There was a bullish atmosphere at the 26th Deloitte European Hotel Investment conference held earlier this month in London, where STR Global predicted the hospitality industry is set for 36 months of positive growth.
Private equity is back in the business and the IPO market up to pre-2007 levels, according to Deloitte’s global head of travel, hospitality and leisure, Nick van Marken. He said that CFOs rate credit as cheaper and more available than at any recent time and noted, “There is significant appetite for hotels in Europe and the UK in particular.”
Van Marken’s confident tone was echoed by Roger Bootle, managing director of Capital Economics who noted that UK interest rates are unlikely to rise for the foreseeable future, despite the fact that the Eurozone economy is still a great cause for financial concern.
European hotel transaction activity in 2015 is expected to be dominated by overseas investors underpinned by North America, China and the Middle East. Upscale properties are the most sought after sector with trophy assets dominated by high net worth individuals and London is considered the most attractive city for investment.
Top investment cities
London is the star, ranked as Europe’s most attractive hotel investment destination, according to Deloitte’s survey of over 120 senior hospitality professionals. Over half of the survey respondents put London ahead of Paris, followed by Barcelona and Amsterdam, despite a majority considering London to be overvalued. In the UK, the Scottish cities of Edinburgh and Aberdeen draw the most interest, with Manchester and Bath also looking very attractive to investors.
“The UK regions have benefitted from a series of high profile international events and a return of corporate and meetings demand resulting in double digit RevPAR growth,” van Marken added.
All things digital
Accor Chairman and CEO Sebastien Bazin said the future is customer-centric and they will force the industry to change. He cited ‘customer to customer’ as the new digital business model, the third wave of innovation which started 10 years ago with OTAs and moved on through aggregators and disrupters such as Kayak and AirBnB.
Bazin said customer communication must focus on the way younger people operate, enabled and influenced by mobile technology, and he urged delegates to “master and follow the customer journey: dream, plan, book, stay, share.”
NH Hoteles showcased how it is bringing the cutting edge to the meetings space with holographic technology, enabling taped or real time interactions. CEO Federico Gonzalez Tejera showed he is an evangelist for the communications opportunities based on the time and cost savings it can create, allowing companies to communicate in multiple locations in a much more personal way or giving access to the CEO for staff throughout the business without the need for him or her to leave the boardroom at critical times.
Best conference quotes
Accor Chairman and CEO Sebastien Bazin on taking over his new role: ” The best three months of the last 30 years, immersing myself in the organization, talking only to Accor executives and our employees,” as a result of which he modified his plan some 40%.
CEO Travelodge Peter Gowers on keeping it real: “They’re only budget hotels if you have a lot more money… Learn the lessons of retail. Think of the sector as low cost rather than budget.”