A budget hotel is born
French Louvre Hotels and Austrian Warimpex have announced a strategic joint venture to develop a network of budget hotels in Central Europe. The two companies are now awaiting government approval and want to launch the project in the middle of 2007. Together, the firms are looking to invest between E300-500 (zł.1,163-1,938) million within the next five to seven years with the aim of developing over 80 hotels in the region.
"We are delighted to announce this agreement with Louvre Hotels. Together, we intend to open up the economy-hotel market segment in Central Europe. The synergy of our strengths should smooth the way for market leadership," says Franz Jurkowitsch, president of Warimpex Finanz-und Beteiligungs AG.
"This is a very exciting project for Louvre Hotels. It allows us to expand our budget hotel distribution in key strategic markets with a strong regional partner," says Richard Gomel, president of Louvre Hotels. "The proven strength and quality of our offer combined with Warimpex's expertise in hotel development will create a leading force at the forefront of budget hotel chain growth in Central Europe," he adds.
Louvre Hotels and Warimpex will each have a 50-percent stake in the company, which will operate in Poland, the Czech Republic, Hungary and Slovakia. If successful, the company will extend its operations to other countries in the CEE region. In the first stage of investment, the companies plan to develop some 30 budget hotels. This will cost roughly E150 (zł.581) million.
Zbigniew Bugaj from the Institute of the Hotel Market (IRH) considers the project an ideal solution. "Warimpex will act as developer and Louvre Hotels as hotel operator. Together, they will easily fill up the markets where there aren't many hotels. [These] economies are growing at some six to eight percent and they have over 60 million people," adds Bugaj.
Both companies have a lot of experience in the industry. With more than 850 hotels and 63,000 rooms, Louvre Hotels is the second-largest chain in Europe. The company is owned by US property investor Starwood Capital Group.
Since its establishment in 1982, Warimpex has completed projects whose total value amounts to E850 (zł.3,294) million. Today, the company owns or co-owns 11 hotels with a total of around 2,200 rooms. This includes the five-star Intercontinental and four-star Sobieski in Warsaw, as well as the three-star Chopin in Kraków. The company also operates one hotel near Paris. The firm's portfolio, including hotel assets, office and retail assets as well as projects currently under development, comes to around E382 (zł.1,480) million.
