Editors recap the second day of the International Hotel Investment Forum with takeaways, quotables and more highlights from the event.
BERLIN—After the hotel industry’s strong operating fundamentals in Europe were established on Day One of the International Hotel Investment Forum, speakers on Day Two turned their attention to big-picture issues and pressing influences from outside industries.
While labor concerns pervade the hotel industry in most locations around the globe, alternative accommodations and nontraditional hotel models—namely hostels and serviced apartments—are issues particularly top of mind in Europe.
Technology was another hot topic, as general session speakers debated the role automation and AI may have in the industry’s future, particularly given pervading labor concerns.
Overall, the mood remains optimistic, as hoteliers see lots of opportunity for growth in Europe, with only passing references to Brexit concerns, currency issues and politics.
“There’s always going to be something new. Isn’t it fantastic?” said Kike Sarasola, chairman and founder of Room Mate Group, on the “Brave new world” panel. “We’re living such an incredible moment in our industry. And anything new that comes up, we’re going to be there.”
Day Two recap video
Photo of the day
Quotes of the day
“Our competition is local competitors, and we are the only (hotel chain) Accor has not bought.”
—Kike Sarasola, president and founder, Room Mate Group
“Well, it is only 10 o’clock in the morning.”
—Russell Kett, chairman of business consultancy HVS London, responding to Sarasola.
“We tend to give the customer what we want to give the customer, or what we think they want. You need to ask each of your customers … ‘What is it that you actually want?’”
—Lisa Bovio, chief commercial officer, Yotel, on the “Blending Technology and the Customer Experience” panel.
“I wouldn’t do your job. I love my job because I’m seeing my clients. You never see your clients.”
—Sébastien Bazin,* Accor, to Mark Okerstrom of Expedia to close the “From the inside looking out: CEO to CEO” panel. (Editor’s note: He said it in a non-confrontational way.)
“I’m a big contrarian on millennials because I think the world talks about them as if they are from another planet. The truth is, as millennials mature, they look a lot more like us. … Everyone is forgetting that. They’re trying to say that millennials at 20 are going to be the same at 30 and at 40. That is not the case.”
—Keith Barr, CEO of InterContinental Hotels Group, during the “Adapting to survive and thrive: Hear for the CEOs leading the change” session.
Tweet of the day
Keith Barr @IHG: “The world talks about millennials as if they are from another planet and the truth is as they mature they look a lot more like us… they are trying to say that millennials at 20 will be the same at 30 and 40... [but] they are changing” #IHIF2019 pic.twitter.com/WTJMA8i9Mu— The Caterer (@Caterertweets) March 5, 2019
It wasn’t all that long ago when it seemed as though the hotel industry looked at serviced apartments, hostels and other ancillary lodging products as more foe than friend. That’s no longer the case.
As evidenced by general session panels, such as “The brave new world: What are the opportunities in alternative models?” session on the second day of IHIF 2019, those alternative models are more accepted as part of the mainstream hotel industry than ever.
Perhaps the 2008 introduction of Airbnb and its subsequent meteoric rise in popularity was the galvanizing factor. All forms of regulated lodging rallied together to call for level playing fields. As an unintended consequence of that cohesion, traditional hoteliers began noticing the opportunities in alternative accommodations.
It’s no coincidence that there’s been an uptick in development in all forms of accommodations in the last decade. That’s a good thing, and based on comments during Tuesday’s sessions, there’s more to come.
Sébastien Bazin, CEO of Accor, said the company bought Onefinestay because it didn’t want to lose customers to alternative accommodations—I believe that it’s the tip of the iceberg in terms of hotel companies getting into the short-term rental business. Kike Sarasola, chairman and founder of Spain-based Room Mate Group, said his company is expanding from its core hotel and short-term rentals business into luxury hotels to retain its long-time client base and into hostels to attract younger guests.
It’s great to see traditional hotels and up-and-coming sectors such as hostels becoming accommodation brethren. The more options hotel developers, owners and operators give to consumers who are looking for different experiences, the more of a win-win it is for everyone.
When those things are discussed at major hotel industry conferences, it’s a sign that all inflated bravado among most of the various segments has been put to bed.
--Jeff Higley, Content Strategist
I love hearing hoteliers not just acknowledge the influence other industries have on their business, but embrace them and want to learn more. Every general session panel on Day Two of IHIF touched on outside industries and how hoteliers can thrive alongside those industries and learn from them.
Accor CEO Sébastien Bazin had a very frank one-on-one conversation with Expedia Group CEO Mark Okerstrom on the main stage, and it was so interesting to hear about how both view their role as change agents within their companies. Bazin spoke a lot about the transformation of Accor, and spent time talking about the company’s current shift to a culture of “people-servicers,” as Bazin put it, now that the company’s geography and business model have changed.
Okerstrom, too, said Expedia thinks a lot about people and their preferences, and it was interesting to hear him voice his big concerns: “I worry about Google,” he said. “They have everyone in the world (as their audience). They have billions of customers’ eyeballs, doing searches and telling Google about what they like and what their preferences are.”
--Stephanie Ricca, Editor-in-Chief
The second day at IHIF always is about the nitty gritty. Yes, Keith Barr, CEO of InterContinental Hotels Group, and Accor CEO Sébastien Bazin were on the stage, but most of the day’s work is about putting heads together to talk about investment opportunities, availability of debt, the change in capital and other possibly more mundane considerations.
There is a sense that the overall European market landscape is changing—perhaps it always will—but across the current cycle, some attendees are seeing a new wave of investors expecting higher yields and more returns on capital without perhaps going through that process of somewhere adding value, whether that’s in the asset, branding, operations or storytelling of a project.
Returns have to come from somewhere in those four considerations, but this is not the time for a smash-and-grab attitude in the industry.
Speaking at a panel titled “Asset management: What’s it worth?” Cody Bradshaw, managing director of international hotels at Starwood Capital, said he thought that now a different type of cash is coming in, which is based around the trend of OpCo-PropCo splits and hybrid leases, with investors content for a quick but lesser yield.
Bradshaw was talking about Starwood Capital’s Principal Hotels deal with French real estate investment trust Covivio. An in-house brand, Principal took a collection of tired but grand buildings and turned them into iconic properties with real brand clout. Bradshaw worries that this strategy will not be possible again in this cycle, however long it might roll on.
Of course, private equity loves distress, but Bradshaw added that he thought this all was a shame.
“These heritage buildings deserve so much more,” Bradshaw said.
It remains competitive out there. Bradshaw, I think, meant this is not time for the sharks, or at least the sharks need a little bit of soul to realize what makes the hospitality industry so special and ultimately puts heads in beds.
--Terence Baker, Senior Reporter, Europe
*Correction, 11 March 2019: This story has been updated to correct a name misspelling.