecast to have a value of $226.2 billion, an increase of 26.2% since 2009.

Market segmentation I

Domestic Consumer is the largest segment of the hotels & motels industry in Europe, accounting for 41.1% of the industry's total value.

Market segmentation II

Germany accounts for 19.1% of the European hotels & motels industry value.

Market rivalry

The hotels and motels industry’s performance has been negatively affected by the recent global economic downturn and now, more than ever, most hoteliers are searching for demand generators and are relying on direct sales to boost revenues and beat competition.

CONTENTS



TABLE OF CONTENTS

EXECUTIVE SUMMARY 2

MARKET OVERVIEW 6

Market definition 6 Research highlights 7 Market analysis 8

MARKET VALUE 9

MARKET SEGMENTATION I 10

MARKET SEGMENTATION II 11

COMPETITIVE LANDSCAPE 12

LEADING COMPANIES 15

Accor 15 Choice Hotels International 19 InterContinental Hotels Group Plc 22 NH Hoteles SA 25

MARKET FORECASTS 29

Market value forecast 29 APPENDIX 30

Methodology 30 Industry associations 31 Related Datamonitor research 31 Disclaimer 32

ABOUT DATAMONITOR 33

Premium Reports 33 Summary Reports 33 Datamonitor consulting 33

CONTENTS



LIST OF TABLES Table 1: Europe hotels & motels industry value: $ billion, 2005–09 9

Table 2: Europe hotels & motels industry segmentation I:% share, by value, 2009 10

Table 3: Europe hotels & motels industry segmentation II: % share, by value, 2009 11

Table 4: Accor: key facts 15

Table 5: Accor: key financials ($) 16

Table 6: Accor: key financials (€) 17

Table 7: Accor: key financial ratios 17

Table 8: Choice Hotels International: key facts 19

Table 9: Choice Hotels International: key financials ($) 20

Table 10: Choice Hotels International: key financial ratios 20

Table 11: InterContinental Hotels Group Plc: key facts 22

Table 12: InterContinental Hotels Group Plc: key financials ($) 23

Table 13: InterContinental Hotels Group Plc: key financial ratios 23

Table 14: NH Hoteles SA: key facts 25

Table 15: NH Hoteles SA: key financials ($) 26

Table 16: NH Hoteles SA: key financials (€) 26

Table 17: NH Hoteles SA: key financial ratios 27

Table 18: Europe hotels & motels industry value forecast: $ billion, 2009–14 29

CONTENTS



LIST OF FIGURES Figure 1: Europe hotels & motels industry value: $ billion, 2005–09 9

Figure 2: Europe hotels & motels industry segmentation I:% share, by value, 2009 10

Figure 3: Europe hotels & motels industry segmentation II: % share, by value, 2009 11

Figure 4: Accor: revenues & profitability 18

Figure 5: Accor: assets & liabilities 18

Figure 6: Choice Hotels International: revenues & profitability 21

Figure 7: Choice Hotels International: assets & liabilities 21

Figure 8: InterContinental Hotels Group Plc: revenues & profitability 24

Figure 9: InterContinental Hotels Group Plc: assets & liabilities 24

Figure 10: NH Hoteles SA: revenues & profitability 27

Figure 11: NH Hoteles SA: assets & liabilities 28

Figure 12: Europe hotels & motels industry value forecast: $ billion, 2009–14 29

MARKET OVERVIEW



MARKET OVERVIEW

Market definition

The hotels & motels industry value consists of all revenues generated by hotels, motels and other accommodation providers through the provision of accommodation and foodservice. The value does not include any revenues generated through other interests, such as casinos, shops and telecommunication services. The industry is segmented according to the origin of the revenues (domestic consumers, domestic business and international business & consumers). Any currency conversions included within this report have been calculated using constant 2009 annual average exchange rates.

For the purposes of this report, Europe consists of Western Europe and Eastern Europe.

Western Europe comprises Belgium, Denmark, France, Germany, Italy, the Netherlands, Norway, Spain, Sweden, and the United Kingdom.

Eastern Europe comprises the Czech Republic, Hungary, Poland, Romania, Russia, and Ukraine.

MARKET OVERVIEW



Research highlights

The European hotels & motels industry had total revenue of $179.3 billion in 2009, representing a compound annual growth rate (CAGR) of 1.2% for the period spanning 2005-2009.

The domestic consumer segment was the industry's most lucrative in 2009, with total revenue of $73.8 billion, equivalent to 41.1% of the industry's overall value.

The performance of the industry is forecast to accelerate, with an anticipated CAGR of 4.8% for the five-year period 2009-2014, which is expected to drive the industry to a value of $226.2 billion by the end of 2014.

MARKET OVERVIEW



Market analysis

The European hotels & motels industry has been decelerating in recent years, suffering also a decline of -4% in 2009. A marginal recovery is expected in 2010, with strong growth rates predicted over the years up to and including 2014.

The European hotels & motels industry had total revenue of $179.3 billion in 2009, representing a compound annual growth rate (CAGR) of 1.2% for the period spanning 2005-2009. In comparison, the German industry declined with a compound annual rate of change (CARC) of -0.1%, and the UK industry increased with a CAGR of 0.8%, over the same period, to reach respective values of $34.2 billion and $30.8 billion in 2009.

The domestic consumer segment was the industry's most lucrative in 2009, with total revenue of $73.8 billion, equivalent to 41.1% of the industry's overall value. The international segment contributed revenue of $58.6 billion in 2009, equating to 32.7% of the industry's aggregate value.

The performance of the industry is forecast to accelerate, with an anticipated CAGR of 4.8% for the five-year period 2009-2014, which is expected to drive the industry to a value of $226.2 billion by the end of 2014. Comparatively, the German and UK industries will grow with CAGRs of 3.5% and 4.1% respectively, over the same period, to reach respective values of $40.7 billion and $37.6 billion in 2014.

MARKET VALUE



MARKET VALUE

The European hotels & motels industry shrank by 4% in 2009 to reach a value of $179.3 billion.

The compound annual growth rate of the industry in the period 2005–09 was 1.2%.

Table 1: Europe hotels & motels industry value: $ billion, 2005–09 Year $ billion € billion % Growth2005 170.8 122.8 2006 178.1 128.1 4.3%2007 183.2 131.7 2.9%2008 186.8 134.4 2.0%2009 179.3 129.0 (4.0%)

CAGR: 2005–09 1.2%

Source: Datamonitor D A T A M O N I T O R

Figure 1: Europe hotels & motels industry value: $ billion, 2005–09


MARKET SEGMENTATION I



MARKET SEGMENTATION I

Domestic Consumer is the largest segment of the hotels & motels industry in Europe, accounting for 41.1% of the industry's total value.

The international segment accounts for a further 32.7% of the industry.

Table 2: Europe hotels & motels industry segmentation I:% share, by value, 2009 Category % ShareDomestic Consumer 41.1%International 32.7%Domestic Business 26.2%

Total 100%


Figure 2: Europe hotels & motels industry segmentation I:% share, by value, 2009


MARKET SEGMENTATION II



MARKET SEGMENTATION II

Germany accounts for 19.1% of the European hotels & motels industry value.

France accounts for a further 17.4% of the European industry.

Table 3: Europe hotels & motels industry segmentation II: % share, by value, 2009 Category % ShareGermany 19.1%France 17.4%United Kingdom 17.2%Italy 13.6%Spain 12.4%Rest of Europe 20.3%

Total 100%


Figure 3: Europe hotels & motels industry segmentation II: % share, by value, 2009


COMPETITIVE LANDSCAPE




The hotels & motels market will be analyzed taking hotel and motel operators as players. The key buyers will be taken as consumers, and property owners, interior designers, and information and computer technology manufacturers as the key suppliers.

The hotels and motels industry’s performance has been negatively affected by the recent global economic downturn and now, more than ever, most hoteliers are searching for demand generators and are relying on direct sales to boost revenues and beat competition.

Within the hotels and motels industry, where switching costs are rather negligible and competing on price alone is no longer a key to success, brand recognition and innovation helps to attract first-time customers and also repeat business. Suppliers include providers of various goods and services, as well as a qualified workforce. Due to a high reliance on sophisticated technology and systems and the growing importance of mobile communication channels, some suppliers may exert strong supplier power. Globalization is an important key driver within the industry, with emerging markets offering significant opportunities, but it also involves employing various business strategies and extra costs. Substitutes include alternative forms of leisure accommodation. The presence of strong, international players, coupled with decline in industry value in 2009, boosts the rivalry level.

Within the hotels & motels industry, which is both mature and very competitive, brand recognition is important to attract consumers. Many of the major players also operate extensive franchise businesses that make brand recognition particularly important. A strong brand image helps to attract first-time customers and also to repeat business as switching costs are negligible in this industry. Buyers are generally price sensitive, except in the premium market. Innovation is also vitally important in attracting customers, as competing on price alone can be difficult. Operators try to tempt customers with new ideas, such as capsule style hotels aimed at the mid-market consumer. In the premium segment, companies can attract customers by better security and more facilities, such as spas, gyms and integrating hotels into golf complexes. Some larger companies have begun to introduce loyalty schemes, by offering a points system or air miles to regular customers, which reduces buyer power. As customers are numerous and mostly small in size, their buyer power is reduced since the impact of losing one customer is not a significant threat to business. Overall, buyer power is moderate.

Suppliers in this market are defined as property owners, developers and real estate companies, interior design and furnishing companies, architects, management and training service providers, marketing companies, industry consultants, and information and computer technology (ICT) manufacturers. Real estate companies are often much smaller companies than hotel and motel operators and rather than being globalized, they are usually local to the property they develop, which reduces their financial muscle and ability to negotiate favorable contracts. Furthermore, hotels can integrate backwards and operate their own real estate business. The quality and availability of supplier services and equipment is essential to the hotel and motel industry. Hotel operators are reliant upon sophisticated technology and systems, including technology utilized for property management, procurement and reservation systems.




Applications, databases and networks must integrate easily with each other and third-party systems to facilitate collaborations with partners. The growing importance of the mobile channel is clear. The technology platforms used by hospitality companies must support and enable all user interactions to integrate in the future, from phones to fax machines to personal computers to personal digital assistants (PDAs) to mobiles. This strengthens supplier power. The industry is also labor intensive. In a competitive industry, sales people who take the time to understand clients’ needs can hold an advantage. Staff costs are significant as success in the hotel industry is strongly influenced by the quality of the service provided. Supplier power is assessed as moderate overall.

The hotels & motels industry is strongly influenced by travel and tourism trends. The situation within the industry has changed significantly in recent years. The business used to be strong and the biggest challenge was finding space to book. Now that it is a buyer’s market, most hotel sales people are faced with the challenge of finding customers. The recent global economic downturn had an adverse effect on the industry’s performance and now more than ever, most hoteliers are searching for demand generators and are relying on direct sales to impact revenues and fill the significant void left by the ailing economy. This may act as deterrent for newcomers; however, the growth forecast is positive, which may boost the risk of new entrants in future.

It is possible to enter the industry in a relatively low-key way by opening a small, independent hotel or motel as a sole proprietor. However, the industry is capital intensive, and for a large-scale entrance, upfront investment in buildings, décor and furnishings, ICT infrastructure and staff is expensive. In a highly competitive business, conducting operations using all the latest technology, as well as constantly developing the tools and skills required, is essential (e.g. allowing travelers to check in to hotel rooms remotely). The more demanding customer of the future will want to engage with a hotel across all touch points (i.e. text, email, and social media) where appropriate. Hotels will need to capture and store more data, yet access to it must be faster and more targeted in order to personalize the guest experience.

As tourism is not a vital consumer good, it will tend to be cyclical and travelers are increasingly expecting bargain rates while refusing to tolerate lapses in quality and service. To sustain revenue growth in the premium market, operating a chain of hotels is often an important strategy as it reduces dependence on tourism in any particular location. However, in order to open an international chain of hotels, regulations in terms of real estate and buying abroad need to be taken into consideration and can therefore be restrictive in some countries. The purchase, leasing, and management of property may involve legal and financial complexities, necessitating spending on professional services.

Globalization is an important key driver within the industry, with emerging markets, i.e. Russia, India and China, offering significant opportunities, but it also involves employing various business strategies and extra costs. For example, customers from China will search for, plan and book a hotel in a different way from customers from Russia. The notion of brand integrity is crucial: hotels will need to supply consistent service in a global environment, while adapting to support customers with new cultural background and sensitivities in local markets.




Some companies have been able to develop a certain business model to avoid many of these extra costs; however, a completely new entrant might not have sufficient scale economies to attempt this. Some companies, such as Marriott, have developed business models involving third parties deal with its property, which has allowed it to bring costs down. Overall, the likelihood of new entrants is moderate.

Substitutes to hotels and motels include alternative forms of leisure accommodation, such as camping facilities or recreational vehicles, or informal accommodation with friends and family. Switching costs range from negligible to high (e.g. the purchase price of a recreational vehicle). While all these substitutes offer the same basic function of a place to stay, up-market hotels and motels often provide added benefits, such as spas and restaurants. The threat of substitutes is assessed as moderate.

The industry includes several large hotel operators, such as Accor and InterContinental, with most of the leading players operating several different branded chains. However, there are also a large number of independents present in the industry. Many larger operators have diversified to some extent and own additional businesses, such as casinos, restaurants and shops. To attract and sustain more business, operators try to offer more and more complex packages and value-added services, such as free breakfast and parking, free third night, etc. Recently, a rising popularity of lifestyle hotels amongst major chains can be observed. Such hotels cater to the conscientious traveler's demands for eco-friendly practices, social responsibility, and affordable style. The largest hotel and motel operators are fairly well insulated from unpredictable market conditions by geographical diversification. However, others are based largely or exclusively in one country. Exit barriers in the industry are fairly high because most of the major tangible assets are highly specific to their industry, and thus harder to divest. This is a likely motivator for many of the global leaders to pursue expansion through franchising and hotel management services, as well as through the acquisition of properties. Many big chains have adopted an asset-light business model in order to fuel expansion; selling off assets has allowed large competitors to raise capital and invest in expanded operations, which again intensifies the competitive nature of the industry. In addition, the declining industry value in 2009 forces players to fight fiercely over a limited share of revenues. However, the industry is expected to recover and post good rates of growth in the forecast period, which may ease the competition somewhat. Overall, rivalry in the industry is strong.

LEADING COMPANIES



LEADING COMPANIES

Accor

Table 4: Accor: key facts Head office: 2 rue de la Mare Nueve, 91021 Evry Cedex, FRA Telephone: 33 1 61 61 80 80 Fax: 33 1 61 61 79 00 Website: www.accor.com Financial year-end: December Ticker: AC Stock exchange: Paris Source: company website D A T A M O N I T O R

Accor is a major global group operating in the hospitality, tourism and service business. The group operates in 100 countries across the globe with Europe being the largest center for its operations.

Accor operates through three business divisions: hotels, services, and other business.

The hotel division of the group is organized under the Accor Hospitality name. Its hotel business has presence in 90 countries, with nearly 4,111 hotels and 492,675 rooms. Accor offers 15 complementary brands for different segments. It offers luxury hotels under the brand name Sofitel; mid-scale to upscale hotels under the brand names Novotel, Pullman, Mercure, Suitehotel, and Adagio; economy hotels under All Seasons and Ibis; and budget hotels under the brand names Motel 6, Etap and Formule 1 (now hotelf1). As of December 2009, Accor operated 1,408 hotels in France, 901 in the rest of Europe, 1,076 in North America, 180 in Latin America and Caribbean, and 565 in other countries. Out of these 4,111 hotels, 21% were franchised, 20% were owned, 20% were on fixed lease, 17% were on variable lease and 22% were managed.

Federated under the name Accor Services, the service division of the company designs, develops and manages value-added services for corporate and public institutions. The division offers a range of prepaid services in the areas of employee and public benefits, including Ticket Restaurant, Ticket Alimentacion and Ticket Childcare; rewards and loyalty like Accentiv, Ticket Kadeos, and Ticket Compliments; and business expense management such as Ticket Car. Accor Services operates in 40 countries with approximately 1.2 million affiliated service providers.

The group's other businesses include restaurants, casinos, and onboard train services.

LEADING COMPANIES



Accor offers a full range of gourmet dining activities through its subsidiary, Lenotre. The subsidiary is the ambassador of French gourmet foods around the world with 16 boutiques in France and 17 outlets in other countries. It also organizes special events and operates a number of restaurants. In all, it has 50 establishments in 10 countries.

Accor provides casino services through its 49% interest in Groupe Lucien Barriere, a major player in the European gaming industry. It also offers onboard train services through its subsidiary, Compagnie des Wagons-Lits. With operations in Austria, France, Italy, Portugal, Spain and the UK, the subsidiary delivers a wide range of onboard food and hotels services on train networks. It also provides related services designed to make traveling easier and more pleasant, as well as foodstuff management and procurement services.

Key Metrics

The company recorded revenues of $9,824 million in the fiscal year ending December 2009, a decrease of 8.7% compared to fiscal 2008. Its net loss was $368 million in fiscal 2009, compared to a net income of $852 million in the preceding year.

Table 5: Accor: key financials ($) $ million 2005 2006 2007 2008 2009Revenues 9,922.7 10,577.6 11,292.3 10,761.2 9,824.0Net income (loss) 506.1 742.5 1,268.1 852.4 (368.5)Total assets 18,324.2 15,480.6 15,064.8 15,869.9 16,332.9Total liabilities 12,343.6 9,782.2 9,932.4 11,274.3 12,165.6Employees 168,623 170,417 172,695 158,162 150,000 Source: company filings D A T A M O N I T O R

LEADING COMPANIES



Table 6: Accor: key financials (€) € million 2005 2006 2007 2008 2009Revenues 7,136.0 7,607.0 8,121.0 7,739.0 7,065.0Net income (loss) 364.0 534.0 912.0 613.0 (265.0)Total assets 13,178.0 11,133.0 10,834.0 11,413.0 11,746.0Total liabilities 8,877.0 7,035.0 7,143.0 8,108.0 8,749.0 Source: company filings D A T A M O N I T O R

Table 7: Accor: key financial ratios Ratio 2005 2006 2007 2008 2009Profit margin 5.1% 7.0% 11.2% 7.9% (3.8%)Revenue growth 8.1% 6.6% 6.8% (4.7%) (8.7%)Asset growth 16.1% (15.5%) (2.7%) 5.3% 2.9%Liabilities growth 8.9% (20.8%) 1.5% 13.5% 7.9%Debt/asset ratio 67.4% 63.2% 65.9% 71.0% 74.5%Return on assets 3.0% 4.4% 8.3% 5.5% (2.3%)Revenue per employee $58,845 $62,069 $65,389 $68,039 $65,493Profit per employee $3,002 $4,357 $7,343 $5,389 ($2,457) Source: company filings D A T A M O N I T O R

LEADING COMPANIES



Figure 4: Accor: revenues & profitability

Source: company filings D A T A M O N I T O R

Figure 5: Accor: assets & liabilities


LEADING COMPANIES



Choice Hotels International

Table 8: Choice Hotels International: key facts Head office: 10750 Columbia Pike, Sliver Spring, Maryland 20901, USA Telephone: 1 301 592 5000 Website: www.choicehotels.com Financial year-end: December Ticker: CHH Stock exchange: New York Source: company website D A T A M O N I T O R

Choice Hotels International is a hotel franchiser operating more than 5,900 hotels, representing more than 479,000 rooms, in more than 30 countries and territories.

The company franchises lodging properties under a number of proprietary brand names, including: Cambria Suites, Comfort Inn, Comfort Suites, Quality, Clarion, Sleep Inn, Econo Lodge, Rodeway Inn, MainStay Suites and Flag Hotels. The company's franchises offer mid-priced, all-suite hotels and rooms designed for senior travelers. Real-time bookings for suites can be made via the internet and the telephone.

The hotels offer two levels of service: full-service hotels, which offer food and beverage services, meeting rooms, room service and similar guest services; and limited-service hotels, which offer amenities such as swimming pools, continental breakfast, or similar services.

Choice conducts its international franchise operations through a combination of direct franchising and master franchising, which allow the use of its brands by third parties in foreign countries. The company operates in Denmark, Norway, Sweden, Finland and Lithuania through the company's relationship with Choice Hotels Scandinavia (CHS); as of December 2006, CHS has 145 open properties.

The company operates in Austria, Germany, Italy, the Czech Republic, Switzerland, France, Belgium, Portugal and Spain through a master franchise agreement between Choice and Choice Hotels Europe (CHE). In the UK, Canada and Ireland, the company operates 113 properties. In Canada, the company operates through Choice Hotels Canada (CHC), a joint venture owned by the company and InnVest Real Estate Investment Trust. CHC is one of the largest lodging organizations in Canada with 275 franchised properties.

LEADING COMPANIES



In Australasia, the company conducts direct franchising operations in Australia, American Samoa, Fiji, New Caledonia, Singapore, New Zealand and Papua New Guinea through a wholly owned subsidiary, Choice Hotels Australasia (CHA). CHA operates 291 franchised properties under the Choice brands and two franchised hotels under the Flag brand in Australia, American Samoa, New Zealand, New Caledonia and Papua New Guinea.

Key Metrics

The company recorded revenues of $564 million in the fiscal year ending December 2009, a decrease of 12.1% compared to fiscal 2008. Its net income was $98 million in fiscal 2009, compared to a net income of $100 million in the preceding year.

Table 9: Choice Hotels International: key financials ($) $ million 2005 2006 2007 2008 2009Revenues 477.4 544.6 615.5 641.7 564.2Net income (loss) 87.6 112.8 111.3 100.2 98.3Total assets 265.2 303.3 328.4 328.2 340.0Total liabilities 432.4 365.7 485.4 465.9 454.2Employees 1,728 1,860 1,816 1,789 1,560 Source: company filings D A T A M O N I T O R

Table 10: Choice Hotels International: key financial ratios Ratio 2005 2006 2007 2008 2009Profit margin 18.3% 20.7% 18.1% 15.6% 17.4%Revenue growth 11.3% 14.1% 13.0% 4.3% (12.1%)Asset growth 1.1% 14.4% 8.3% (0.1%) 3.6%Liabilities growth (7.1%) (15.4%) 32.7% (4.0%) (2.5%)Debt/asset ratio 163.0% 120.6% 147.8% 142.0% 133.6%Return on assets 33.2% 39.7% 35.2% 30.5% 29.4%Revenue per employee $276,273 $292,796 $338,932 $358,692 $361,667Profit per employee $50,674 $60,638 $61,289 $56,009 $63,013 Source: company filings D A T A M O N I T O R

LEADING COMPANIES



Figure 6: Choice Hotels International: revenues & profitability


Figure 7: Choice Hotels International: assets & liabilities


LEADING COMPANIES



InterContinental Hotels Group Plc

Table 11: InterContinental Hotels Group Plc: key facts Head office: Broadwater Park, Denham, Buckinghamshire, UB9 5HR, GBR Telephone: 44 1895 512 000 Fax: 44 1895 512 101 Website: www.ihgplc.com Financial year-end: December Ticker: IHG Stock exchange: London Source: company website D A T A M O N I T O R

IHG is an owner, operator and franchisor of hotels and resorts. The group, through its subsidiaries owns, manages, leases and franchises over 4,400 hotels with around 650,000 guest rooms in nearly 100 countries around the world.

IHG mainly operates in the UK, the US, Asia-Pacific, Europe, Africa and the Middle East. However, the group reports its results as three geographic segments (Americas, EMEA and Asia-Pacific), which together with Central functions, form the principal format by which management is organized and makes operational decisions. All these segments are aligned along seven hotel brands: InterContinental Hotels and Resorts, Crowne Plaza, Hotel Indigo, Holiday Inn, Holiday Inn Express, Staybridge Suites, and Candlewood Suites.

Nearly 84% (3,500) of IHG's rooms worldwide are franchised, 14% (585) are operated under management contracts; and 1% (16) is self owned. IHG supports revenue delivery into its hotels through its global reservation system and global loyalty program (Priority Club Rewards), which is paid for by assessments from each hotel in the group. The elements of the global system include: Priority Club Rewards; the central reservation system technology; reservation call centers; and the internet.

The group's Priority Club Rewards offer members rewards, including free overnight stays in hotels, frequent flyer miles for over 40 airlines worldwide, wines, store vouchers and special activities. It offers club member benefits, gold member benefits and platinum member benefits. The central reservation system technology includes the operations of the HolidexPlus reservation system. The HolidexPlus system electronically receives reservation requests entered on terminals located at most of its reservation centers, as well as from global distribution systems operated by a number of major corporations and travel agents; and confirms such reservations.

LEADING COMPANIES



IHG generates room sales globally through its branded websites, such as www.intercontinental.com and www.holiday-inn.com, as well as through third party distributors such as Travelocity, Travelocity Business, Priceline, Orbitz, Lastminute.com, Zuji, Hotel.de and HRS.

Key Metrics

The company recorded revenues of $1,538 million in the fiscal year ending December 2009, a decrease of 17% compared to fiscal 2008. Its net income was $294 million in fiscal 2009, compared to a net income of $262 million in the preceding year.

Table 12: InterContinental Hotels Group Plc: key financials ($) $ million 2005 2006 2007 2008 2009Revenues 1,910.0 960.0 1,771.0 1,854.0 1,538.0Net income (loss) 515.0 405.0 463.0 262.0 294.0Total assets 2,735.0 1,893.0 3,617.0 3,118.0 2,893.0Total liabilities 1,631.0 1,207.0 3,519.0 3,117.0 2,737.0Employees 21,986 11,465 8,674 8,334 7,556 Source: company filings D A T A M O N I T O R

Table 13: InterContinental Hotels Group Plc: key financial ratios Ratio 2005 2006 2007 2008 2009Profit margin 27.0% 42.2% 26.1% 14.1% 19.1%Revenue growth (13.3%) (49.7%) 84.5% 4.7% (17.0%)Asset growth (41.5%) (30.8%) 91.1% (13.8%) (7.2%)Liabilities growth (40.5%) (26.0%) 191.5% (11.4%) (12.2%)Debt/asset ratio 59.6% 63.8% 97.3% 100.0% 94.6%Return on assets 13.9% 17.5% 16.8% 7.8% 9.8%Revenue per employee $86,873 $83,733 $204,173 $222,462 $203,547Profit per employee $23,424 $35,325 $53,378 $31,437 $38,909 Source: company filings D A T A M O N I T O R

LEADING COMPANIES



Figure 8: InterContinental Hotels Group Plc: revenues & profitability


Figure 9: InterContinental Hotels Group Plc: assets & liabilities


LEADING COMPANIES



NH Hoteles SA

Table 14: NH Hoteles SA: key facts Head office: Santa Engracia 120, Edificio Central, 28003 Madrid, ESP Telephone: 34 91 451 9718 Fax: 34 91 451 9764 Website: www.nh-hotels.com Financial year-end: December Ticker: NHH Stock exchange: Barcelona Source: company website D A T A M O N I T O R

NH Hoteles is one of leading European business hotels. It currently has 349 hotels with 52,676 rooms in 22 countries in Europe, America and Africa. NH Hoteles has at present 54 new projects for hotels under construction, which will provide more than 8,000 new rooms.

NH Hotels provides the TV interactive services in all its guestrooms: pay-per-view movies, video games, messaging and information. Internet is also offered in the guestrooms. NH Hotels also has its own brand 'Agua de la Tierra' in its toiletry kits. This new line is based in Spain and the Mediterranean Sea.

NH Hotels has the 'Woman Style concept, which includes among other special features, rooms that are specifically reserved for ladies. This service also includes specially designed accessories for women. The company also has a new kit called 'Woman Style Agua de la Tierra', a specially designed concept for women and consists of different products, such as body milk, and make-up remover.

The company also operates other concepts including: Elysium, Nhube, Fast Good and Nhow.

Elysium is the hallmark of NH and includes hydrotherapy centers, health and beauty, spas, massages, muscle therapy and specific treatments. The company has Elysium centers in Sotogrande (Hotel Almenara), Marbella (Hotel NH Alanda), Seville (Hotel NH Central Convenciones), and Madrid (Hotel NH Eurobuilding). The company also has two new Elysium Travel Spa centers at Terminal 4 in Madrid-Barajas International Airport.

Nhube is a multifunctional area found inside the NH hotels, created exclusively for the company by Ferran Adria. The Nhube concept includes cuisine intermingled with rest areas, reading areas, internet access points, music, and coffee.

LEADING COMPANIES



Fast Good is Ferran Adria's latest invention for NH Hoteles. This concept offers hamburgers, sandwiches, baguettes and salads.

Nhow is the new category of NH hotels, created for avant-garde, sophisticated and international guests. Nhow is the NH category where guests can eat, use the spa, have a business meeting or event.

Additionally, the company is engaged in the real estate development business.

Key Metrics

The company recorded revenues of $1,682 million in the fiscal year ending December 2009, a decrease of 21.1% compared to fiscal 2008. Its net loss was $135 million in fiscal 2009, compared to a net income of $37 million in the preceding year.

Table 15: NH Hoteles SA: key financials ($) $ million 2005 2006 2007 2008 2009Revenues 1,369.2 1,517.0 2,093.7 2,130.8 1,682.2Net income (loss) 86.5 86.8 107.6 37.3 (135.0)Total assets 2,979.6 3,777.3 4,617.5 4,580.8 4,916.8Total liabilities 1,741.6 2,343.3 2,754.5 2,785.5 2,982.6Employees 14,088 14,205 15,158 15,174 18,000 Source: company filings D A T A M O N I T O R

Table 16: NH Hoteles SA: key financials (€) € million 2005 2006 2007 2008 2009Revenues 984.7 1,090.9 1,505.7 1,532.4 1,209.8Net income (loss) 62.2 62.5 77.4 26.8 (97.1)Total assets 2,142.8 2,716.5 3,320.7 3,294.3 3,536.0Total liabilities 1,252.5 1,685.2 1,980.9 2,003.2 2,145.0 Source: company filings D A T A M O N I T O R

LEADING COMPANIES



Table 17: NH Hoteles SA: key financial ratios Ratio 2005 2006 2007 2008 2009Profit margin 6.3% 5.7% 5.1% 1.7% (8.0%)Revenue growth 3.2% 10.8% 38.0% 1.8% (21.1%)Asset growth 17.7% 26.8% 22.2% (0.8%) 7.3%Liabilities growth 37.2% 34.5% 17.5% 1.1% 7.1%Debt/asset ratio 58.5% 62.0% 59.7% 60.8% 60.7%Return on assets 3.1% 2.6% 2.6% 0.8% (2.8%)Revenue per employee $97,188 $106,791 $138,125 $140,426 $93,458Profit per employee $6,143 $6,113 $7,100 $2,456 ($7,501) Source: company filings D A T A M O N I T O R

Figure 10: NH Hoteles SA: revenues & profitability


LEADING COMPANIES



Figure 11: NH Hoteles SA: assets & liabilities


MARKET FORECASTS



MARKET FORECASTS

Market value forecast

In 2014, the European hotels & motels industry is forecast to have a value of $226.2 billion, an increase of 26.2% since 2009.

The compound annual growth rate of the industry in the period 2009–14 is predicted to be 4.8%.

Table 18: Europe hotels & motels industry value forecast: $ billion, 2009–14 Year $ billion € billion % Growth2009 179.3 129.0 (4.0%)2010 180.1 129.5 0.5%2011 187.5 134.8 4.1%2012 199.7 143.6 6.5%2013 212.9 153.1 6.6%2014 226.2 162.7 6.3%

CAGR: 2009–14 4.8%


Figure 12: Europe hotels & motels industry value forecast: $ billion, 2009–14


APPENDIX



APPENDIX

Methodology

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APPENDIX



Industry associations

European Hotel and Restaurant Association 111 Boulevard Anspach, Box 4, 1000 Brussels, Belgium Tel.: 32 2 513 6323 Fax: 32 2 502 4173 www.hotrec.org

Related Datamonitor research

Industry Profile

Hotels & Motels in Australia

Hotels & Motels in China

Hotels & Motels in India

Hotels & Motels in Japan

APPENDIX



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