Foncière des Régions and MKG Consulting examine the relationship between hotel operators and investors at the last edition of the Global Lodging Forum.
In the United States, REIT-like structures, the primary investment vehicle for the hotel industry, are very successful with record capitalization that goes along with renewed growth in supply over the last decade.
In Europe, sovereign funds have been extremely involved in the acquisition of "trophy assets", but not so much for less prestigious assets. Thus it is important to develop adapted measures and investment vehicles as have the Censi-Bouvard, OPCI and SIIC devices that are European adaptations of REIT systems.
Nonetheless, it is regrettable that to this day only two SIICs surpass one billion euros in hotel asset management. And yet, the investment class of Hotels is progressively attracting investors, the boldest of which are beginning to show interest in "alternative" products such as new generation youth hostels, or concepts from abroad that are developing in France.
Behind this interest lies the performance growth curve. Overall, in the top five countries in terms of hotel investment, the UK, Spain, France, Germany and Italy, the asset class of Hotels clearly outperforms the other real estate asset classes in terms of yield on invested capital.
The context, particularly in France, is particularly favorable for greater interventions involving land. This implicates the growth of business models by investor-owners, to free up energy by adjusting the legislative and regulatory framework.
According to Dominique Ozanne, it would thus be wise:
- To take inspiration from the American and Asian REIT regime to finance property and business operations through institutions:
- Strong capacity for financing REITS and institutions (insurance companies, banks...) demanding a yield on invested capital that is weaker than the investment fund/ private equity
- Possibility of positioning on business activities by accompanying operators in the long term
- To renew the hotel supply with innovative concepts
- Need to implement new concepts in light of competition from new players (Sharing Economy - AirBnB)
- New consumer expectations (differentiation, unique and new experience) putting an end to standardizations of chains
- To encourage real estate owners and operators to speak about new problems in unison
- The shift from asset light to asset free led to a merger between property owners and real estate and business owners
- Weigh the simplification of norms and standards that are uselessly restrictive
- Multiples problems in common between operators and investors: supply renewal, increasing strength of AirBnB
- Is hotel investment always profitable and who benefits from it?
- Must the new supply necessarily include new concepts or just refreshed concepts?
- Is there a new segmentation for commercial accommodations’ clients? How to reach them through personalized one2one marketing?
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