Find here the highlights of the Hospitality Asset Forum 2022 where investors and operators of the sector meet to discuss the issues and challenges concerning the hospitality sector. On the agenda: resilient products, new investment models and new levers to unlock value.
Economic context, anticipating what we can't control. Nicolas Baverez, Economist & Historian
History is currently accelerating very sharply.
With the war in Ukraine, we are on a change of era in Europe. A war that affects all sectors.
We are living in a very special time with an energy crisis, a food crisis, a return of inflation, a pandemic that continues at a low level and a geopolitical crisis.
We are living in a "strange" crisis.
Companies are holding up rather well, and the stock market is doing surprisingly well. Corporate profits are good.
From a macroeconomic point of view, the picture is rather worrying. The recession is underway, an impressive recession because all regions of the world are synchronised on the same slowdown, except for the Gulf States.
Europe is concentrating all the shocks while the emerging countries are facing the rise of the dollar, like Turkey or Argentina.
All the engines will suffer, that of consumption with the fall in purchasing power, that of investment with the rise in interest rates, and international trade with the tensions at the international level.
We are currently experiencing a series of shocks: the return of inflation, de-globalisation, energy prices, food, the health crisis and climate change.
The means of states to intervene are increasingly limited, notably because of the 2008 crisis but also because of Covid-19.
We are at a turning point with financial markets holding up well and a hotel sector that is also performing well with a strong recovery that will continue.
People want to travel and reclaim the world, so the recovery in tourism will continue. Business tourism is also making a comeback.
The tension on employment will unfortunately continue.
France and Europe are at the heart of all these shocks with a rise in risks because the French model is fundamentally unsustainable.
The European model is now problematic with its dependence on Russia for gas and the United States for technology. A divided and fragmenting Europe.
Southern Europe has been privileged during this year with an exceptional season.
France benefits from exceptional assets with a qualified workforce, centres of excellence, its culture, its way of life but performance is weak.
Energy is an absolutely decisive factor of competitiveness.
The hospitality industry is fundamentally linked to the values that underpin our democracies, with the freedom of movement and of discovery.
We have entered a decisive decade where those who refuse to question themselves will face complicated days. It is necessary to anticipate in a world where geopolitics has taken precedence over economics.
We must know how to cooperate and be open to others in the times to come.
MKG Insight : Hotel investment dynamics. Sylvie Bergeret, Chief Operating Officer, MKG Consulting
Nous avons encore des situations très contrastées selon les pays.
Sur les pays qui ont le mieux progressé, ce sont surtout les pays qui avaient un bon équilibre entre les clientèles loisirs et affaires.
La reprise est tirée par les prix moyens. Certains pays ont un prix moyen qui a doublé depuis 2019.
Il y a également des contrastes entre les différentes catégories. Le segment ultra économique a bien performé.
Malgré tout, les fondamentaux demeurent forts. Le marché a été impacté par des crises de différents ordres, ce qui signifient des baisses de taux d’occupation et de prix moyen mais la croissance reprend relativement vite.
A chaque fois qu’on a une forte baisse, le rebond est fort et marqué de manière rapide.
Le marché de l’hospitality anticipe les évolutions du PIB, c’est un marché que l’on peut ainsi qualifier de cyclique.
Le marché fait face à 3 challenges actuellement.
On se retrouve avec des difficultés d’investissement et de financement. On assiste à davantage d’acquisitions que de créations.
Aujourd’hui il faut innover pour se distinguer afin d’éviter notamment les phénomènes de cannibalisation.
The budget hotel chain of tomorrow. Fabrice Collet, Chairman & CEO, B&B Hotels
At B&B Hotels we try to think in terms of segmentation by use and not by price.
Segment by segment, the fastest growing segment is budget and economy.
The budget industry needs a lot of cash, so we need to keep opening hotels.
Convenience hotels are essential because people will always need them, even in times of crisis.
We double in size every 5 years at B&B Hotels.
Economy hotels do not mean soulless hotels, we pay a lot of attention to ESG.
We would like to have 3,000 by the end of the decade in order to establish ourselves as the leading brand in this segment, particularly by establishing ourselves in other countries.
Budget hotels: an increasingly attractive asset. Jean Michel Dalmasso, CEP, Dalmata Hospitality ; Fabrice Collet, Chairman & CEO, B&B Hotels ; Hubert Viriot, CEO, Yotel
Hubert Viriot: Yotel's positioning is somewhat unusual, we have challenged the usual hotel classification.
The return to growth was very strong, and in the end it was faster than expected.
Seeing this opportunity in the market, we apply the same thing to the economy segment.
Most of the current projects are designed in mixed use in order to diversify the project. Single-use constructions are becoming increasingly rare.
Jean Michel Dalmasso: There is a lot of talk about the resilience of the economy, and in resilience there is an element
Resilient is good because it protects against a downturn. The challenge is to show that we can also perform well on the upside.
What seems to me today in hospitality is not to create brands but rather to put in place good management.
Investing to perform. Jochen Schaefer-Suren, Founder & Co-Chairman, IREMIS Sarl
The new world order will have lasting repercussions.
The lack of liquidity will have a huge impact on financial assets in general.
If you are an operator, you will have a very different strategy than private and institutional investors.
Value drivers are key to implementations.
There are 3 alternative strategies which are Core/Core +, Value Add/Opportunistic and Resort Strategy.
Due to the current situation, many hotels will be taken out of the market.
Resorts are tricky animals, but we like to invest in them.
Living through the crisis is so difficult that there are a lot of question marks over the coming months.
The future is bright, but today patience has the highest IRR! The prospects for the hospitality industry are still bright, but the era of cheap money is over.
New relationship between operators and project developers. Henry Simpson, Senior Director of Development France, Belgium, French-speaking Switzerland and Turkey, IHG Hotels & Resorts
Before covid we were in a neo-liberal space where many brand new hotels were built. Covid has changed this whole situation.
Covid has a big impact on upstream decision making but not on ongoing hotel operators.
Many financial partners have disappeared since covid.
We were living on construction and established partnerships, and all of a sudden we had this will to build that no longer existed.
We are in a growth war because the franchise needs to grow to keep its market share.
Many new investors have appeared and we have gone looking for them.
France is reassuring in terms of investment.
Now investors and operators are equal partners.
A franchisor accompanies on the IT side but also on the human side, so the relationship has totally changed.
Today, in site meetings, we finally talk about the energy bill of future hotels.
The human resources crisis has not been resolved and we must all act on it. The employer brand has a strong role to play in offering meaning to work.
We need to think about the life of the employee in the property itself.
The hotels of tomorrow must be useful and give meaning to the people who work there.
The work of support has been largely modified, we are no longer just distribution.
Overview of the investment market. Philippe Bijaoui, Managing Director France, Christie & Co and Valerie Schuermans, Vice President of Business Development, Radisson Hotel Group
Valerie Schuermans: We are seeing a geographical shift.
On the product side, there is a greater appetite for the high-end segment and products such as boutique hotels and lifestyle properties.
We need to create products that have operational value.
We don't want to focus only on building new properties.
We have signed a new Radisson Individuals property in Honfleur, Les Maisons de Léa.
Philippe Bijaoui: Inflation jumping up and down.
The 2019 level of transactions never came back.
The slowdown in transactions is due to a lack of sellers, not buyers.
Investing, between sustainability and risk-taking. Tugdual Millet, CEO, Covivio Hotels et Jaume Tàpies, Founding Partner and CEO, Boscalt Hospitality
Jaume Tapies: These clients have very comprehensive needs, both financial and emotional.
We have created very strong partnerships with the operators of our hotels.
We can get into core assets with very interesting prices today, assets that are less affected by price increases.
Every three months we try to compare 33 European cities by giving a score according to various factors such as the penetration price or RevPAR.
Tax pressure can have an impact on the market, as in London recently.
Tugdual Millet: Before we (Covivio) invested in hotels by lease and today we are more in the wall and fund in order to manage the hotels directly.
Our shareholders have been able to assess the great resilience of this real estate sector.
The sector's ability to rebound with months like September and October has been very reassuring to investors.
The environment and our customers' expectations have changed.
We don't know how stocks will evolve in the medium and long term.
Our primary objective is to create value.
A business customer who can then stay for leisure, that muddies the waters a bit.
We don't want to go beyond Western Europe and the UK.
Mixed use answering the customer's needs while developping profitability. Olivier Durix, CEO Customer Solutions, Bouygues Immobilier
We are now in an experiential economy.
New economic models indicate new consumption patterns.
To meet new expectations, we need to pay more attention to the living environment and create more design and green products.
Our expectations and needs are changing strongly as we go through our lives, much more than before.
The housing offer is mainly monolithic.
In the neighbourhoods, we are seeing the emergence of third places and hybrid places that propose new offers that adapt to the territories where they develop.
Co-working has radically changed things, it offers flexible spaces with personalisation and experience at the heart of the offer.
Coworking business models are constantly evolving.
Coworking means coliving. The rental market is very complicated with a rather poor experience so we are working hard on this product.
Loji is a flexible and modular housing offer by designing spaces according to usage.
We are working to develop an offer for convinced urbanites who do not wish to leave the cities.
Adapting development to opportunities . Nick Smart, Vice-President Development North & West Europe, Hilton
Hilton began its journey in Europe 50 years ago.
Most of the development in recent years, 50% were conversions and another 50% were new buildings.
Adaptive reuse offers a AAA location that would be difficult to obtain as new construction and financing is easier.
Offices as an asset class are challenged in a post-Covid environment.
We can be creative, we have the brands and expertise to assist in unlocking the full value of these buildings.
Enhancing the value and sustainability of France's tourist flagships. Pascal Savary, Co-Founder and Chairman, Atream
The figures before the health crisis, 1.5 billion tourists in the world, the euro zone 750 million tourists, which makes Europe the world's largest market.
The tourism industry is a major industry, in fact it has become a media with the development of new technologies.
We must not forget that tourism is a supply industry which needs long-term investment to accompany the transformation, but also a service industry.
We cannot talk about this industry without talking about the major actors in it.
The conviction that we have to transform ourselves in the face of adversity is essential.
The growth of the hospitality sector is constantly changing, so it is necessary to reposition, re-mobilise and adapt to customers.
The customer is now central. They impose their needs and we must listen to their remarks and take them into account.
We are creating a dynamic around our properties, particularly in terms of employment.
All hotel operator concepts are evolving, and we are actors in change.
We have a diverse range of products and services which are of a high standard and which will continue to evolve in spite of complicated times.
Service is essential for the upscale nature of the offer.
We must look at the customer as a chance, an opportunity. You have to give them pleasure during the time they spend with you.
The business is evolving very quickly, and has opened up internationally.
We have to be irreproachable at all times and the product must not get old.
The health crisis has imposed transparency and dialogue between owners and investors, restoring confidence.
Leisure accommodation, the backstory of a success story. Yariv Abehsera, Distribution & Hospitality Director, Compagnie des Alpes and Grégory Lanter, Chief Development Construction & Property Officer, CEO Moutain Strategy, Club Med
Yariv Abehsera: We created a new business unit focused on hospitality distribution about fifteen months ago.
We have created resorts to retain customers in order to better control the offer.
We are seeing a move upmarket in the Alps which does not necessarily meet a certain number of criteria specific to the mountain destination.
Running assets for more than 6 months of the year ensures sustainability.
We needed an operational platform, so we acquired the mmv platform.
We are capable of carrying out a strategy, i.e. being an actor who goes out to find customers and responds to their needs.
A person who does not ski must contribute to the economic fabric of the destination.
The product must move to adapt to new demands, in particular to create 4-season resorts.
Grégory Lanter: We (Club Med) have been trying for several years to be more responsible but also more desirable.
Club Med makes 70% of its turnover directly because we control our own distribution.
First half of 2022 we are back to 90% of our figures excluding Covid.
The second quarter is very different, +15% compared to 2019. Asia is catching up strongly.
A figure in reservations of +36% on mountain destinations.
Many investors are now interested in mountain assets, it has become an asset class in its own right.
The mountains have become a much more open territory for investment. This appetite for ski holidays on the part of international and domestic tourists is a strong attraction.
Secrets of long stay. Benoît Jobert, Co-Founder, The Babel Community
Many people live in shared flats but the supply was very poor at the time. So we responded to this demand.
Surprisingly, this offer was not of interest to students but rather to young working people, people who had not yet fully settled into their lives and their city.
We need accommodation at key moments in our lives.
We need to keep it simple with an affordable rate and also meet people.
Since 2017, The Babel Community has opened 4 residences.
We put coworking in our properties because it is extremely complementary to coliving but also to design a dynamic building throughout the day.
We want buildings that are also open to the neighbourhood in which they are located.
Our concept allows us to enter any building.
When we set up in a city, our sales people focus on the HR departments of large local companies.
The coliver and the cowroker are not necessarily the same person profiles but sometimes have similar needs.
We are trying to cover the whole of France, which is a real challenge for The Babel Community.
Fighting against the de-industrialisation of France. Nicolas Dufourcq, CEO, Bpifrance
The origin of the Bpi is the hotel operator credit.
In France, tourism is doing very well.
I wanted to know what happened to make France lose a large part of its industry at the beginning of the 21st century.
French industries were closing down first at the time because they were seen as the worst in Europe.
France was not prepared for the Chinese industrial offensive at the beginning of this century.
Since 2010 we have been in a supply-side policy in France.
We are in a continuous effort to reindustrialise France a little, to ultimately gain at least 2%. This is a very important issue.