INTRODUCTION 1 METHODOLOGY 5 DEFINITION 6 TRENDS AND ISSUES 8. White space 8 Brands as points 10 Return to asset ownership 13 Soft branding 16

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2 Contents INTRODUCTION 1 METHODOLOGY 5 DEFINITION 6 TRENDS AND ISSUES 8 White space 8 Brands as points 10 Return to asset ownership 13 Soft branding 16 SEGMENTATION OF BRANDS 19 Star-rating 19 STR classifications 19 Chain scale segments 20 Types 20 Purpose of hotel 21 Examples of specific company segmentations 21 Hotel Analyst s segmentation 23 Summary 24 BRANDS 29 Ones to watch 142

3 Introduction The purpose of this report is to bring clarity to the European hotel brand landscape and provide readers with a comprehensive branding structure. The report investigates the different ways that hotel brands are segmented: Star-rating Chain scales Purpose of hotel Using the information provided in the brand profiles in the report, an illustrative brand landscape for the European hotel brands split by chain scale as defined by themselves is provided. The next section provides useful charts and tables of the leading European brands split by segment; growth of the leading brands, brands in transition and new brands and concepts. In the final section of the report, there are 100 brand profiles of the individual leading European hotel brands plus an additional 20 Ones to Watch. Table 1: Leading European hotel brands to be profiled in this report (2017) Brand Company STR Rooms in Europe Europe as share of whole portfolio Best Western Best Western Hotels & Resorts M 82,000 27% Ibis AccorHotels M 82,342 58% Premier Inn Whitbread E 69,297 96% Mercure AccorHotels UM 63,945 66% Novotel AccorHotels U 44,469 49% Holiday Inn IHG UM 46,024 22% Radisson Blu Carlson Rezidor Hotel Group UU 45,600 e 80% Ibis Budget AccorHotels E 44,916 80% Hilton Hotels & Resorts Hilton Worldwide UU 42,500 21% Scandic Hotels Scandic Hotels U 40, % NH Hotels NH Hotel Group U 37,634 89% Travelodge Travelodge E 37,000 97% Ramada Worldwide Wyndham Hotel Group M 31,000 26% B&B Hotels B&B Hotels E 28,000 96% Campanile Louvre Hotel Group M 28, % Holiday Inn Express IHG UM 29,508 34% Barcelo Barcelo Hotels & Resorts U/UM 25,000 e 66% Sol Melia Hotels International M 24,500 97% Marriott Hotels Marriott International UU 23,872 12% Ibis Styles AccorHotels M 24,039 63% Melia Melia Hotels International U 20,500 e 64% Crowne Plaza Hotels & Resorts IHG U 21,633 19% HotelF1 AccorHotels E 16, % Premiere Classe Louvre Hotel Group 19, % 1

4 Table 2: One to watch brands to be profiled in this report (2017) Brand Company STR Rooms in Europe Europe as share of whole portfolio 7 Days Inn Plateno Hotels Group E - Ascend Collection Choice Hotels International U 3,585 27% Canopy by Hilton Hilton Worldwide % Clayton Hotels Dalata Hotel Group U 4, % Even Hotels IHG U - - GLo Best Western Hotels & Resorts HomeInns BTG Hotels Hualuxe Hotels & Resorts IHG U - - Hub by Premier Inn Whitbread E Nine hotels 100% Hyatt Centric Hyatt Hotels Corp UU - - Jaz in the City Deutsche Hospitality U Two hotels 100% Jo&Joe AccorHotels % Kimpton Hotels & Restaurants IHG UU 149 1% Maldron Hotels Dalata Hotel Group 1, % MamaShelter AccorHotels % Metropolo Jin Jiang Hotels Group Moxy Marriott International UM 1,000 77% nhow NH Hotels Group UU Three hotels 100% Prizotel Carlson Rezidor Hotel Group % Quorvus Collection Carlson Rezidor Hotel Group UU c % Radisson Red Carlson Rezidor Hotel Group c % Tru by Hilton Hilton Worldwide Vib Best Western Hotels & Resorts Zoku Zoku - 1 aparthotel - Note: STR E = economy; M = midscale; UM = upper midscale; U = upscale; UU = upper upscale; L = luxury Source: Hotel Analyst 4

5 Methodology There are more than 120 profiles on the leading European hotel brands including significant others. These significant others are ones to watch due either to the fact they are new brands launched by the global players, are new concepts or are large brands in their domestic markets and may possibly move into Europe. A variety of different sources were used to collate a list of the leading hotel companies and their brands. These included the list of top 325 hotel chains provided by Hotels magazine, Otus OHBD Hotel Chains in Europe, MKG Consulting and individual company websites. For the purpose of the report, it was decided to focus upon those brands that had operations in Europe or that were planning to develop hotels in Europe. The report looks at the leading 100 European hotel brands. Brands and sub brands: due to the difficulty in obtaining data for many brands by sub-brand if necessary, they will be profiled together. For example Best Western does not provide any information on BW Plus, Premier, Collection, so they will be profiled together Profiles: the information provided in the profiles comes from: Company websites Development information Investor Relations SEC filings, Annual Reports Facebook PR departments 5

6 Definition Wikipedia defines a brand as a collection of images and ideas representing an economic producer; more specifically, it refers to the descriptive verbal attributes and concrete symbols such as a name, logo, slogan, and design scheme that convey the essence of a company, product or service. The brand, branding and brand equity have become increasingly important components of culture and the economy, now being described as cultural accessories and personal philosophies. Brands in the hotel industry today are more than the actual hotel itself; they represent a lifestyle choice and create a whole new meaning system. Hotel brand experts now aim for loyalty beyond reason which is associated with international brands like Coke, Nike, Apple and Starbucks. In order to increase profitability, hotel companies need to expand and in order to do this they either stick to one brand or they develop a portfolio of brands in order to capture a wider market. A one-brand strategy has the advantage of coherence and economies of scale, while multi-brand companies can target specific market segments with products tailored to the needs of that particular niche. Also, there are often potential synergies between the brands of one hotel group. For example, one individual may belong to different market segments, depending on whether they are travelling for business or leisure. The level of adherence to brand standards is another important strategic variable. There is an inherent tradeoff between maintaining very demanding requirements and promoting a looser concept of brand affiliation. Strict standards which require that all hotels in the chain have a consistently recognisable appearance and that they be managed according to detailed operating procedures have the advantage of ensuring a brand s integrity. The downside is that such rigidity can hinder a brand s expansion, especially when it is a question of converting existing hotels under franchise or management contracts. One example is the introduction of loosely-affiliated brands such as Marriott s Autograph Collection. Also, increasingly, hotel consumers are rejecting standardisation and are seeking out properties that have individual character or reflect local culture 1. Factors that have brought about increasing importance of brand: Many hotel groups are divesting their real estate interests and pursuing an asset-light strategy in order to free up capital for expansion. Therefore ownership of bricks and mortar is giving way to ownership of the brand itself, in both its physical and intangible aspects: a major cultural shift in the industry. Hotel expansion is intensifying competition; most gateway cities are reaching market saturation with leading brands sited close to one another, and travellers frequently spoilt for choice. There are now clear signs that hotel groups are beginning to recognise the importance of brand management within their organisational structure. Loyalty schemes, traditionally the preferred tool for winning and retaining hotel customers, are having a declining impact. Many hotel guests now own loyalty cards for all of the major chains, therefore such schemes are no longer a dominant factor in their choice of where to stay. Brand relationships as owners continue to expect more from brands, they will not sit by idly while a property they believe should be performing better is struggling. High profile cases such as the Waikiki 1 Mintel International Group, International Hotel Industry, December

7 mean booking. And it adds choice when redeeming those loyalty points. But scale is all and collections are the only way to pick up those independent owners who just won t do the decent thing and flag up. For Hilton, the name is apt. Another colour to fill in the bigger picture. HA Perspective, issue four, 3rd February 2017 The Alternatives (to branding) The growth of the OTAs has meant that hotels have been presented with an alternate route to market, where weighing up the cost of branding versus the cost of OTA commissions. The operators have looked to stem the tide with soft and collection brands, but there are yet other options, including affiliation brands and just plan staying independent. At the International Hotels Investment Forum in Berlin in 2017, owners spoke out about their concerns. Cody Bradshaw, SVP and head of European hotels, Starwood Capital Group, said: Brands need to go overhead light as well as asset light. Cost synergies are subsidising many of these deals, but there s no trickle down in cost savings to owners. My prediction is that Google is going to be a real disruptor in this space. In the next 20 years something has got to give the brand fees are not that different to the OTA fees. Bradshaw echoed earlier comments from Desmond Taljaard, managing director, hotels, London & Regional, who told the conference: What would a brand have to be able to do to put a brand on a hotel? They need to drive business above and beyond what the hotel could do itself. Take the Atlas Hotel portfolio, we do ponder whether there was any need to brand those, so far we are leaning on the green box rather than the red, but when I m charged for the brand, loyalty programme, booking.com and I get 12% back at the end of that, I begin to wonder. The economics are going to come under lots of scrutiny when the contracts come up for renewal. Every time a brand hires a new brand leader it adds new costs for me, they add bacon at breakfast, green carpet, blue carpet. It s wonderful for that persons CV and I hope they do well, but it adds cost for me. Brands need to keep the cost of value added in balance. The OTAs are the fundamental crisis in the hotel sector in the past 20 years. You compare the arithmetic of the OTA and the limited service brand are we facing a cataclysmic change? People need a lot a lot more weaponry if they are going to win the war. The brands have tried to respond with flexible contracts, with Robert Shepherd, chief development officer, Europe, IHG, telling Hotel Analyst that the concerns of the owners had been noted: The old days of a 25, 30- year management agreement that you couldn t get out of, they re gone. The point now is around aligning interests. Unless we align interests, there is no point in a 20-year relationship. By structuring whether there are performance tests, whether there is a hurdle for incentive management, so you don t earn meaningfully until you get a certain level of GOP. Our fee structures are a base and an incentive fee, the base is low and competitive. We will talk to owners at the outset and start to make an agreement based on their interests. We don t have to have capital in the game, we don t have to own it, but we can make sure that our performance is tied to the hotel performance. There may be guarantees fort the first five or six years, at which point the owner will refinance a stabilised asset. 16

8 But the alternatives are also responding. In May Associated Luxury Hotels International announced that it had added 45 hotels and resorts outside north America. The new sites were added from Worldhotels, which the company acquired earlier this year as the consortia sector seeks to take on the rise of the soft brands. ALHI looks to set itself apart from the other groups offering sales representation or meeting services, working as an extension to its members onsite sales teams, being compensated by a dues-based business model, at no cost to the meeting professional or their organisation. The group focuses on the meeting and incentives market, with primarily independent luxury hotels and resorts and emerging luxury brands. In February the company acquired Worldhotels for an undisclosed fee, bringing Worldhotels 350 member hotels and resorts together with ALHI s 250, combining their experience across the business, leisure and MICE segments. Associated Luxury Hotels chief sales officer Mark Sergot, said: We ve added these 45 exceptional hotels and resorts to our distinguished portfolio in response to the demand we ve been experiencing from meeting, convention and incentive professionals for more luxury-level hotels and resorts around the world. ALHI has long been recognised as having the very best portfolio of meeting, incentive, and convention hotels and resorts in North America for years, bar none, so we have been busy augmenting our portfolio with fantastic options abroad. These new additions are helping us expand that reputation around the world. Further, we have also planted our newest ALHI global sales office in London, as our first in Europe, just last month. Earlier this year saw ALHI chairman, David Gabri, announce that the group was preparing to become more valuable to hotel owners and operating companies as a significant, full-service soft brand. As the ALHI was expanding into luxury and Europe, Preferred Hotels & Resorts, which operates a pay-forperformance structure, revealed a new app and membership rate, offering a 3% discount to the best available rate, to its loyalty programme, iprefer. The app, built in collaboration with American Express, allows members to book stays at over 600 participating hotels and access special offers such as member rates, update their profiles, view their stay history and related points earnings, and access and redeem reward certificates. Members will also get push notifications for special offers, while American Express cardholders will be offered expedited process through American Express Checkout. Additional features soon to be introduced include a concierge chat service and the ability for travellers to reserve services such as spa treatments that can be purchased using reward certificates. The announcement was the latest in a string for Preferred this year, including overhauling the loyalty programme, which it said had led to a 57% increase in enrolments, a 24% increase in stays, and a 23% increase in room revenue generated through iprefer bookings. In 2015 the company moved to one brand under the Preferred Hotels & Resorts flag, with president and CEO Lindsey Ueberroth commenting: In a time when seemingly every hotel company is introducing new brands that target specific demographics, we are doing the opposite by transitioning from a house of brands to a branded house. To the consumer, all branding is branding. Dr Cris Tarrant, CEO, BDRC Group, said In the eyes of the consumer an affiliation brand is just like any other hotel brand and so bears direct comparison with them. BDRC s unique Brand Margin methodology clearly demonstrates that compared to an equivalent unbranded hotel in the same 17

9 Segmentation of brands Star-rating Although hotels are classified into 'Star' categories (one-star to five-star), there is no standard method of assigning these ratings, and compliance with customary requirements is voluntary. A US hotel with a certain rating, for example, may look very different from a European or Asian hotel with the same rating, and would provide a different level of amenities, range of facilities, and quality of service. Whereas hotel chains assure uniform standards throughout, non-chain hotels (even within the same country) may not agree on the same standards. In Germany, for example, only about 30% of the hotels choose to comply with the provisions of the rules established by the German Hotels & Restaurants association. Although both UN World Tourism Organisation (UNWTO) and International Organisation for Standardisation (ISO) have been trying to persuade hotels to agree on some minimum requirements as worldwide norms, the entire membership of the International Hotel & Restaurant Association (IH&RA) opposes any such move. According to IH&RA, to harmonise hotel classification based on a single grading (which is uniform across national boundaries) would be an undesirable and impossible task. As a rough guide: One-star hotel provides a limited range of amenities and services, but adheres to a high standard of facilitywide cleanliness. A two-star hotel provides good accommodation and better equipped bedrooms, each with a telephone and attached private bathroom. A three-star hotel has more spacious rooms and adds high-class decorations and furnishings and colour TV. It also offers one or more bars or lounges. A four-star hotel is much more comfortable and larger, and provides excellent cuisine (table d'hote and a la carte), room service, and other amenities. A five-star hotel offers luxurious premises, widest range of guest services, as well as a swimming pool and sport and exercise facilities 3. STR classifications STR and STR Global use Chain Scales and these are a very useful indicator of where brands sit in relation to one another. The brands/chains are sorted by chain scale based on the brands previous year s annual systemwide (global) Average Daily Rate. The rate ranges defining each chain scale are determined by STR itself. They have the following chain scales: Luxury Upper upscale Upscale Upper midscale Midscale Economy

10 There are some discrepancies between where the brand markets itself and where it is positioned by STR. For example, STR Global has Novotel listed as an upscale brand, but Accor in its own marketing literature describes Novotel as upper midscale or midscale. Chain scale segments Performance in the US lodging industry is evaluated based upon chain scale segments, which are generally defined as follows: Luxury - typically offers first class accommodations and an extensive range of on-property amenities and services, including restaurants, spas, recreational facilities, business centres, concierges, room service and local transportation (shuttle service to airport and/or local attractions). ADR is normally greater than USD210 for hotels in this category. Upper Upscale - typically offers a full range of on-property amenities and services, including restaurants, spas, recreational facilities, business centres, concierges, room service and local transportation (shuttle service to airport and/or local attractions). ADR normally falls in the range of USD145 to USD210 for hotels in this category. Upscale - typically offers a full range of on-property amenities and services, including restaurants, spas, recreational facilities, business centres, concierges, room service, and local transportation (shuttle service to airport and/or local attractions). ADR normally falls in the range of USD110 to USD145 for hotels in this category. Upper Midscale - typically offers restaurants, vending, selected business services, partial recreational facilities (either a pool or fitness equipment), and limited transportation (airport shuttle). ADR normally falls in the range of USD90 to USD110 for hotels in this category. Midscale - typically offers limited breakfast, selected business services, limited recreational facilities (either a pool or fitness equipment), and limited transportation (airport shuttle). ADR normally falls in the range of USD65 to USD90 for hotels in this category. Economy - typically offers basic amenities and a limited breakfast. ADR is normally less than USD65 for hotels in this category. Types Upscale luxury: An upscale full service hotel facility that offers luxury amenities, full service accommodations, on-site full service restaurant(s), and the highest level of personalized and professional service. Luxury hotels fare normally classified with at least a four or five-star rating depending on the country and local classification standards. Examples may include: InterContinental, Waldorf Astoria, Four Seasons, Conrad, Fairmont, and The Ritz-Carlton. Full service: Full service hotels often contain upscale full-service facilities with a large volume of full service accommodations, on-site full service restaurant(s), and a variety of on-site amenities such as swimming pools, a health club, children's activities, ballrooms, on-site conference facilities, and other amenities. Examples include: Holiday Inn, Sheraton, Westin, Hilton, Marriott, and Hyatt hotels. Boutique / lifestyle hotels: Boutique hotels are smaller independent non-branded hotels that often contain upscale facilities of varying size in unique or intimate settings with full service accommodations. Boutique hotels are generally 100 rooms or less. Some historic inns and boutique hotels may be classified as luxury hotels. Examples include Hotel Indigo and Kimpton Hotels 20

11 Chart 1: Illustrative landscape for leading European hotel brands (2017) SOFT BRANDED 1-STAR 5-STAR EXTENDED STAY LIFESTYLE RESORT / WELLNESS URBAN BUSINESS MEETINGS STANDARD ECONOMY MID-MARKET UPPER MARKET LUXURY Summary Chart 2: Illustrative brandscape for European luxury and upscale brands UPSCALE UPPER UPSCALE LUXURY Source: McKenney Research 24

12 AUTOGRAPH COLLECTION Ownership Hotel & rooms Launched 2010 STR Classification Marriott International 111 hotels with 24,939 rooms Upper upscale Geography (rooms) Operating model (rooms) 3% 2% 19% 18% 58% North America Europe Africa & ME Asia Pacific Caribbean & Latin America 1% 7% Managed Franchised Joint venture 92% Europe accounted for 4,710 rooms Joint ventures accounted for just below 1% Characteristics Key competitors Performance Tag line Customer profile Development plans Soft brand Features independent hotels and resorts around the world representing upper-upscale and luxury properties with distinctive personalities Each is unique in terms of product offering and target customers. Many are iconic properties located in gateway and emerging cities in preferred destinations around the world Curio by Hilton, Leading Hotels of the World, Preferred Hotels, Small Luxury Hotels At end December, occupancy 77.5%, ADR USD229, RevPAR USD178 (N America only) Exactly like nothing else Different for each property Pipeline stands at 72 properties with almost 13,000 rooms Latest news Autograph Collection debuts in Estonia (2017) 33

13 B&B HOTELS Ownership PAI Partners Hotel & rooms Launched hotels STR Classification Economy Geography (hotels) Europe 100% Properties are located in Europe with the exception of one property in Morocco France 69%, Germany 22%, Italy 7% and Spain and Poland 1% each Characteristics Key competitors Customer profile Development plans Brand standards B&B is at the high-end of the budget hotel segment Econochic room concept Ibis Budget Business and leisure travellers. Plans to open 15 hotels a year One of the top three French hotel networks with one goal only: to offer the best experience for a low price. All the hotels offer only Bed & Breakfast (no restaurant), the fast wifi access and a pantagruelian breakfast buffet Latest news Acquired from Carlyle Group by PAI Partners (March 2016) Acquired Spanish hotel chain Sidorme, adding 15 hotels (1,367 rooms) across Spain (October 2016) 34

14 W HOTELS Ownership Hotel & rooms Launched 1998 STR Classification Marriott International 51 hotels with 14,145 rooms Luxury Geography (rooms) 10% 6% Americas Operating model (rooms) 9% 20% 64% Asia Pacific Europe Africa & ME Owned Managed & UJV 91% Characteristics Brand specific products Tag line Development plans Latest news A New York phenomenon that evolved into a global powerhouse Combining the personality and cutting-edge style of a boutique hotel with distinct positioning, W Hotels has created an entirely new segment in the hotel industry. W hotels provides the insider access to what s new and next, offering a unique mix of cutting-edge design and passions around design, fashion, music and fuel. Dominating the contemporary lifestyle space, W Hotels consistently outperforms the competition. W Hotels can be found in the most dynamic international gateway cities and in some of the most desirable and exclusive leisure destinations in the world. Location urban or retreat Living room/lounge W Hotels has taken the traditional hotel lobby and made the Living Room the epicentre of the hotel s vibe. Providing stylish ambience, guests can take in the buzz or create their own intimate social spaces. W Hotels' take on the traditional hotel pool, Wet Deck, often serves as an outside extension of the Living Room. W HAPPENINGS - W Hotels' Signature Event Series, focusing on W Hotels' passion points of design, fashion and music, activates W Hotels' Living Rooms and Wet Decks so that they remain vibrant and a place to see and be seen. SPA - W Hotels offers two spa options that reflect its values: Bliss Spa, a renowned, hip day spa from New York that is exclusive to W hotels, and Away Spa, a tailor-made spa solution developed for W Hotels and Escapes alike The Store - The Store allows hotels to partner with local designers and shops for a locally curated experience. An extensive product line up delivers the W brand in a tangible and personal way for guests to take home with them. Insider access to what s new and next Has a pipeline of 32 hotels with 7,874 rooms Is looking to reach 75 hotels by 2020 Following the launch of W Dubai Al Habtoor City, the brand is set to rapidly grow its portfolio in the Middle East region with four new hotels slated for the coming years. These include two more in the UAE: a second hotel in Dubai, the highly anticipated W Dubai The Palm, and W Abu Dhabi; plus W Amman and W Muscat. W Hotel is to debut in Dubai Expanding its presence in Spain with the signing of W Madrid Due to open in Budapest in

15 WESTIN HOTELS & RESORTS Ownership Hotel & rooms Launched 1930 STR Classification Geography (rooms) Marriott International 217 hotels with 81,249 rooms Upper upscale Operating model (rooms) 3% 20% 70% 8% 2% Americas Asia Pacific Europe Africa & ME 39% 58% Owned Managed &UJV Franchised Characteristics Brand specific products Tag line Customer profile Development plans Latest news Every aspect of the Westin experience is designed with travellers well-being in mind, ensuring that guests leave feeling better than when they arrived. Through innovative, signature products and programs combined with instinctive, personal service and intuitive design, Westin delivers on each guest s every need, driving unmatched guest loyalty and industry-leading performance. Location urban, suburban, resort, convention and airport It has high customer appeal and loyalty Each signature Westin offering is developed to help guests Sleep Well, Eat Well, Move Well, Feel Well, Work Well, or Play Well. These are the brand s 6 pillars of well-being. Some example offerings include: The Heavenly Bed Westin transformed both the sleep experience and the industry with the Heavenly Bed. The success of the Heavenly Bed inspired the launch of our Heavenly Bath, Heavenly Shower, Heavenly Spa and an extensive line of other products. Sensory Welcome Guests feel well the moment they arrive through a fusion of refreshing elements like the signature White Tea by Westin scent, soothing lighting and natural botanical beauty. SuperFoodsRx During all meal periods Westin offers delectably nutritious SuperFoodsRx dishes by powerfully pairing whole foods to boost their benefits and their flavours. WestinWORKOUT/RunWESTIN/Gear Lending - Westin offers spacious state-of-the-art fitness studios, group runs led by a Run Concierge and local running maps designed to help guests explore the area while keeping up with their fitness routine. Guests can also pack light and stay fit with workout Gear Lending provided in partnership with New Balance For a better you Business and leisure travellers Has a development pipeline of 48 hotels with 13,260 rooms Recent openings include The Westin Cairo Golf Resort & Spa, Jakarta (Indonesia), Doha (Qatar) locations in the US Buffalo, Nashville 140