Investors eye Europe more favorably as demand grows
Investors eye Europe more favorably as demand grows
05 MARCH 2019 9:17 AM

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

BERLIN—At the International Hotel Investment Forum that started yesterday, attendees heard Europe remains a hot market in the eyes of investors, brands and operators, as the number of global air passengers is likely to rise from 4 billion trips annually to 8 billion in the next 20 years. Many of these travelers are drawn to Europe’s unique culture and history as the place to experience.

Day 1 recap video

Quotes of the day
“Institutional capital accounts for 49% of the total transaction volume in 2018, and we’ve also seen strong development of private capital, accounting for 30% of total transaction volume. This is one of the most exciting developments in the 22-year history of IHIF. Hotel assets are now seen by many institutions as a prime real estate asset class.”
—Chris Day, global managing director, Christie & Co, on the biggest capital sources for European hotel investment.

“From a pure value perspective, well, get an asset manager from the pre-opening plan, but some of the critical delivery of revenue management can be in a crisis situation. It is not always monetarily the most important part, but perhaps it is in terms of the most cost-saving and important decisions.”
—John Brennan, chairman, Amaris Hospitality

“I don’t know how many … but you’ll see new things from us.”
—Hilton President and CEO Chris Nassetta when asked if the company planned any more new brands.

“We are in the second phase of a rather long cycle. It means we all need to be careful and judge each thing as it comes. If you look at the excesses created in previous cycles, a lot of those aren’t here. Demand is still exceeding supply. If you think about leverage, it still remains in check. That combination of demand/supply in check and leverage in check makes you feel optimistic. There are some political risks. You can’t paint all of Europe the same way. You need to look at each market and what’s going on there.”
—Abhishek Agarwal, managing director real estate, London, at Blackstone, on the “Money makes the world go around” panel.

“We were supposed to be dying because of Airbnb, but Airbnb is achieving staggering growth rates, and the hotel sector is achieving fantastic occupancy; we have survived the mother of all disruption.”
—Cody Bradshaw, managing director and head of European hotels, Starwood Capital Group

Tweet of the day

Slide of the Day

STR managing director Robin Rossmann shared data showing the growth of brands across Europe, according to HNN parent company STR.

Editor’s takeaways

Naturally, investment is following the trend of increasing travel to Europe, which remains somewhat unbranded, and that means opportunity. For Accor, which relaunched its loyalty program on the morning before IHIF started, that means two new brands—an upscale soft collection called House of Originals and an economy lifestyle brand out of Australia called Tribe, which has its first site in Perth, Australia, but which will open a Glasgow, Scotland, hotel later this year.

If there is one downside it might be the populist political rhetoric sweeping across some of Europe’s dissatisfied population, but several IHIF speakers reiterated that is unlikely to stop the inexorable rise of hotels developing as a bona-fide European asset class.
--Terence Baker, Senior Reporter, Europe

IHIF Day One was all about showcasing Europe’s growing maturing for hotel brands and investment. On the brands front, Accor launched a new brand, the midscale lifestyle offering Tribe, and outlined changes to its loyalty program. Other major franchise companies, including InterContinental Hotels Group, Marriott International and Hilton, had increased presence on the show floor.

But perhaps most interesting was the support many speakers showed of hotels as a thriving asset class across Europe. Chris Day, global managing director of Christie & Co., was very enthusiastic about the capital sources the European hotel investment sector is attracting, led by institutional capital now, nearly 50% in 2018, and followed by private equity capital. He said it all when he said, “the hotel investment market has come of age” here in Europe.

Speakers on the general session titled “Money makes the world go around” echoed that sentiment, adding that favorable supply and demand metrics in the region continue to boost the investment story around Europe.
--Stephanie Ricca, Editor-in-Chief

Elevated uncertainty and volatility—two of the characteristics economist Thanos Papasavvas told IHIF attendees that he expects to evolve during 2019—aren’t dampening the moods of hotel owners, operators and investors attending the conference.

In general, the mood is even slightly more buoyant than the mood was at the Americas Lodging Investment Summit in January. As opposed to the “status quo” mentality at the Los Angeles gathering, attendees at IHIF are still talking about gaining more momentum.

Gateway cities throughout Europe continue to perform well overall—despite an ever-increasing supply pipeline, according to Robin Rossmann, managing director of STR, the parent company of Hotel News Now.

The biggest potential headache appears to be on the political and social fronts, where events such as Brexit, the looming departure of German Chancellor Angela Merkel and continued questions about the direction of the United States and China, are hovering like a distant thunderstorm.

The repeated chatter throughout the day’s general session focused on the European hotel industry’s evolution into a respected investment class by institutional investors. That can’t be taken lightly, as the industry has long strived to achieve such stature.

“Savvy investors already see the hotel market as mainstream,” said Chris Day, global managing director for Christie & Co. “Demand for quality assets in our market continues to grow. The hotel market has come of age.”

There’s plenty of money stockpiled to keep transactions flowing, and the idea of more airlift—particularly from the U.S.—is keeping investors confident.

And the brands aren’t far behind. Rossmann’s observation that for every independent hotel opening around the world there are two branded hotels opening appeared to add to the overall good vibes.

Chris Nassetta, Hilton’s president and CEO, kept the happy train rolling by closing the day with the observation that his company will continue to add brands to its 17-brand portfolio.

All in all, things look fairly bright for European hotels at the moment.
--Jeff Higley, Content Strategist

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