Investors and hoteliers remain optimistic about European trading, operations, ownership and demand, but opportunities are scarcer, and the uncertainties caused by Brexit simply refuse to disappear.
LONDON—As the 2018 edition of the Hotel Investment in Europe Conference, usually known as Hot.E, is the first hotel industry conference of the season held in the United Kingdom before Brexit will formally happen on 29 March 2019, the major discussion topic was inevitable.
But it was evident among the hoteliers in attendance that patience is wearing thin regarding the wrangling over the United Kingdom’s planned exit from the European Union.
Desmond Taljaard, managing director at investment firm London & Regional, even brought a bicycle horn with him to sound noisily when anyone dared mention Brexit.
The U.K. markets that have done well in the last five years are those that have shown the greatest transparency, and uncertainty brewing over Brexit threatens to cancel out that factor, according to panelists in an opening day session on the topic of private equity.
Neville de Melo, SVP of acquisitions at Realstar Group, said no one is any clearer on what will happen as the March deadline for Brexit approaches and no deal seems within sight.
“Everyday (Brexit) changes. It moves everywhere, and it might run up to March, and then someone might work it all out, or extend (the leaving date),” De Melo said.
Still, hotel investment in Europe marches on, said Cody Bradshaw, managing director and head of European hotels at Starwood Capital.
“We just bought seven Hiltons in the U.K. … You can still find pockets of opportunity if you can inject CapEx and take out some costs to see yield. … There are opportunities. That is today’s answer,” Bradshaw said.
One of hoteliers’ lingering concerns linked to Brexit is labor. With employment at its highest levels for many years—technically a state of full employment—the U.K. government is making overtures for immigrant employees, but only highly skilled ones. The hotel industry in the U.K. needs low-skilled workers in starting positions, panelists said.
Quotes of the day
“There have been nine years of consecutive (revenue per available room) growth in Europe. … London has had the most phenomenal June, July and August I have ever seen.”
—Robin Rossmann, managing director at STR, parent company of Hotel News Now, who added that U.K. staycations have helped buoy U.K. performance.
“There remains an enormous amount of capital out there, both debt and equity. Important are growth, profitability and relevance, and we are focused on resilience. There also is a scarcity of opportunity.”
—Steffen R. Doyle, managing director, Credit Suisse, on what is driving investment in the U.K. and Europe during a panel titled “Expert views from the International Hotel Investment Council.”
Tweet of the day
Hotel in Europe Investment Conference (Hot.E); @BurbaHayes started in #London, w/ @STR_Data's Robin Rossmann saying UK / Europe hotels continue to do well despite 2017/18's dampening of RevPAR excitement. Some cities' supply might cause headwinds. @Hotel_News_Now #HNNis10 #HotE pic.twitter.com/f4tnccQ1rN— Terence Baker (@terencebakerhnn) September 26, 2018