Le mie ricette per la real estate communityThe 22nd International Hotel Investment Forum (IHIF) opened on March 4 in Berlin with Alexi H. Khajavi, Managing Director EMEA & Chair of Hospitality + Travel Group, Questex LLC and Jonathan Langston, Chair, IHIF Advisory Board welcoming over 2,500 delegates to the InterContinental hotel in Berlin.
The Economic Overview was delivered by Thanos Papasavvas, Founder and CIO, ABP Invest Ltd who opened his presentation with the statement, in reference to the global economic crisis, “we have just survived a hurricane”. He noted that one tool that drives the economy is Federal Reserve Fund Rates and looking at the economies of China and the US said “neither were a concern” and would maintain economic growth with Trump likely to stay in power until 2025. On the other hand, “Europe is my biggest concern”. Papasavvas said that Merkel “has been keeping the EuropeZone and Germany together and she is about to depart with no one ready to replace her leadership.”
Looking at UK and specifically Brexit, Papasavvas said in his view, “May will deliver Brexit” and the weaker EU economy will have significant impact in the UK. There will be opportunities for non-Sterling investors to invest in the UK and for medium to longer term investors, the UK represents a good opportunity. Providing the central banks maintain an ample level of liquidity, Papasavvas is positive about the economic outlook but warns of social and political unrest if the global economy, specifically the European economy, weakens.
Robin Rossmann, Managing Director, STR took to the stage to look at the markets, Past, Present and Future in A Global Hotel Market Overview. Rossmann opened by looking at the rise of brands and said “owners are choosing more branded hotels than they are independent hotels. In the last 10 years there has been a massive shift towards branded hotels.” He cited OYO as a brand to watch as in contrast to other franchise hotels, all their hotels are required to give 100% of their pricing control to OYO, thereby giving them total control.
Rossmann mentioned Germany as one to watch as it should be stable in 2019 but with 100,000 hotel rooms in the pipeline, the supply growth could negatively impact the market. Unfortunately, a World Cup hangover for Russia is unavoidable and many feared Spanish resorts hit a peak in pricing capacity in 2018. The later is largely due to the huge capacity in Istanbul and the Red Sea (Sharm El Sheikh) and Marrakesh all offering a compelling alternative to Spanish resorts at better value now the safety concerns have abated.
Rossman concluded by stating the “drivers to travel remain strong and whilst 2018 was amazing, 2019 is still expected to be strong.”
Chris Day, Global Managing Director, Christie & Co delivered the next presentation on Buyers and Sellers: The Global Picture on Hotel Transaction Trends. Day opened by saying “less than 20 years ago it was almost impossible to convince institutional investors to consider hotels as an investment opportunity. How times have changed.” He stated yields are continuing to sharpen with increased activity being seen in the Middle East and buoyant hotel investment in Spain. Regarding the UK market Day said “some overseas buyers, particularly from Asia have withdrawn from the market until the uncertainty around Brexit has reduced”. Statistics support this with Asian investment 46% down compared to 2017. Institutional investors represented nearly 50% of the 2018 capital mix demonstrating hotel assets are now seen as a serious asset class by this group. Day cited risks to the market as new supply, geo-political risks and cost pressures and predicted that asset management will become increasingly important in our markets. He noted that banks have a better understanding of the asset class, with specialists deployed within their teams. He said that “we will continue to see low yields in prime locations with increased demand for opco/propco structures” and “investors will seek leaner and more cost effective models and hostels and serviced apartments provide these.” Day concluded by saying “savvy investors already see the hotel market as mainstream. Demand for quality assets in our market continues to grow. The hotel market has come of age.”
The IHIF Lifetime Achievement Awardwas presented to Sol Kerzner (KCMG) – Founder, Kerzner International and collected by his daughter on his behalf. Michael Hirst OBE, Consultant, CBRE Hotels presented the award to Chantal Kerzner. Hirst said during his meeting with Kerzner in London he confirmed his life lessons were; keep going, good enough never is and we can do even better. Kerzner was credited as an innovator and perfectionist and we all wish him a safe and speedy recovery to full health.
The highly anticipated Investors’ Panel: Money Makes the World Go Around: Identifying the Key Trends in Global Money Movement followed moderated by Michael Fishbin, Global Hospitality Leader, EY in conversation with Mai-Lan de Marcilly, Director and Head of Hotels Europe, KKR, Cody Bradshaw, Managing Director and Head of International Hotels, Starwood Capital Group, Abhishek Agarwal, Managing Director, The Blackstone Group, Khaled Bichara, Chief Executive Officer, Orascom Development Holding and Christophe Vielle, CEO & Co-Founder, GCP Hospitality (Gaw Capital Group)
Bradshaw said, “the majority of hotel deals done over the last few years have been done by investors who invest across all asset classes, so they don’t have to invest in hotels if they don’t want to” with which de Marcilly agreed by saying “we don’t need to invest in hotels if we don’t believe the dynamics are good.”
Vielle believes “Some of the investors will be a little bit more careful. They believe there will be better deals to come at the end of this year.”
Looking at the investment options across real estate, de Marcilly said: “retail is challenging, office is very expensive which leaves beds and sheds. We are investing a lot in beds – hospitality, student accommodation and hostels.”
Bradshaw confirmed Starwood Capital Group are looking for properties that they can fix (reference the HAMA Asset Management Awardfor details on Starwood Capital’s creation of The Principal Hotel Company) and in looking at Europe said that “Europe is a city level strategy, not a country level strategy.” Discussing Airbnb, Bradshaw said “we were supposed to be dying because of Airbnb but Airbnb are achieving staggering growth rates and the hotel sector is achieving fantastic occupancy and it’s retail which is suffering. So have survived the mother of all disruption.”
Agarwal said Blackstone are looking at innovation cities for investment opportunities. These are typically where the technology is and where the Millennials want to work. He said “global travel grew by 7% last year and. European airlines order books are set to grow by 7% until 2020 so there is a healthy appetite to serve.”
The panel discussed the recent sale of Belmond to LVMH and their response to the transaction. De Marcilly said the transaction represented a long term trend for luxury whilst Bradshaw said “this acquisition was a marketing manager’s dream, a real opportunity to own the customer”.
A final note on sources of future capital from Bradshaw, “Israeli capital buys in the U.K. In 2018 this equalled £2bn and a lot of people do not know that as only a few press releases come out. Israeli Investors and Israeli Money is becoming a major player in the European Lodging industry.”
The presentation of the HAMA Awardwas then made by the The Hospitality Asset Managers’ Association Europe. The winner of both the overall award as well as the and re-positioning strategy category was Starwood Capital Group and the creation of The Principal Hotel Company. Goldman Sachs won the HAMA Value-Add Strategy category for their work completed with the Tifco Hotel Group.
An asset management panel session followed in the penultimate session of the day, Improving Performance: The Rise of the Asset Manager. The session was moderated by Ben Godon, Head of Hospitality Asset Management, Colliers in conversation with, John Brennan, CEO, Amaris Hospitality, Gaël Le Lay,Deputy Chief Executive Officer, Covivio Hotels and Ömer Müftüler – Partner, Odien Group. Brennan opened the discussion by stating “asset management is not really a role or a function, it’s a mindset of a business.”
The panel discussed asset management within the life cycle of an asset and where can an asset manager can create most value? It was widely agreed that sometimes some of the most critical executions can be during crisis situations. Godon concluded the discussion by saying “the brands are so busy growing brands that, at a local level, the asset manager can focus more energy.”
The final session of the opening day was an interview with Chris Nassetta, President and CEO, Hilton with broadcaster and presenter, Nick Ross. Hilton are celebrating 100 years of operation in the hospitality industry this year and Nassetta praised the noble promise that Conrad Hilton founded the group on. Nassetta and his team aim to work out the next great thing that customers want and deliver it with a customer centricity and a sprit of innovation. He concluded by saying that “leaders should be responsible for ensuring there is a great culture and great strategy, the rest runs itself.”
The second day started with Tim Arthur, Creative Director of the Need To Know Club and former Creative Director of Virgin Money and CEO of Time Out who shared his view from outside the hospitality industry. Arthur encouraged us all to make our brands loveable.
The first panel of the day was an unmoderated conversation between Sébastien Bazin, Chairman and CEO, AccorHotels and Mark Okerstrom, President and Chief Executive Officer, Expedia Group. The CEOs discussed leading performance through innovation and opening up to models outside of traditional hospitality.
Bazin began by saying that the transformation of Accor is complete in terms of fundamentals like segment, geography and business model and what is left to be done is a culture shift. But that, Bazin said “is going to take me another 5 years.”
Okerstrom said that “any time that someone stands on a higher or broader mountain than you do, you have to be careful”. He announced that Expedia have reached the 1 million property milestone this year.
Sharing their concerns, Okerstrom said “I worry about Google. They have everyone in the world telling them what they like and don’t like.”
Referring to the new Accor loyalty programme ALL (Accor Live Limitless), Bazin said he had purposely hired 90% of the team from outside the hospitality background to provide insight, experience and a different way of thinking.
In a light hearted exchange, Okerstrom said his job was to bring Bazin customer. Bazin agreed that he was, “its costing me a fortune, but you are. It then becomes vital to convert them to an Accor customer.”
On the relationship between Accor and Expedia, Bazin said “five-years ago, everyone wanted to admit that we were in a fight. We’re not fighting with anyone. Our relationship with Expedia is very adult and sophisticated.”
Concluding points from this conversation from Bazin included the positive attributes of the industry being that it is profitable, scalable and predictable and the understanding that “you have to be daring, you have to be audacious, you have to learn from other industries.” Okerstrom agreed and said “it’s up to us to make sure this eco-system remains.”
The first panel of the second day was hosted by Russell Kett, Chairman, HVS – London Office in conversation with Marloes Knippenberg, CEO, Kerten Hospitality, Rainer Nonnengässer, Chief Executive Officer, International Campus GmbH, Kike Sarasola, President and Founder Room Mate Group and Oliver Winter, CEO and co-founder, a&o Hostels. The panel discussed the opportunities in alternative models.
Looking at the development of the alternative model structure, Knippenberg predicted that “retail will meet hospitality on the ground floor” and at the moment they have no issues with raising cash or investment.
Turning to sustainability and how much it a hallmark of their brands, Knippenberg said; “we take being local and part of the community very seriously. If we can source a product locally, then we will. We have made a big impact in countries and communities where we can support local.
Sarasola, to applause from the audience, announced how all Room Mate employees have clothes made from recycled material and how he strongly felt that the sector had a very long way to go in terms of sustainability. “If all we are going to do is stop using plastic straws, that’s pathetic. We don’t have a planet B”.
When asked about OTAs, Sarasola (whose company Room Mate works on a 35% direct booking structure) said “OTAs understand that I want to steal their client. They will come once and they will be mine, but we are all working together.”
Looking to other models like glamping, etc, Sarasola said “there is always going to be something new. Anything new that comes up, we’re going to be there.”
The final comment on technology in the industry garnered different views. Sarasola firmly believes that “we still have an industry where we can see our client, touch them and I don’t want to lose that physical interaction” whilst Knippenberg was slightly scathing of conversations around automated check-in saying “the world is going to voice (activated technology) and AI…“we’re so behind”.
The International Hotel Investment Forum (IHIF) and The International Society of Hospitality Consultants (ISHC) Young Leader Award 2019 award was presented to Brian Kaufman, Managing Partner at The Kaufman Companies. Kaufman commented that he was “lucky to be part of global industry which is widely dynamic and continues to innovate. Innovation will continue to drive change”.
The final panel of the morning was the Global CEO Panel – Adapting to Survive & Thrive: Hear from the CEOs Leading the Change. The panel was moderated by Kevin Mallory, Global Head, Senior Managing Director, CBRE Hotels who was joined by Keith Barr, CEO, IHG, Sonia Cheng, Chief Executive Officer, Rosewood Hotel Group, Federico J González, President & CEO, Radisson Hotel Group, David Kong, Chief Executive Officer, Best Western International and Thomas Willms, Chief Executive Officer, Deutsche Hospitality.
Barr opened by saying that 1 in 10 jobs globally are being created in the hospitality sector yet “governments globally fail to understand the importance of the industry in terms of job creation. We are seeing more populist governments which will continue to put pressure on the industry. We need to continue to communicate to governments as an industry.”
Willms said “keeping people in the industry is important, keeping people in our hotels is better.”
When discussing automation and how it fits into the future, Barr explained IHG are adopting machine learning for their workforce and that “there are a lot of functions of the industry that are very manual/back office pieces where it can be used to be more efficient. I’m not convinced about using to enhance the customer experience. It won’t ever replace the human interactions.”
Willms made the point that without automation, airlines would have gone out of business.
Turning to the sharing economy Cheng believes “Rosewood are not traditional or mainstream so the sharing economy will not have an impact on us. Consumers are looking for authenticity, variety and a sense of place whilst being immersed in a city.” She believes Rosewood are “delivering with quality and consistency” and that “in an economic downturn, consumers will go to reliable and trustworthy brands, like Rosewood.”
Kong from Best Western said “Airbnb have significant reduced occupancy and affected our profitability.” But he says, “The Airbnb experience is inconsistent, if something goes wrong there is no one to put it right. Our industry should wise up to how we market our industry and promote what we offer over Airbnb. We are a different product.”
The panel then discussed consumer behaviour in particular that Millennials were largely brand agnostic and turn first to social media, friends, OTAs and review sites for opinions and recommendations.
González believes Radisson remain relevant due to the importance of marketing. “In many other industries involving consumer goods, they pay a lot of attention to how the brands resonate with consumers. The moment a consumer sees you think about them, their thoughts and experience, you have their loyalty.”
Barr understands that marketing needs to become more data driven and more personalised but admitted that he worries when “people say they are building something for Millennials as people change over time.”
Cheng is working on marketing partnerships across Rosewood as well as how the product is packaged. Unique experiences remain the focus point in the knowledge that “with Millennials, everything is about social.”
Barr is eager to reflect the dynamism of how airlines use data to drive their prices and feels “the hospitality industry hasn’t raised their game as much as the airlines have.”
Following lunch, the afternoon programme involved a series of breakout sessions concluding in a Gala Networking Reception, hosted by IHG.
Source : IHIF