U.S. hotel operators can be successful in Europe if companies forge good relationships, can show investors sound convictions and track records, and if they demonstrate added value to owners.
LONDON—As U.S. hotel operators aim to expand in Europe, the importance of understanding the continent’s different markets and creating relationships with established hotel owners is crucial, sources said.
Participants in the “U.S. operators: Surfin’ USA?” panel at Deloitte’s 28th European Hotel Investment Conference included four hoteliers employed by U.S. operators. The discussion featured talk about their European and global businesses, and how quickly they could change.
The panelists agreed that Europe remains a very complex set of markets, where success demands conviction, good relationships and strong track records that can attract investors.
Josh Littman, VP of hotel development for Europe, Middle East and Africa at Hard Rock International, said successful U.S. operators can show European capital where their brands and companies can add value.
Scott Woroch, managing director of Starwood Capital’s hotel management firm SH Group, agreed. “Appeal to an owner to take a different path, for them to have more say in the product,” he said.
In Europe, U.S. operators need to tread carefully with the integration of branded residences and hotels, which is an increasing trend in the continent. James Bermingham, EVP of operations at Montage Hotels & Resorts, said researching European markets is key.
“We have to understand our markets. It will not work if we just come in as another U.S. company,” he said.
Craig Reid, CEO of Auberge Resorts Collection, said hoteliers must “never lose sight of the customer.” He added that hotel companies need to follow their customers by being increasingly formal in their approaches and properties.
“We did not do this gradually,” he said. “We jumped.”
The panelists each discussed their companies’ pipelines and how they expect to expand in Europe.
SH Group’s brand Baccarat Hotels & Resorts—which debuted in New York City in 2015 and has announced assets coming in Dubai, Morocco and Qatar—has plans to expand in 20 to 30 global markets, Woroch said.
“It’s a niche brand, and the product is really resonating with consumers,” he said.
Hard Rock Hotels, Littman said, has an even larger goal: 100 hotels by 2020.
“The strategy is not to have more than one in each market, with maybe some exceptions. It’s a big world,” he said. “Authenticity and uniqueness is key, even within your own portfolio.”
Growth is a universal agenda, and while Europe is a diverse collection of markets, the panelists agreed the region still contains sufficient opportunities for all.
The changing US landscape
Deloitte’s conference was held on the same day Donald Trump claimed victory in the United States presidential election, so naturally, the discussion turned toward the state of the U.S. and what Trump’s victory means for the hotel industry.
Panelists said they thought potential short-term ramifications from the Trump win, such as a potential dip in international arrivals to the U.S., would be offset by U.S. companies adapting to new challenges.*
“All our growth strategies have been about diversifying portfolio, trying to identify individual market challenges,” Littman said.
Woroch said the U.S. will benefit from high occupancy and robust demand continuing to absorb supply. Chinese investment also continues to be active, he added.
*Correction, 12 December 2016: A previous version of this story attributed a paraphrased quote to an individual panelist instead of the group consensus of the session.