IHIF 2023

More than 2,500 members of the hospitality investment community gathered at the International Hospitality Investment Forum (IHIF) at the InterContinental Berlin, last month under the theme: “Fortune Favours the Bold”.

The theme “Fortune Flavours the Bold” & think we should add “the Brave” as well, in what continues to be an unpredictable operating environment. From original asset management strategies to creative debt financing, industry forecasted bold ideas. These stories, trends and yes, the gossip, from Berlin drive the hotel investment industry. The consensus seems to be that we’re enjoying the storm with plenty of unanswered questions. Will consumer demand start to soften? Will interest rates come down? And will A1 change everything?

Many hotels are refinancing at much lower profit margins and will have no option but to sell as they breach covenants. “A lot of opportunistic capital is waiting for the bid ask spread to finally adjust cash, buyers especially” Jan Hein Simons, hotel director at Colliers.

The opening keynote from Professor Ian Goldin, Professor of Globalisation and Development, Oxford University, told delegates hospitality was still a ‘good investment’ but impacted by high inflation and staffing issues in 2023.

Goldin suggested the industry be proactive and ‘ahead of the curve’ to seize opportunities. “The hospitality industry needs to do better, to deliver experiences that people want and that last. People are drawn magnetically to find like-minded people – being in the right place is becoming increasingly important for investors” he said.

Giving people valuable experiences and creating a sense of community was echoed in sessions focusing on diversification and merging hospitality concepts, held at Adjacent Spaces at The Pullman Hotel across the road. “You need to add substance, not just style,” said Shafi Syed from Equinox Hotels. “If you want to extend the brand you need to have credibility and a strong, authentic story – and focus on the specific needs of the customer.”

A session led by Jenny Southan, Globetrender examined travel trends and the continued growth of the rebel spending traveller, while the panel discussion with Robin Rossman of STR, Michael Grove of Hotstats, Carine Bonnejean of Christie & Co and Julien Allen of CBRE Capital Talks, saw them unpick asset values and identify opportunities for investors, reinforcing the message that those stuck in old ways may not survive. Anchoring a place of sense and purpose was delivered through the newly introduced ESG and F & B hubs, where stats and guidance were shared on designing and developing profitable concepts for today’s consumer. Sebastien Bazin, chairman and CEO of Accor took to the stage to share his honest and personal insights, and what being bold means to him.

Bazin spoke about his continuing journey with the brand, managing brand standards and his hate of the term AI within hospitality. He said: “There is nothing artificial about artificial intelligence, it should be called augmented intelligence. You need AI, but remember people want and need to travel to build moments and interactions so that can’t be replaced.“

The final session of the day saw CEO Keith Barr, who has headed up IHG Hotels & Resorts for the last six years, speak of his next move after it was revealed he would be standing down from his position at the end of June.

He said: “I’ll be moving to my wife’s birthplace of Hawaii and taking some <me with my family, but after 20 years in the industry, I’m sure I’ll be back sooner rather than later.”

Barr said he believed hospitality had the ability to thrive as post-pandemic consumers were more interested in experiences than material objects. “People aren’t buying TVs, cars and goods, they are buying experiences, airline tickets, booking restaurants and hotels and that’s a great sign.”

IHIF also provided the perfect platform for exciting announcements including IHIF owner Questex who revealed they will assume management control of the NYU International Hospitality Industry Investment Conference following its June 2023 event and thus expanding its global hospitality portfolio.

In addition, several high-profile hospitality partners announced key developments including: The launch of hospitality management company Kinsfolk; Co. Born in London, but created with an international perspective, the company will be led by Paul Brackley, previously managing director of The Beaumont Hotel, Mayfair.

The launch of LyvInn, a new European-based hybrid hotel brand founded by Navneet Bali, which opened its first hotel in Frankfurt on 15 May.

The signing of an exclusivity agreement between Zeal Hotels and IHG Hotels & Resort for their first net zero carbon hotel.

Wyndham Hotels & Resorts and Zeus International Hotels Resorts have expanded their strategic collaboration with a new non-exclusive agreement to develop multiple hospitality asset developments in the next few years under the Trademark Collection by Wyndham and Registry Collection Hotels brands.

Choice Hotels EMEA and Borealis Hotel Group have signed a strategic partnership agreement to expand their European portfolios. Through this agreement, Borealis will have the ability to franchise upscale and midscale hotels from the Choice Hotels EMEA portfolio of brands, across the territories they currently operate including The Netherlands, Belgium, France, Germany, Austria, Spain and Denmark and look for new opportunities in other European countries.

Hilton has signed a franchise agreement with Blackstone, the world’s largest alternative asset manager, and Event Hotels to open DoubleTree by Hilton Berlin Ku’damm. The hotel is set to become the first DoubleTree by Hilton in Berlin, following an extensive multi-million-euro remodeling. The hotel company has also signed a franchise agreement with Intersped, Sarajevo to open Hotel Neretva Mostar, Tapestry Collection by Hilton and Hampton by Hilton Sarajevo City Centre, The first hotel in Bosnia & Herzegovina.

Some takeaways from IHIF, Berlin 2023 are comments and statements from the prognosticators at the investment conference. This year they looked into their crystal ball wanted us to contemplate these understandings & takeaways:

1. When it comes to operating in an inflationary environment, raising rates is only one way of dealing with increased costs. Watching the bottom line, harnessing technology, and investing in personal are all ways to maintain asset value. Meanwhile, there were also forward-thinking responses to newer trends such as the future of work where co-working and remote working are both viable elements of successful hotels, with a significant part to play in future revenues.

2. Owners and investors are much more willing to think outside the box when it comes to optimising their assets, which has the dual benefit of protecting the bottom line while also being more attractive to the corporate and leisure traveller of the future.

3. People prefer mixed use for reasons of lifestyle and convenience. Investor appetite growing and deals could be unlocked by debt maturity. Given where the global economy looked like it might have been heading at the end of last year it’s easy to understand why a lot of people seem optimistic at this year’s IHIF. Maybe optimism is the wrong way of looking at it perhaps hopeful is better.

Travel demand is still buoyant but his alongside the increasing cost of debt is what is contributing to the lack of transactions. There are reasons however, to think this might change in the not- so- distant future. With consumers showing no sign of slowing down their travel spending (something that sellers are keenly aware of) what is likely to precipitate change is refinancings. What’s more we heard that when properties do start coming to market in larger numbers and more appropriate prices than there is still a “wall of cash” that is poised to act. Deals are the oil that lubricates the hotel investment engine with lawyers, architects and asset managers all playing their part in the process that follow a transaction. Lenders have been very supportive and extended debt facilities. But that might change, and the situation could get worse before it gets better. Lenders have been lenient, but in the next 12-18 months that may be a bit different as much of the debt will need to be refinanced and relationships between lenders and hotel owners have deteriorated”- Carine Bonnejean managing director – Hotels at Christie & Co

Owners warn brands over failure to meet digital guest journey expectations.

1. Access to best-in-class open and scalable digital systems is becoming a key deciding factor in brand selection. Digitalizing the guest journey is seen as an essential antidote to profit erosion from high operating costs and falling guest satisfaction. Historically, the hotel brands were tech innovators, particularly with central reservation systems. But a long lull in R & D has led most branded hotels with antiquated property management systems.

2. The lack of tech investment at property level is negatively impacting the ability to attract and retain staff. Equally, a full digital guest journey is fast becoming what guests expect.

3. “ Digital guest journey systems are going to be so critical to our success, we are not going to run our operations on something we can’t and design, because there are other brands out there with whom we can work”

Mark Willis is now CEO of Fairmont Hotels/ Accor.

Mark Willis is Fairmont’s New CEO was overheard to say Accor is making a serious investment on luxury and lifestyle by having a dedicated CEO and team for each of its top-floor brands.

Mark continues "We have our own brand team, our own commercial team and operational support The operational structure with our own COO, etc.," Willis explained. And like the three other CEOS, Willis runs Fairmont autonomously, like a chain within a chain, but supported by a shared global platform for digital, technology and procurement services.

"The new structure makes it easier for customers, owners and media to understand what we're doing and where we are going because we're communicating just Fairmont, as I am today with you," Willis added. "I have this specific remit to look asper one global brand with 90 hotels, rather than 32 brands with 450 hotels across India, Middle East, Africa and Turkey [as CEO of the region previously]. This allows us to change how we approach the business, how we approach our customers, and the way that we're going to develop the brand and move it forward. So, lots to do. The new structure makes it easier for customers, owners and media to understand what we're doing and where we are going because we're communicating just Fairmont, as I am today with you.

NOTE:

? PARIS - Of four CEOS Accor picked to lead its luxury and lifestyle division brands, Mark Willis CEO of Fairmont Hotels & Resorts, probably has the hardest job - at least concerning brand identity.

? Raffles Hotels & Resorts and Orient Express Hotels, under CEO Omer Acar, need no defining thanks to their classy pedigree.

? Sofitel under CEO Maud Bailly, who also leads Accor's MGallery and Emblems collections boasts a certain "French-ness" Ennismore, under co-CEO Gaurav Bhushan, earns the lifestyle crown.

Consumer travel trends for the next decade so say Jenny Southan. Consumer demand for travel defied all logic in the wake of the Covid-19 pandemic and subsequent economic slowdown. In previous periods of financial strike people have held back from spending big on holidays and traded down to staycations. That hasn't been the case this time but how long can it really last?

In a session entitled Going Places: Travel Demand Evolution and Forecasts Jenny Southan, editor, founder and CEO of Globetrender analysed how travel has evolved and where it is heading as understanding travel demand is a fundamental part of hospitality investment”. If you're interested in resorts for example, you need to know that leisure demand in certain destinations is sustainable. Similarly, if you have a portfolio of urban assets, what is the outlook for business travel? The pandemic has shaken everything up and although some things are the same, others are unrecognizable.

"Both inbound and outbound tourism from China has yet to take off again but that will pick up pace in over the coming months, particularly as airlines such as Virgin Atlantic resume flights to key cities like Shanghai in May. This will also coincide with the US government removing the requirement for inbound travellers to be vaccinated” Jenny Southan, editor founder and CEO of Globetrender.