CDO Message
Growth is a major success story for Rezidor. As one of the world's most dynamic, fastest growing hotel companies, we dreamt of growth, we lived it, we planned it... and we delivered it!
Our long-term objective is asset-light growth predominantly based on fee business. With a select geographic reach, diversification helps Rezidor navigate through market swings and still grow our bottom line. This strategy has enabled us to increase our emerging markets portfolio by 11% per annum since 2010.
2016 was a milestone year for organic growth with 45 transactions, of which 75% are already under construction. We also grew laterally with the acquisition of a 49% stake in prizeotel, our new economy brand which is now on an ambitious journey. We also proudly opened the world's first Radisson RED in Brussels/Belgium. Our bold lifestyle select brand is quickly becoming a favorite delivering four new signings in Dubai, Tbilisi, Jeddah, Vilnius and Krakow, and more underway.
Our strong momentum continued in the first quarter of 2017 with 60% more rooms signed than in the prior year, driven by Eastern Europe and the Middle East with five signings. These included three Park Inn by Radisson properties in Saudi Arabia; two signings in Poland, including the first Radisson RED; and one Park Inn conversion in Istanbul. We also signed our second Quorvus Collection hotel in Africa (Kampala, Uganda) and our first lease since 2009 to enter Geneva, a strategic market for Radisson Blu presence.
Openings were robust and in line with 2016. We welcomed five new hotels with 900 rooms in the first quarter of 2017. Q1 openings were focused on Africa with the addition of 500 rooms in Polokwane, Cape Town and Libreville. Our additions are 100% managed. We extended our portfolio of Serviced Apartments with Radisson Blu Residences in Dhahran and Istanbul, and opened our seventh Park Inn in Benelux with the new Park Inn Brussels Airport. We expect Q2 to be a very strong quarter for openings.
LONG-TERM POTENTIAL OF EMERGING MARKETS
Emerging markets make up nearly 50% of Rezidor's operating room portfolio. Despite some recent disturbances, we remain confident in the long-term potential of emerging markets, which fit with our asset-light model and balance sheet capabilities.
Poland, one of the fast-growing economies in Europe, is now a focus market for Rezidor, offering strong economics and opportunities for scale. Rezidor is privileged to have a solid existing market presence and brand recognition in Poland, which serves as a solid foundation to deliver our ambitious growth plans in this market.
We are proud and humbled to have the largest pipeline of hotels and rooms under development on the African continent. With vast natural and human resources, an improving infrastructure and rapid urbanization, a growing middle class and huge demand for modern, internationally branded accommodation, Africa is an ideal market for an ambitious hotel operator like Rezidor. Building on our leading position in Europe with Radisson Blu, the largest network in the upper upscale segment, we are now driving the same ambition for Africa. Our portfolio growth creates value to our shareholders and helps us make meaningful social and economic contributions to the local communities and economy. In fact, we are proud to state that 90% of our employees in African hotels are locals.
As a world's most ethical company and a responsible business, every time we open a new hotel in Africa and other emerging markets, we are helping make a positive impact - be it social or economic.
We remain strong in the Middle East, especially Saudi Arabia, which has been a very liquid market over the last five years. Demand has been growing, but has possibly been outpaced by supply. Despite the economic cyclical challenges in the market, specifically driven by oil prices, we have 25 to 30 hotels under construction and are optimistic about the country's 2030 vision.
Striking the ideal balance between volatile but lucrative emerging markets and highly competitive but stable mature markets, will be a focus in 2017. Opening our hotels and growing our new brands will equally be one of our top priorities.
With the key 100,000-room milestone in our rear view mirror, Rezidor opened 18 new hotels in EMEA during 2016 adding 3,500+ rooms. This includes three new hotels in Turkey, along with launches in Latvia, Finland, Germany, Armenia, Greece, the Ivory Coast, Morocco, Oman, Rwanda, Spain and Togo.
New signings also showed continuing improvement, especially in emerging markets, such as Africa. We concluded 45 signings in 2016, keeping up a steady increase of many years. This total includes nine hotels in Saudi Arabia, six in the United Arab Emirates, five in Angola, three in Belgium, three in Latvia and a handful in Turkey. Plus, six deals in Poland, Lithuania and Russia - and others in Cape Verde, Cyprus, Georgia, Kyrgyzstan, Nigeria, Romania, South Africa, Ukraine and Zimbabwe.
In addition to this organic growth, Rezidor acquired prizeotel, an entrepreneurial start-up in the economy segment with three existing hotels in Germany and more already in our European pipeline. We have exciting and ambitious growth plans for prizeotel, starting in Germany, Switzerland and Austria.
Balance is key as we move forward on our journey. So, we will spread our geographic focus between mature and emerging markets. This approach will eventually be reflected in our business model.
A BALANCED PORTFOLIO AND INNOVATION ARE KEY
Our 2017 priority is delivering the pipeline by opening new hotels, rejuvenating growth in our mature markets, specifically Europe, and accelerating our penetration in focus markets, especially in Africa and Poland. We also will concentrate on the rollout of our dynamic, new brands - prizeotel and Radisson RED. 2017 will be another year of innovation with
some exciting new concepts for our guests and investment partners in the resorts and residences for the extended stay segment.
ESSENTIAL SAFETY AND SECURITY
Security is a key issue for many travelers in EMEA. Rezidor remains a vigilant market leader, making safety and security a critical part of its development process. Rezidor was one of the first hotel companies to join the Safehotels Alliance - a third-party provider that reviews and assesses hotels for security. More than 160 of our properties currently have a Safehotels accreditation - and many more will follow.
THE RIGHT CHOICE FOR BUSINESS - "WE SIMPLY BEHAVE DIFFERENTLY"!
Rezidor creates value for business partners with our unique mix of compelling brands; our leading positions in Europe, Russia and Africa; and our operational expertise, which drives revenue and optimizes profit conversion.
Very importantly, the WAY we do business gives us true market standout. Rezidor's Yes I Can! ethos means we work with our partners and stakeholders with an approach that is uniquely commercial, solution driven, simplified, geared to the business realities, relationship focused and enduringly nurturing.
We are passionate about business journeys based on trust and responsibility. Our goal is to unlock value for our own shareholders - and for our business partners - as we continue on our own successful growth path to achieve our long-term objectives.
We thank all our partners and stakeholders for the trust they endow on our people and brands to operate their hotels.