Last week, on the 2nd day of the 20th IHIF, I attended a panel titled: 'New business opportunities in Central & Eastern Europe', the reason that I chose this specific panel is simple: I believe that Central & Eastern Europe still hold a huge growth potential for new hotels both branded and non-branded.
The participants in this panel represented both investors and operators.
From the lodging brands side, the panel included representatives of IHG, Deutsche Hospitality and NH Hotel Group.
From the Investment and Asset management side the panel included two players: Invesco Real Estate and Colliers International representative which recently taken over Vision Hospitality Asset Management.
- Ben Godon Director, Colliers International
- Frida Hansen Director of Business Development, Deutsche Hospitality
- Hans-Peter Hermann Director Asset Management, Hotels, Invesco Real Estate
- Ascan Kókai Director Development & Asset Management, NH Hotel Group
- Miguel Martins Development Director, Poland, IHG
What are my key take-aways from the panel?
- The brands represented in the panel are clearly focusing on Central Europe development i.e. Poland, Czech Republic and Hungary. Croatia was also mentioned as part of the “comfort zone”. When it comes to development in Eastern Europe, these brands are “opportunistic” and in less wish-wash terms, they aren’t actively looking for projects in countries such as: Romania, Serbia, Ukraine, Macedonia, Bosnia Herzegovina, Slovakia, Bulgaria, Georgia and Albania.
- From an Investment perspective, the investors/Asset managers would clearly prefer Management agreements and leases and are less inclined to go with franchise or “soft-brands”
- Between the lines, I understood that Investors are still uneasy with “local regulations” and business codes in Eastern European countries
- The rise of cheap air connectivity, mainly with low cost Carriers between major European feeder markets to these new Central & Eastern European countries isn’t solving the problems these new destinations are faced with, namely poor touristic infrastructure which the local governments need to develop.
- In some of the destinations, one example that was given was Split in Croatia " Airlines operate their flight schedules only during the summer whereby hotels want to operate thorough out the year.
My Conclusion:
Central Europe is clearly at the focus of both Operators and Investors. Each and every large global brand be it Marriott, Hilton, IHG, Accor as well as smaller brands such as Deutsche Hospitality and NH Hotel Group are working hard to secure locations and agreements in those countries.
Eastern Europe is clearly “The new frontier”. Once local governments will ease the ways of doing business allowing transparency and ease of investment, the local investors will develop new hotels, old hotel stock will be bought and re-developed and brands will come in.
Tourism infrastructure development and modernization of the existing old infrastructure is required to go hand-in-hand with the development of new hotels.
This type of investments is normally being done by local governments together with the European Bank for Re-Development, EU funds and in some cases with the support of the local regions & Municipalities.
However, in Eastern Europe were countries are poor, some of the allocated investments sometimes ends in alternative investments or worst in people’s pockets.
Clearly, the first steps need to be taken. Maybe several large Chinese holding groups the likes of HNA Group Co., Ltd or the huge Anbang Insurance Group Co. will recognize the potential and will make a move on these markets.
"The best time to plant a tree was 20 years ago, the second-best time is now."
Chinese proverb
Joseph - Yossi - Fischer the CEO of Vision Hospitality & Travel - international lodging & Travel Solutions and a regular contributor to 4Hoteliers.com with exclusive writing and views.
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