Foreign Hotels Are Struggling, Too

So we’ve been talking a lot about how the recession is affecting the hotel industry here in the United States because, well, that’s where we are. But how are hotels doing in other parts of the world?

According to Trivago, a hotel price comparison Web site that publishes a monthly hotel price index, the European hotel business is struggling, too. Madrid and Barcelona, Spain, have experienced the worst declines over the last year with 31 percent and 28 percent, respectively, while London and cities in France, Germany and Italy have held up relatively well with differences in the low single digits.

And in a move that could be considered a good marketing ploy for a struggling Indian hotel market, Mumbai, India-based Taj Holidays has partnered up with Travelocity to create a bundled flight-and-hotel program at www.tajholidaysflynstay.com. The idea is to provide one-stop shopping for business and leisure travels while also offering incentives such as free nights, one-way flights and companion tickets.

What does this mean for foreign hotels? Since most of Europe’s hotels are independent and not branded, they could be more susceptible to financial difficulty. You don’t have to dig deep to find many of these hotels listed for sale; a Google search yields thousands of listings all over the world, including Europe, Central America and the Caribbean.

With room rates dropping and properties going up for sale, hopefully many U.S. companies’ decisions to open abroad won’t backfire. Maybe the best option for expansion is to convert existing hotels to a branded name, as Best Western International is planning to do, particularly in Europe and Asia or to sign franchise agreements, which Hilton Hotels just did in the United Kingdom.