Editors recap the opening day of the International Hotel Investment Forum with takeaways, quotables and more highlights from event in Berlin.
BERLIN—The first day of the 21st annual International Hotel Investment Forum was a busy one as attendees listened to general sessions that included the latest industry update, a look at current transactions trends, and opinions from owners, operators and investors, all of which continue to be positive.
More than 2,200 delegates crowded into the Hotel InterContinental Berlin for the sessions and the Radisson Blu Hotel Berlin for nightcaps at the opening reception. The reception was a celebration of sorts as the industry was formally introduced to Radisson Hotel Group—formerly known as Carlson Rezidor Hotel Group.
Photo of the day
Quotes of the day
“A hung Parliament was pretty much assured, with the 5-Star Movement and Northern League, which both did well, both having serious concerns about Eurozone membership. Added to that, debt in Italy is at 132% of (gross domestic product) at the end of 2017. Just wait to see what happens when the (European Central Bank) stops buying bonds. Italy really could be a problem.”
—Megan Greene, managing director and chief economist for Manulife Asset Management, when talking about Italy’s 4 March elections.
“There’s an absolute wall of money looking at the hotel sector at the moment.”
—Keith Lindsay, managing director-EMEA for CBRE, while moderating the “Investors’ intentions in 2018 and beyond” general session.
Tweet of the day
Slide of the day
It appears that Europe is now the land of opportunity. Investors are aggressively seeking to buy hotels and overall sentiment is that there’s still some meat left on the bone when it comes to finding value-add opportunities.
Some research provides insight to the issue: Keith Lindsay said 37% of respondents of CBRE’s most recent investor sentiment survey said capital growth is the main motivation for investing in 2018.
Some speakers, such as Martin Brühl, chief investment officer and member of the management board of Union Investment, said the amount of capital available in Europe continues to grow in large part because European investors are being priced out of buying assets in the United States and hedging costs in the United Kingdom have gone up significantly.
IHIF attendees file in for the conference's evening reception at the Radisson Blu Hotel, Berlin. The hotel's lobby features a six-story aquarium in its center. (Photo: Jeff Higley)
“There’s almost a repatriation of money in the Eurozone,” Brühl said.
Some of that is a result of generational change, said Cody Bradshaw, managing director and head of European Hotels for Starwood Capital Group. As patriarchs of long-time ownership companies retire, they’re looking to sell to square up family finances.
Another not-so-subtle revelation from Monday’s sessions: Investors are buoyed by the continued desire of consumers to choose experiences over excess goods.
John Ozinga, CEO of AccorInvest, declined to talk about last week’s announcement that AccorHotels is selling 55% of AccorInvest, but was vocal on other topics that fueled more optimism. He said the deal would bring more capital-expenditure funds to the table for the hotel owner.
Meanwhile, the company continues to focus on expanding its food-and-beverage operations to pump more revenue to the bottom line.
That kind of forward-looking optimism made the first day of this year’s IHIF very pleasant indeed.
—Jeff Higley, VP & editorial director
Europe remains the place to be if you are focused on the repositioning, turnaround or opportunistic business of hotels—which due to today’s myriad sources of savvy debt and equity pretty much means everyone and certainly many firms from inside Europe, the Middle East, the U.S. and the Asia/Pacific.
At least in the hotel business, optimism remains rife despite Brexit, Eurozone jitters, an Italian election that left more questions than it provided answers, and the ugly resurgence of nationalism, or so it felt at the first day of IHIF.
As George Nicholas, global head of hotels at Savills, said during a panel titled “Follow the money,” hoteliers know that the “great thing about hotels is that you model the (return on investment) you need. Hotels are a natural hedge against inflation, as you can reset the rent every day.”
Are hoteliers, as many people have quipped, the first people to get into a recession and the last ones to get out, or is there continued power in the European engine?
There were a few voices of warning, although Robin Rossmann, managing director of STR, the parent company of Hotel News Now, and Megan Greene, managing director and chief economist, Manulife Asset Management, ultimately seem optimistic, too.
Rossmann said London might be running out of economic juice following the Brexit referendum and the subsequent fall in the worth of the pound. Greene said that while many of the fundamental concepts of economics rely on scarcity, right now there was not a scarcity of anything, yet productivity and wages continue to fall, which evidently leads to a fall in discernible income.
How long can hoteliers rely on the general growth of global travel demand? How many new and exciting hotel concepts can they create that help boost this demand? And how long can they ignore Keynesian or Friedman 101 economics?
—Terence Baker, senior reporter, Europe