IHIF Day Two: M&A activity heats up conference talk
IHIF Day Two: M&A activity heats up conference talk
07 MARCH 2018 9:33 AM

Editors recap the second day of the International Hotel Investment Forum with takeaways, quotables and more highlights from the event.

BERLIN—The second day of the International Hotel Investment Forum proved that there is plenty of hotel mergers-and-acquisitions activity and transactions sitting at or just below the surface in Europe.

Raúl González, CEO of Barceló Group, bemoaned the fact that the company couldn’t get a merger done with fellow Spain-based hotel company NH Hotels. Such a move, which Barceló backed 100%, would have helped clean up a fragmented hotel industry in Spain, the CEO said. As it stands, the company will continue to push for a merger with some other company to build more critical mass.

Keith Barr, CEO of InterContinental Hotels Group, said the company will acquire a luxury brand that will fit in above its InterContinental Hotels & Resorts brand, and IHG also will launch a conversion brand this year.

Hilton President and CEO Chris Nassetta said his company projects more organic growth. He expects the Tru brand to be the most impactful in the company’s portfolio over the next five to 10 years as it fills a gap under the Hampton by Hilton brand.

Lastly, Frankfurt-based Deutsche Hospitality introduced its fourth brand, Maxx by Steigenberger, which will be a conversion brand.

These announcements, among others, had delegates and speakers talking about the robust state of affairs in the industry. The conference is riding the crest of the hotel industry wave as attendees continued to be optimistic about what lies ahead in the near term. It might sound like a broken record, but there’s no way around it: Things are good for the global hotel industry.

Photo of the day

Tina Yu, of KSL Capital Partners, received the Young Leader Award from ISHC’s John Fareed (left) and Questex’s Alexi Khajavi during the second day of the International Hotel Investment Forum. (Photo: Jeff Higley)

Quotes of the day
“There is a risk of being unsuccessful, misunderstood and wrong. The problem with our industry is that we see our guests only three or four times a year. Facebook sees its customers 12 times a day. It also costs us a bundle to acquire our customers.”
—Sébastien Bazin, CEO, AccorHotels

“We are very kind people, and we don’t want to buy. We want to try to do a merger. The other company doesn’t think the same as we think. … At the present it’s not any clear (deal) with these guys. We can try to do the same but with more medium-sized companies, not so big like NH. We really believe it made a lot of sense to consolidate the market. It’s too fragmented. … If we want to be global players worldwide then it’s absolutely necessary.”
—Raúl González, CEO, Barceló Group on reports about a possible merger with NH Hotels Group.

“When it comes to outbound travel, the United States is in diapers.”
—Alex Zozaya, CEO, Apple Leisure Group, on the impact U.S. travelers could have on global travel if the 60% that don’t have passports got one.

Tweet of the day

Editors’ takeaways

Three things I know today that I didn’t know yesterday: Hotel lending is tight around the globe, there is much concern about rising operating costs in the hotel industry, and who knew industry CEOs were so into socks?

As today’s main photo illustrates, Wyndham Hotel Group’s Geoff Ballotti initiated a conversation about socks during Tuesday’s CEO panel—he came prepared with La Quinta-oriented socks for all the panelists. Others chimed in and had a little fun before the panel regained its, ahem, footing.

There were plenty of serious topics covered throughout morning sessions. Coupled with the discussions on Monday, it’s clear that while the industry is riding high at the moment, there are concerns about what’s on the horizon.

Hoteliers in each of the 79 countries represented at IHIF almost certainly have issues with a lack of lending and an increase in expenses. It bears watching how hotels in different regions handle the issues.

One thing that has been abundantly clear long before I landed in Berlin and was crystallized throughout each session and conversation: Regardless of the location in the world, labor is the No. 1 issue facing hoteliers. A hotel can’t be operated by robots regardless of how deep artificial intelligence becomes.

From CEOs on down the line, the pursuit of talent at every level is a critical task that must be addressed, and it could spell trouble. It’s going to take creativity and money to ease the pain in the long run. The industry is keen to share plenty of the former, but not so much of the latter.
—Jeff Higley, VP & editorial director

It is the general rule of European hotel investment conferences that no real news is ever announced. Yes, deals are done, relationships are made and strengthened and good wine is savored, but there’s normally no news of the type that regularly accompanies American conferences.

That changed at IHIF 2018. Following official announcements by Radisson Hotel Group and Deutsche Hospitality, Keith Barr, CEO of InterContinental Hotels Group, said IHG would announce sometime this year the acquisition of a luxury brand to sit above its InterContinental Hotels & Resorts brand, that is, at the very top of the IHG pyramid.

That set minds racing. Who would that be? Four Seasons? Changes have occurred in management at the Canadian chain of late. Aman? Founder Adrian Zecha, who no longer works for the brand, was in attendance at the first day of the conference to accept the Lifetime Achievement Award. Or will it be a small brand that then IHG can boost to the sufficient scale required? Six Senses, maybe? All speculation of course, but it is with bated breath we wait, and evidently the deal must have already been signed.

All this just underlines the huge levels of optimism apparent on Day 1 and spilling over into Day 2. The landscape still offers much in brand-conversion and repositioning possibilities. There even remains some distress, and travel to the continent that started tourism with the Grand Tour is still growing.

Some concerns remain. No one wants to see interest rates rise too high, and there is always the danger that might happen. Inflation, producing the same pressure on costs and discernible income, is another, but hoteliers will likely be able to adapt to whatever storms are forming on the horizon.
—Terence Baker, senior reporter, Europe, Hotel News Now

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