InterContinental Hotels Expands Despite Tough Economies
- Mar 12, 2009
The recession continues to advance, but some hotel developers are still seeing opportunities for growth outside the United States. Just a day after announcing that InterContinental Hotels Group partnered with Crocus Group to build the world’s biggest Holiday Inn in Moscow, the firm announced that it has inked a deal with Tiger Developments to build a 17-story 192-room InterContinental Hotel in Edinburgh, Scotland, due to open in 2013. The hotel will bring InterContinental to Scotland for the first time and will form part of Tiger Developments’ proposal to regenerate the Haymarket area, creating offices, restaurants and shops. The Moscow project garners IHG an investment of more than $100 million from Crocus. The Edinburgh hotel project will be funded with Tiger’s £250 million. As well as the hotel, Tiger’s plans for the Haymarket also feature 342,000-square-foot of office space providing a natural expansion to the Exchange financial district. A boulevard lined with cafes and shops is planned for the center of the site extending from Morrison Street to Dalry Road, forming a major pedestrian thoroughfare linking Haymarket and the Exchange.IHG has seven branded hotels open in Russia and 13 more in the works making IHG the largest international hotel operator in the country. Located in Crocus City in the Krasnogorsk area of Moscow, the eighth Holiday Inn will offer meeting facilities occupying 26,900 square feet, three restaurants and a 12,900-square-foot health club. Construction is scheduled to start in 2011 with the hotel set to open in 2014, CPN reported.While it may seem counterintuitive to start building hotels in the uncertain economy, starting projects now or in the near future may be “forward looking,” Terry Clower, associate director for the center for economic development and research at the University of North Texas, told CPN on March 5. While travel spending is down now, Clower said investment decisions like these are not based on what is going on right now, but what may be happening in one to two years from now.“A hotel starting construction today isn’t planning to open next week,” Clower told CPN. “If you have the financial capacity to move forward now, the time is right because you can get more competitive bidding for construction and materials. So, it is not a bad time to build.”Concord Hospitality Enterprises president and CEO Mark Laport told CPN on Jan. 29 that this is an excellent time to develop. Interest rates are at rock-bottom levels, land prices have come down, and construction material prices have also moderated. In addition, architects are less busy than they were during the boom years, so design plans can be finished quickly. Also, contractors are now looking for work, and competing with each other on price, a good situation for a developer. Concord recently secured a $13.4 million loan to build a 124-room Courtyard by Marriott in Pittsburgh and has 11 hotels under construction, CPN reported.