CMS – HOTEL & LEISURE Team

Hotels and Leisure Sector

Update
Date January 2008

This update provides a sector-based overview of hotels and leisure news. Information gathered by the
CMS Hotel & Leisure Team.

Large Hotel chains

InterContinental Hotels Group (IHG) is set increase its presence in the Middle East, after signing an agreement
with one of the region’s biggest property developers.
Whitbread is exploring the possibility of launching Premier Inn, its budget hotel brand, in India.
Starwood Hotels & Resorts has announced that it will open its first hotels under its Aloft lifestyle brand in India in
2010
Hilton plans to have 1,000 hotels across Europe by 2015 and move its focus away from luxury, according to
European president Wolfgang Neumann.The hotel chain aims to grow strongly in Russia, Spain, Portugal, Germany,
Italy and the UK
Accor has agreed to sell 57 hotels spread across France and Switzerland to a real estate consortium for Eu518m
(£372.8m) as part of a leaseback deal.
Accor, the French hotel group that owns the Novotel and Ibis chains, is to launch its budget All Seasons in the UK
next year. A two-star chain, the first one recently opened in France

Hotels, pubs and breweries

JJW Hotels & Resorts, the Middle East hotel group, has reported a profit of $276m (£140.8m) for the 12 months to
31 December 2007, up from £66m the previous year
The Barclay brothers, who own the Ritz Hotel, are sitting on a paper loss of about £120m over their 10% stake in
InterContinental Hotels Group (IHG).
Nite Nite, the micro boutique hotel group, is in advanced negotiations to develop a 300-room hotel in Covent
Garden, Hotel Report has learnt
Young’s, the London-based brewer and pub operator, is to launch a £30m hotel investment programme that will see
the number of rooms it operates more than double.
Hayley Conference Centres, which was acquired by Principal Hotels for £358m last May, has joined its parent
company as a partner member of the Hotel Booking Agents Association (HBAA).
Japan Leisure Hotels (JLH) will float on Aim later this month, after substantially revising its flotation plans, reports
the Financial Times
Qbic Hotels is planning to bring its low-budget pod concept to London, after launching its first property within
Amsterdam’s World Trade Centre last year.
The Bannatyne Group, which is owned by entrepreneur Duncan Bannatyne, plans to invest £16m on a number of
hotel, spa and health club projects, writes The Times
EasyHotel has sold its pilot 34-room property in Kensington, west London, for more than £3m to property company
Demipower. Boss Lawrence Alexander says the money will be used for international expansion of the no-frills chain.
Barclays Commercial Bank has appointed Jonathan Wright as a relationship director within its hotels team
The Real Hotel Company, formerly CHE Hotel Group, has announced that while its trading for the 12 months to 31
December had shown an improvement on the prior year it would be “quite some way below” its previous expectations
Fuller’s, the London brewer and hotel and pub operator, has confirmed that James Douglas will formerly be
appointed as finance director on 1st January, 2008
Leisure

The Dubai government's investment arm Dubai World has increased its stake in the US gaming group MGM Mirage
to 6.5% by buying a block of shares from a charity founded by billionaire investor Kirk Kerkorian
Critics fear Guinness Peat Group (GPG), which has launched a hostile £33.4m bid for Newbury race course,
intends eventually to redevelop the site and stamp out racing there
Duke Street Capital has written to Rank Group with a proposal to buy the Mecca bingo operation
Hotel and conference organiser Booking Services International has been put up for sale for £30m
Trocadero owner Asif Aziz, who last month was forced to abandon plans for a 503-room hotel there, is being sued for
$20m over claims that he defrauded a Lebanese businessman

Deals intelligence

Trends

Fairmont Hotels & Resorts has entered into a partnership with WWF, the global conservation organisation, with the
aim of reducing its carbon footprint.
Hotels are now so expensive that most families cannot afford to stay in them, according to Adam Raphael, editor of
the Good Hotel Guide.
A worldwide boom in high-quality low-cost hotels is set to revolutionise the hotel industry the way budget airlines
have shaken up air travel, according to Michael Prager, chief executive of the Real Hotel Company, whose new
Purple Hotel opens this week at Glasgow airport.
The corporate travel industry is set to see rapid change in 2008, with the introduction of the Open Skies agreement,
according to a new report by the Hogg Robinson Group (HRG).
Travelodge has announced it expects to save £10m a year in building costs with the launch of a new construction
method. The group plans to build new hotels using modified shipping containers made in China, that will lead to a
10% reduction in the cost of each building and a 25% increase in construction speed.
Revpar in the Middle East and Africa was up by 28.2% in November, the highest increase across the globe,
according to figures released by The Bench and Smith Travel Research.
Hotels in the UK saw revpar rise 6.9% during 2007 driven by a strong performance by London, according to the latest
results from the HotelBenchmark Survey by Deloitte.
The UK hotel market was valued at £14bn in 2006, according to Hotels Market Report Plus 2007, produced by
Research and Markets
Visit London, the capital’s visitor organisation, is to put customer reviews of hotels on its website for the first time
Airmiles, the British Airways-owned travel award scheme used widely in the leisure industry, is to simplify its
rewards package. From next week all charges such as air passenger duty and fuel surcharges will be included in its
Airmiles fares.

CEE hotels and leisure

It is planned to build an entertainment complex with a big skating-rink in the ski complex Igora in the Leningrad
region, the Russia-InfoCenter newswire reported. After building works are over, the territory of the ski complex will
increase by 9-fold which will make the ski complex the biggest in Europe
Sistema-Hals OJSC (LSE, MICEX, RTS: HALS), one of the largest diversified real estate companies in Russia and
the CIS (Commonwealth of Independent States), has announced its strategic partnership with Saraya, a real estate
development and asset management company that invests in the travel and tourism industry, to develop Saraya
Sochi on the Black Sea in Sochi, Russia.
Romanian catering company Calipso, majority-owned by investment company Banat-Crisana, plans to build a five-
star hotel in the Western Romanian city of Oradea in a EUR 10 mln investment, Romanian national daily Ziarul
Financiar reported
Some 28 hotels are to be opened in Moscow in 2008, the Moscow city government's representative told RBC today.
Vladimir Resin, Deputy Mayor of Moscow signed a decree to this effect. According to the document, 21 hotels are
projected to be opened in the center of the city, and the total amount of hotel rooms is anticipated to exceed 5,200.

2
 The five-star hotel market value in Romania recorded an increase of some 5 percent in 2007 compared to 2006,
going beyond the 100 million euros ceiling, on the background of maintaining an average occupation degree of 50
percent, estimate profile analysts
The Multifunctional Complex Nevskii Plaza is one of the first genuine multifunctional complexes will be completed in
December of 2008 in the very center of St. Petersburg at #55-59 Nevskii Prospekt. The project will widen the
currently operational hotel, Korintiya Nevskii Palace, by expanding into the neighboring lots, making it the largest
hotel of its category in the city both by virtue of the number of its rooms and by the size of its conference halls
Hungarian real estate developer Eureka Holding Zrt will set up a four-star hotel in the northwestern town of
Szekesfehervar, under a total investment of over 4.0 bln Hungarian forints ($23 mln/15.7 mln euro),
Vladivostok draws the world largest hotel operators. In December foreign companies Accor Group and Marriott
signed letters of intention with the City Administration and the Federation subject. As RIA PrimaMedia was informed
in the press-service of Vladivostok Administration, when signing this document the parties showed their interest to
mutually beneficial cooperation in the field of hotel projects analyzing on the long term and stable basis in the
Primorsky Territory
Foreign hotel chains have ambitious plans for expansion on the Polish market. Most probably American tycoon
Wyndham will enter Poland in 2008, focusing on 2-4 star hotels. However, it will also offer the cheapest hotels such
as Super 8 and Days Inn, as well as the most exclusive ones: Ramada and Wyndham
Yuli Ofer's real estate development arm Central European Estates BV (CEE) (TASE:CNERO.B1) is in negotiations
to buy 95% of the Le Meridien hotel in Budapest from a company owned by Yuli Ofer and Nimrod Rinot. CEE will set
up a subsidiary, CEE Hotel Holdings BV, to buy the hotel and oversee CEE's hotel interests in Central Europe. Le
Meridien is a five-star hotel in the city center operated by Starwood Hotels and Resorts Worldwide Inc.
CEE is also negotiating with Starwood to manage another hotel to be built on the site of Budapest's Nador Palace.
CEE bought 54% of the site in August, and plans to build a 150-room luxury boutique hotel, which Starwood will
operate under the "W" brand. CEE estimates the cost of renovations and redevelopment of the project at 26 million,
of which its share is 2 million.
The effects of the credit crunch have not yet impacted Central and Eastern Europe (CEE), with hotel investments in
the region still showing stable yield requirements, according to new research by Jones Lang LaSalle
Within three years Intourist Foreign Economic Company for Tourism and Investments plans to construct 55
hotels in Russia, Aleksandr Arutyunov, CEO of the company, said. Knight Frank is the advisor for the project. Total
investments are $1.5bln. Arutyunov said that $1bln will be a loan of Sberbank of Russia, other funds will be given by
outside investors, including VAO Inturist itself
Romanian hotel operator Turism Felix expects its gross profit to edge up 5.4 pct on the year to 7.7 mln Romanian lei
($3.25 mln/2.22 mln euro) in 2007
Shareholders of Russian construction and development company Mirax Group plan to invest U.S. $300 million in the
construction of a ski resort in Switzerland, Maxim Temnikov, a member of the company's board of directors
Listed Hungarian hotel chain operator Danubius has won an invitation tender announced by Hungarian capital
Budapest's municipal spa management company Budapest Gyogyfurdoi es Hevizei, to build and manage a four-or
five-star hotel in Budapest
A new 100-room office and hotel complex will be erected in central Moscow in 3 years to come, the city
administration said that the city authorities of Moscow has permitted JSC Khortex to put up the office and hotel
building on 7/2, Zemelny Lane, bldg. 1-2 in 2007-2010 by its own or debt means.
The builders of Moscow are to erect three hotels in Yaroslavl region by the end of 2008, Konstantin Korolevsky, first
deputy head of department of city-planning policy, development and reconstruction of Moscow
Hilton Hotels Corporation has announced that it is set to open its first hotel in Kazakhstan through a management
agreement with Expo-Center Astana LLP. The new Hilton Astana, which will have approximately 237 rooms, is
scheduled to open in the country's capital city in the first quarter of 2010.
The firm Unger Stahlbau, based in Oberwart, Burgenland, will build 18 hotels in Eastern European countries in
cooperation with the Azalea hotel chain. Founded in 2003 by Austrian Christian Piber, Azalea has become one of the
leading international chains in Croatia and is planning to build hotels in Russia, Romania, Bulgaria and Ukraine in the
coming years

China
Park Hyatt Beijing is to be launched by Hyatt in 2008, and is to be the first Park Hyatt hotel in China. Park Hyatt is to
be the eighth Hyatt hotel in mainland China with 12 more hotels planned.
Hong Kong Exchanges and Clearing Limited has initially approved the hotel REIT listing of Far East Consortium
International Ltd.

3
Jiangmen city in Guangdong province, China, expects the tourism investments of Hutchison Whampoa Limited to
attract more visitors and investors. Kaiping city, Enping city, Taishan city and Xinhui district have signed agreements
on tourism investment intention of about RMB20 billion totally until the beginning of January 2008
Hunan Huatian Great Hotel Co., Ltd successfully obtained approval from the China Securities Regulatory
Commission for its share issuance.
Wang Jianlin, chairman of BoD of Dalian Wanda Group Co., Ltd. recently revealed that the company will start
seeing the effects of its previous moves in 2008, as construction will start on more than ten new projects every year,
with 5-8 Wanda Plazas and 3-5 five-star hotels opening.
Super 8, the US budget hotel operator, said it has surpassed its 2007 China target of 120 properties operating or
under development, with 124 such properties in over 60 cities
Franshion Properties (China) Limited (817) said that completion of the acquisition of 50% interest in Chemsunny
and 75% interest in each of Wangfujing Hotel Management and Sinochem Property Management has taken
place.
Accor Asia Pacific boss Michael Issenberg, is packing up and moving the company's regional headquarters to
Singapore. He said the siren call of China and India where Accor is now developing 100 hotels with plans for many
more has proved impossible to resist.
Luxury hotel group Jumeirah, which manages the Burj Al Arab and Jumeirah Beach hotels, is looking to have at
least 10 hotels in China in three years in a major expansion into Asia.
The 342-room, 24-storey Pan Pacific Tianjin is to be launched in 2010
Shenzhen City had a total of 170 star hotels by the end of 2007, including 21 completed five-star hotels and 47
completed four-star hotels, announced Shenzhen's Bureau of Tourism. It is estimated that by 2011 Shenzhen will
have 35 five-star hotels, 53 four-star hotels and 88 high-star hotels.
MGM Mirage and Dubai World are in talks to expand into China, according to the Financial Times. The two
companies are said to be considering a non-gaming investment, in addition to their status as joint venture partners in
a $5.4bn (£2.7bn) development in Las Vegas called CityCenter.

*********