U.S. Hotels Expand In Europe

<B>U.S. Hotels Expand In Europe</B>

By Bruce Serlen

Ramada International Hotels & Resorts, a division of Marriott International, and Treff Hotels of Germany and Switzerland last month announced an agreement that will result in the co-branding of approximately 80 existing midprice Treff hotels and resorts. The hotels now will be branded Ramada-Treff. At the same time, Ramada concluded an agreement with Hospitality Alliance AG of Switzerland, a division of Treff, that will result in the development of an additional 10 hotels per year in Germany and Switzerland over the next five years.

"As a result of these agreements, Treff hotels, which represent almost 12,600 rooms, will be the largest of our franchisees," said Reas Kondraschow, senior vice president and managing director for Ramada International.

The Ramada-Treff deal is the latest move by a U.S.-based hotel company to extend its influence into the European market. As more U.S.-based business travelers travel to Europe on business, hotel companies see the value of extending their brand recognition and assumed-service standards into new markets.

For their part, the European-based hotel companies with which they are partnering are eager to gain access to the U.S. companies' sales and marketing reach, particularly into the lucrative business travel market, as well as to their sophisticated reservations technology.

On an individual property level, Starwood Hotels & Resorts Worldwide this month said it would manage the historic 230-room Hotel Pulitzer in Amsterdam as part of its Luxury Collection brand. Roeland Vos, Starwood's European president, cited the hotel's "grandeur and tradition" when making the announcement. It's Starwood's third property in the Netherlands.

The Amsterdam news follows Starwood's announcement last month that in conjunction with a locally based partner, it would manage deluxe properties in Leipzig and Weimar, Germany, in the Luxury Collection portfolio.

Counter to trend, Starwood also announced last month that it was putting its group of European-based Ciga hotels on the block for a reported $1.3 billion. The 25 Cigas, which Starwood acquired three years ago, are operated mostly as Westin and Luxury Collection properties. However, Starwood is interested only in selling ownership in the properties, not in relinquishing their management contracts.

Seeing the incursion of U.S. hotel companies into their midst, remaining independent European hotels continued to join forces with such worldwide hotel consortia as SRS-Worldhotels as a way of gaining access to the consortia's global marketing muscle and central reservations system. Last month, SRS-Worldhotels announced that 50 percent of the independent properties that had joined the organization in 2000 were based in Europe, including four in Italy and three in Germany. "Over the first half of the year, our CRS generated an 18 percent increase in room nights over the prior year," said Ed Brill, senior vice president of the Americas for SRS.

For travel buyers with European hotels in their programs, the additional presence of the U.S. hotel companies simplifies their job considerably. As part of a global account agreement with a Marriott or Starwood, for example, they now can get additional coverage in this part of the world as part of their existing contracts. Indeed, the more room nights they can bring to the negotiating table worldwide, the more leverage they have regarding room rates. Another advantage: In most cases, they can work with their U.S.-based sales contacts with whom they have an ongoing relationship.

The same applies for a global agreement with such a consortia as SRS-Worldhotels: It simplifies the process by enabling the submittal of one RFP and leads to one set of negotiations on behalf of many properties, rather than submitting a series of separate RFPs and conducting an equal number of rate negotiations. And the greater the combined volume under discussion, the greater the negotiating leverage.

According to the European Travel Commission, which is based in Brussels, 12.4 million Americans are expected to visit Europe in 2000 for business as well as leisure travel. This represents an increase of 6 percent over last year. It also will be the eighth consecutive year the number of visitors has risen.

For U.S.-based hotel companies in a deal-making mode, meanwhile, an additional incentive is the value of the U.S. dollar against the euro, which fell to record lows last month. Since it was adopted by 11 European countries in early 1999, the euro has lost more than 25 percent of its value against the U.S. dollar.