Future is branding and franchising for hotels

The growth of the hotel market in Europe will be driven by branding and franchising, according to leading industry figures.

Speaking at Deloitte's 19th European hotel investment conference in London last week, operators, owners and investors said translating investment into businesses that can get on their feet quickly will be critical to growth in 2008.

With economic conditions forecast to be tight as the global credit crunch begins to squeeze, the future of hotels will be in branding and franchising existing business models, delegates heard.

Patrick Fitzgibbon, senior vice-president of development for Europe and Africa at Hilton Hotels Corporation, said the company would be launching full-service budget brand Hampton by Hilton into the UK market next year.

"In Europe, only 28% of hotels are branded, compared to 66% in the USA," he said. "We believe our growth in Europe and the international world will come from extending our franchising platform."

Kirk Kinsell, president for Europe, Middle East and Africa at InterContinental Hotels Group, said as the market for new hotel sites accelerated, operators were "all looking at each others' pipelines". He said: "We're challenged by our pipeline in our ability to grow. It's troublesome at times when you're looking for new hotels in the market to find new sites."

However, Ben Carnhan, senior vice-president of acquisitions and development at Starwood Hotels & Resorts, warned that operators which focused too much on developing their pipelines could miss out on customer delivery. "We can all hire the best designers but you need to provide a service to the market," he said. "If you look for different service levels you can look for different customers."

Fitzgibbon concluded on a familiar note, warning that plans for rapid growth could come unstuck if skills issues were not addressed.

"If you're growing at the volume we're all looking to grow at, then how are you going to find 3,000 general managers across Europe?" he asked. "You have to go one deal at a time and you need to focus on value and delivery."

Read more on hotels here >>

Blackstone completes Hilton Hotels Corporation takeover >>

Hilton shareholders back £10b Blackstone takeover >>

By Christopher Walton

E-mail your comments to Christopher Walton here.