In spite of tough economic conditions, a growing number of brands established in other parts of the world are moving into the competitive European market, with a raft of openings planned for the remainder of 2009 and 2010. Global giants including InterContinental and Starwood are launching boutique-style chains in the region, while others, such as Dubai-based Emaar Hotels and Resorts, plan to capitalise on the trend for lifestyle destinations with the introduction of the Armani Hotel in Milan.
More look set to follow, including Jumeirah, which has a number of openings planned between now and 2012, and Wyndham Hotels and Resorts, which is due to complete the repositioning of its flagship Chelsea Harbour property later this year. However, with revenues down and PricewaterhouseCoopers predicting annual occupancy decline of 10.3% in the UK alone, this could be a challenging time for new hotels in what is already a crowded marketplace.
One brand coming to Europe this year is W Hotels, part of the Starwood group. The boutique-style brand, which first opened its doors in New York in 1998, has 21 hotels in cities around the world.
It will launch a 473-bedroom waterfront property in Barcelona in autumn 2009, with future openings planned for Manchester, Athens, Milan and St Petersburg. W is also developing a 194-room hotel in London's Leicester Square, which will include ten two-level luxury branded residences.
"W Hotels began as a US phenomenon but now our strategic focus point is internationalisation," explains Eva Ziegler, global brand leader. "We plan to make W a brand of more than 60 hotels by the end of 2011, thereby tripling our footprint."
W has found the boutique sector a successful place to find affluent guests who are looking for a unique hotel experience. "In terms of location, we look for dynamic cities with strong entertainment and fashion links," adds Ziegler.
"We target a trendsetting audience and we aim to make each guest feel like an insider." This concept is embodied by W's "Whatever/Whenever" concierge service, which, as the name suggests, promises to provide guests with whatever they want, whenever they need it.
Hotel Indigo, part of InterContinental Hotels Group, is another brand that aims to make a splash in Europe in the next few years. Already well established in the US, Hotel Indigo recently opened its first property outside North America, taking the tally to 22 hotels worldwide.
The new 64-room hotel near Paddington Station combines boutique flair with the benefits of a large-scale brand. The property, which is owned by London Town Hotels, is set within a row of nine converted Georgian houses with views of Norfolk Gardens.
Karin Nielsen, vice-president, brand development and delivery for Europe, Middle East and Africa, believes the region has a lot to offer for the chain, fuelling its expansion plans considerably. "We have 56 more hotels in the pipeline and can envisage opening about 200 properties globally in the next few years," she says.
"Now is a great time to grow the brand. Our guests have told us they want a hotel that is a bit different, where you can also experience the peace of mind you get from staying with a large group. Our properties tend to suit capital cities and cultural centres, which continue to be popular destinations for business and leisure travellers."
In January this year Hotel Indigo signed a deal to open three more outlets in London, focusing its attention on conversion projects, which require less investment and can open quickly. The properties, located in Cannon Street, Philpot Lane and Kensington Church Street, are expected to be open for business by 2012.
Sean Worker, managing director and senior vice-president, international operations at Wyndham Hotel Group, thinks that despite the economic downturn, now is a good time for the company to expand throughout Europe. "We're thinking about it now and doing it right now," he enthuses.
"Interestingly there has recently been unprecedented interest in our upscale brands. We're finding that luxury independents are looking for safe harbour in a brand that's big enough, yet agile and small enough for a beautiful and individual hotel to have a presence. This is the natural progression in a recession."
The group, which has eight luxury assets in Europe, is refurbishing its Chelsea Harbour Hotel in London, due for completion in late 2009. "We are repositioning the hotel and renovating the public space, which will essentially allow us to become a player within the upscale meetings business," he continues.
"We will be the only five-star property on the harbour with facilities of this calibre."
Worker also believes that in the competitive European marketplace, large-scale brands have the capacity to deliver a level of customer service that smaller businesses cannot match. "We are there to help the battered traveller, who could be dealing with work or travel issues," he adds.
"It is up to us to provide a safe haven and a distribution system that is capable of delivering. Small boutique hotels are not plugged into the technology and just can't keep up."
Others consider brands associated with the aspirational Dubai lifestyle to have a natural advantage when expanding from one continent to another. Emaar Hotels and Resorts, in partnership with Giorgio Armani, is developing properties in Milan and Dubai.
Chief executive officer Marc Dardenne thinks the Italian city is the perfect location for the brand. "Milan offers a strong market for luxury hospitality projects and the hotel will redefine standards while incorporating the personal touches of Mr Armani himself," he explains.
Visitors to the property can take advantage of everything Armani and, while the hotel will occupy most of the eight-storey building, the lower floors will incorporate a number of shops and restaurants bearing the designer's name.
Emaar's strong association with "brand Dubai" looks set to stand in its favour as it continues to strengthen its portfolio in Europe. "We aim to develop, own and operate an exclusive collection of hotels, resorts and residences in the world's most important cities and holiday destinations," explains Dardenne.
"Dubai is already a strong selling point in the global hospitality market, which is underscored by the successful international recognition of our other brand, The Address Hotels and Resorts. The city of Dubai has established credible differentials in providing luxury hospitality service and setting new standards, which are now globally acclaimed."
With guests increasingly looking for an individual experience, many chains are choosing to introduce regional distinctions, with a subtly different product for each country. According to Ziegler this is crucial if a brand is to cross borders successfully.
"Once you enter a country, you need to fine tune and adapt your offer," she says. "We always include a level of local elements, reinterpreted in a contemporary manner. We adapt not just between continents but within each European country."
Pinpointing the requirements of each particular region is vital, agrees Dardenne. "Every market has specific challenges, ranging from guest expectations to the amenities that can be provided. The hospitality provider has to understand these difficulties and tailor the property for the potential clientele," he adds.
With little sign of economic recovery expected in 2009, this could be seen as a risky time to expand, but W Hotels says that the economic climate won't affect its plans. "All the hotels we have signed are opening," says Ziegler.
"There will be a slowdown but so far openings have not been cancelled. It is important to see through the process to the hotel business at the end and, from a long-term point of view, many of these properties will be opening when the economy has turned around. In addition we are stimulating local labour markets."
In October last year, InterContinental Hotels' chief executive Andy Cosslett admitted that some of its new projects could be delayed by a matter of months because of the slowdown, but he remained positive about the group's overall growth. "We outperformed the competition in all our markets and segments in 2008, and opened 135 hotels, 36% more than the same period last year," he says.
In the company's end of year results, Cosslett went on to say that IHG comfortably exceeded its three-year target in 2008, adding more than 82,000 rooms, 20% more than in 2007. The group also signed almost 100,000 rooms into its pipeline during the same period.
Despite the challenging conditions it seems there is no shortage of strong brands willing to try their luck in the European marketplace and, as the competition gets tougher, consolidation becomes a priority. "On the positive side the global economic downturn has encouraged hotels across all levels to enhance their efficiency standards and put their focus on customer service," says Marc Dardenne.
Sean Worker agrees with this assessment, and expects to see a Darwinian "survival of the fittest" scenario emerging over the next few months. "There will be a period of consolidation, not only to brands but to real estate," he adds.
"Afterwards we will need to regenerate the confidence that value is still there."