Rezidor cuts costs as hotel market weakens

Rezidor has increased its cost cutting programme to €30 million to cope with worsening market conditions.

The hotel chain, whose brands include Radisson SAS, Regent, and Park Inn, said it would continue its strategy of expanding through fee-based management contracts and franchise to keep its assets light.

In its year-end report, the group said the negative impact of the economic slow down on the European hotel market escalated during the last quarter of 2008, leading to double digit decline in industry RevPAR (revenue per available room).

“Industry RevPAR is expected to continue to decline further in 2009," said Rezidor president and CEO Kurt Ritter.

"In order to meet an increasingly weaker market we have extended our existing cost cutting programme to a level of annual savings of around €30 million and are constantly monitoring the need for additional reductions.

“Rezidor continues with the long term strategy to focus its growth on fee-based managed and franchised contracts to reduce risk in the portfolio.”

In 2008, the group opened 6,500 new rooms, with more than 93% of these fee based.

“By the end of 2008 Rezidor had a contracted pipeline of more than 22,000 rooms out of which 88% were managed or franchised," added Ritter.

“While the turmoil in the financial markets may result in some reduction to that pipeline, it is nonetheless a significant asset to the company when the rooms come into operation.”

By Bev Fearis