• Rezidor looks East

Carlson's two Europe-based franchisees are mounting a major push into Russia and Eastern Europe.

Rezidor, which now has a fully fledged office in Moscow, lays claim to being the biggest international hotel management company in Russia and CIS, while Park Plaza Hotels Europe has signed to build up to 20 new hotels in Russia with Ferens Management.

Rezidor has described Russia and the Commonwealth of Independent States as the powerhouse of its development pipeline with 14 hotels already in operation and a further 16 properties on the books.

Eastern Europe is now 21% of the 68,295 rooms under operation or in development, the same proportion as in the Nordics.

It is thanks to growth in the emerging markets of Eastern Europe, together with the Middle East and Africa, which accounts for another 15% of the rooms, that Rezidor has a counterweight to any slowdown in Western Europe. This region, excluding the Nordics, accounts for 42% of rooms.

The company stressed that it has a strong buffer against any slowdown: its EBITDA break even point is a revpar of Eu55 whereas in 2007 Eu77 was achieved. A Eu1 change in revpar hits EBITDA by Eu5m to Eu6m.

In addition, the results presentation today for the first quarter results showed a slide titled "Hedging for turbulence". This listed the shift in the business model towards fee-based income without guarantees, geographical spread, and a multi-brand portfolio as among the moves being undertaken to reduce volatility in earnings.

What Rezidor has been unable to hedge against, however, is the shift in the date of Easter and the impact of currency changes.

In the first two months of the year, for example, the Nordics saw revpar up 8% but with the move of Easter into March from April, March's revpar was down 12%, producing a result for the quarter of just 1% growth.

The UK, in local currency terms, also showed 1% growth for the quarter but when translated into Euros the drop was 12%.

The impact of Easter knocked between Eu14m and Eu16m from revenues and foreign exchange about Eu4m. EBITDA was down about Eu6m to Eu7m.

The end result was EBITDA reported as just Eu0.2m compared to Eu4.5m last year. The loss after tax was Eu7.0m, further down from last year's Eu1.1m loss.

"We are aware of the turmoil on the financial markets and the continued uncertainties surrounding the global economy, which make it difficult to predict the market outlook for 2008," said CEO Kurt Ritter.

"We are confident of achieving our target of adding 20,000 rooms to operations from 2007 to year-end 2009, and believe that the ongoing shift in our business model driven by more fee based revenue will continue to support our EBITDA margin target."

Meanwhile, Park Plaza Hotels Europe is to add about 4,000 rooms in Russia over the next four years thanks to the deal with Ferens, a company owned by Renova StroyGroup.

Share →