The “my pipeline is bigger / better than your pipeline” arguments have already started in earnest, demonstrating that this is to be a critical factor for the success of operators in the years ahead.
And hoteliers are being to learn from politicians the art of spin, particularly the wheeze of announcing the same deals and targets several times, much the same as ministers seem to be forever stating a new record level of investment in some public programme.
This week it is the turn of Hilton’s $550m deal in China to have another airing. To be fair, this was a media push by RREEF, the Deutsche Bank property investment arm that is part-funding the development.
The numbers look strikingly similar to those unveiled last December, namely that there is a target of at least 25 hotels with 15 sites over the next three years. The 50:50 partner with RREEF is private equity outfit H&Q Asia Pacific.
The challenge with any such news flow is that unlike a discrete event such as a takeover, organic growth such as this tends to creep out and it is the skills of the marketing, press and investor relations departments that will ensure it receives attention.
Earlier this month, Hilton announced three major development alliances: in the Caribbean, Russia and the UK.
The Caribbean Property Group, a New York-based property investor, is to receive preferred development rights from Hilton in the Caribbean and Central America. The first properties are two existing full-service hotels in Costa Rica but future openings are to focus on Garden Inn in the short-term.
In the UK and Ireland Shiva Hotels has entered into a preferred development alliance. Four sites are currently in development, including two that will be the first Hampton Inns in the UK, at Leeds and Derby. The agreement is expected to result in 15 new hotels.
Shiva is owned by Rishi and Ramesh Sachdev. Rishi is a former Lehman Brothers derivatives trader.
The deal with London & Regional Properties is expected to result in 25 hotels in Russia over the next five years. The focus will be Moscow and St Petersburg and key regional cities. The first hotel will be a Doubletree in Novosibirsk.
Meanwhile, Starwood was determined not to let Hilton have all the limelight. This month it issued a release headed “Starwood Hotel leads the hospitality industry with its record-setting global hotel pipeline”.
Reading further down, it is apparent that this leadership is not through having the most rooms in development – as you have been span to believe – but that Starwood has more upper upscale and luxury hotels in development. A 38% share, apparently.
On a more serious note, as investors and other stakeholders in hotel operators increasingly rank them on pipeline, the companies should be expected to state clearly what constitutes a project’s inclusion in the pipeline.
Some, such as InterContinental, make clear it is only when a formal agreement has been signed – and not just heads of terms – is it included in the numbers. For other companies, however, the situation is more opaque.