Find here the highlights of the Paris Asset Forum 2021 where investors and operators of the sector meet to discuss the issues and challenges concerning the hospitality sector.
Perspective 2025, what strategy for investors? By Marc Touati, CEO and Chief Economist ACDEFI
If you want a high return, you have to take risks, because not taking risks is a guarantee of low returns.
The good news is that the recovery is here. This year we are looking at 5.2% growth in 2021 and next year it will be structural.
The pandemic has not broken China's growth momentum. There is a 700 billion dollar Chinese trade surplus, a phenomenon never seen before. It is the big winner of this crisis and it is ready for a new crisis.
China was 2% of the world's GDP in 1980 and today it accounts for 20% of that GDP, making it the world's largest power without question.
The bad surprise is Germany, which is experiencing a slowdown in growth. If the locomotive is not there, who will pull the Eurozone?
The Eurozone has still not recovered its pre-crisis GDP level, we are below the 2019 level of 0.5%.
There is a new phenomenon called degrowth, but the problem is that it means lower living standards and lower GDP. And how does this impact on poor countries?
The last public surplus in France was in 1974, and since then we have had a constant public deficit.
We are at 120% of public debt while Germany is at 70%, so the future of the euro zone seems complicated.
The only way to achieve sustainable growth is to optimise the present through innovations such as eco-responsible hotels, hydrogen-powered planes, etc. This is an enormous growth potential.
We are currently experiencing an inflation that we have not seen since 1982, the bankers must react. And consumer prices are going to last, which is dangerous for companies because it represents a risk to margins.
MKG Insights: who will be the most resilient? By Sylvie Bergeret, COO MKG Consulting
Let's take a look at how performance has changed over the last year. In Europe, the market is getting back on track and the to is starting to catch up with the 2019 average with the return of international travel and business events.
We are still on an investment form that has dropped in 2021, with each crisis we see a drop in investment but it has never been so marked over a period.
A coastline less impacted during this period and which has shown a higher growth than the other destinations in 2021. We are looking at increases of around 56% for these coastal areas.
The agglomerations remain solid destinations with professional reception facilities and numerous means of transport.
The secondary towns are still attractive because they combine business and leisure tourism. It is therefore necessary to bring in active people to create new offers.
There is a market potential in a certain number of tertiary cities with the creation of establishments of smaller capacity or with new concepts.
The model must be reinvented in the mountains and on the coast, there have been many new offers in the mountains in recent years that are developing.
Coliving is a mix between hotels and accommodation, a booming asset. It is a market in the process of structuring itself, which is still in the process of finding itself, but which has great potential.
The HPA market is moving upmarket and is becoming structured with the arrival of new investors. It benefits from increasingly high levels of investment.
Towards an asset smart strategy? By Julien Choppin, Managing Director Clearwater International and Thomas Gaucher, Managing Partner Clearwater International
First of all, there are bank-type solutions with leases that allow us to retain our assets.
The operator owns an asset and generates value by selling it to a private individual.
The difficulty with asset smart is that tomorrow the investor may change and therefore the partner on day one will not be the same in a few years.
These are operations that can be set up on assets but also structuring them in a more complex way.
When you have an asset and you are an operator, either it is not strategic or it is strategic and in this case there is no long-term interest in selling this asset.
The hospitality market operates with large funds and what is important is to keep a certain flexibility on these assets.
New partner expectations by Radisson Hotel Group by Sébastien de Courtivron, Regional Director Western Europe at Radisson Hotel Group
The economic landscape has changed a lot in recent months and we have constantly tried to provide growth solutions to our partners.
We have sought to secure the growth of independent hoteliers who are finding it harder to cope with the crisis than large groups.
We have sought to develop less volatile business models.
We wanted to strengthen and accelerate our new model in order to improve our results.
We have an answer to the lack of liquidity to hoteliers with the Radisson Individuals model.
We also sought to strengthen a less volatile business model, serviced apartments.
Like many, we have been quick to respond to changes in customer behaviour and the rise of new technologies.
We also sought to create value by optimising square metres with rooms that can be transformed into meeting rooms, which already existed but we wanted to bring more quality to this concept.
All this value creation would not be possible without an efficient business model. To do this, we set up a single platform throughout the customer journey.
Crossed perspectives: owner-operator and builder by Pascal Donat, Chairman of Valotel and Arnaud Nigoghossian, Sales Director of the Hotel and Luxury Residential Division at Bouygues Construction
In Paris, we tried boutique hotels, a product that works very well.
The world has changed since 1973 and hospitality has evolved considerably.
Functional and modern hotels have been a real revolution. Having a television and a bathroom in a hotel room was a great success for the middle class in the 1970s.
This new young clientele that is arriving in our hotels with a high purchasing power has profoundly changed the hotel industry, making it experiential and digital.
As a franchised hotelier, I am a creator of places to live.
In addition to F&B, customers also want a wellness offer, which means a lot of work on the brands.
You also have to appeal to the staff and that is a real challenge, so the employer brand has to be strong.
Climate change is having a major impact on the hospitality sector, so we have to become responsible stakeholders.
We have to revise our fundamentals because things have changed profoundly.
Containment has been an accelerator and an indicator of trends.
The places where we work and where we rest become one and the same, the borders become porous. People want to do everything at once.
Customers want to eat well, they want quality, local and organic food.
You have to tap into the roots of the brand to create sustainable brands.
For over 35 years, we (Bouygues Immobilier) have been working with hoteliers and we take the time to do so.
Destination Île de France: finding new leverage effects by Christophe Decloux, General Manager of the Paris Île-de-France Regional Tourism Committee, Olivier Pagézy, General Manager at IDF Investissements & Territoires and Marc Rigaud, Tourism Director at IDF Investissements & Territoires
At the end of the confinements, we took stock of the hotel industry and cultural venues that welcome the public.
We attacked all the communication and promotion plans, except that we decided to speak under the same flag, because of the numerous reminders from the destination, and we all speak together about the destination. We have a united campaign with private and public stakeholders.
We have the opportunity to offer a destination that is safe during this health crisis.
Business tourism is key to relaunching the Paris Ile-de-France destination.
In the lessons that we all learn from this crisis, we must involve the public and the private sector.
This new real estate company is very special because it has economic recovery and development objectives.
The three main missions of our property company are to consolidate economic activity, to operate a transformation of use and to remedy the lack of services to the population.
Our plan has a budget of more than 220 million euros with numerous partners such as the Caisse des Dépôts.
The first point of this plan is to support the stakeholders.
Either we wait for the levels to return to what they were before, or we make sure that the recovery is triggered as quickly as possible.
In Ile-de-France, 79% of tourists are what we call repeaters.
Financing and developing projects in Europe after the crisis by Tugdual Millet CEO Covivio Hotels, and Laurent Bigot, Global Head of Real Estate & Hospitality at Natixis Corporate Banking
Covivio has been present in the hotel industry for more than 15 years when we bought this portfolio from Accor in 2004.
The know-how of the operators is exemplary, with stakeholders from various sectors drawing inspiration from the hotel industry's codes.
Despite the volatility of revenues, there is a very strong resilience of values in the hospitality sector.
Our analysis grid has not changed but it has been reinforced by the health crisis.
We are in a resilient business and it is in this kind of situation that we are sensitive to guarantees, particularly cash flow.
There has been a fairly significant movement upmarket in a logic of diversification to compensate for the volatility. We have achieved a fairly sustainable balance.
We have worked on how to transform our existing hotels but also to strengthen the leisure sector.
It is complicated to mix different concepts in the same space and to make them cohabit.
The market benefits from a uniqueness that allows it not to suffer from the health crisis.
Investor appetite is still relatively high today, so the economic environment will be favourable in 2021. But there are still uncertainties at the banking level.
The credit committees are still a bit cautious.
The regulator is increasingly pressing today in the world of finance with the various ecological regulations.
The idea is to direct investments towards what will contribute to the environment.
At Natixis, we have set up a tool that allows us to measure the ecological impact of our loans.
If we want to remain within the Paris Agreement, we have to change our balance sheet to have more green operations than brown.
We need to support those who are on a trajectory to reduce their climate impact, a very serious subject on which we are placing more and more emphasis.
Hospitality is demonstrating exemplary long-term resilience.
The third place: a space for all possibilities by Olivier Durix, Managing Director of Bouygues Immobilier and Stéphane Bensimon, CEO of Wojo
For one week, we transformed the Parc des Princes into a co-working space, something that was unthinkable just two years ago.
How can we optimise the spaces? How can we create value?
There is a combination of expectations and benefits for companies and employees.
The cost of offices is the second largest cost for companies after salaries.
Optimising workspaces can reduce carbon footprints.
We have developed a solution that is flexible in terms of location and space.
We have expanded throughout France, Latin America and are now tackling Germany and Austria.
The possibility in the hospitality world to optimise the square metres and the yield of a hotel, to have an accommodation space, an office space and to share common spaces.
This solution makes sense in terms of eco-balance, profitability, management, experience and customer expectations.
We are responding to the 3 major elements of yield, cross selling and synergies.
It is a new approach that disrupts the world of hospitality and transforms existing assets.
The profitability is more interesting.
The target of co-living spaces are young workers during homestay periods or for short periods of less than a month. This target is ready to make concessions and is more flexible.
The double challenge is to respond to the eco interests of clients and investors.
In the next 15-20 years, the co-living mode will undoubtedly change again.
Our ambition is to have 2,500 beds by 2025.
It is important for us to imagine establishments that are sustainable.
MKG Insights : Tertiary decree, RT 2025... what impact do the regulations have on the value of assets? By Sylvie Bergeret, COO at MKG Consulting
These new regulations involve both the owner and the tenant.
If we look at the RE 2020, it is something that is coming soon with requirements for results and measurement indicators.
There are challenges in terms of sustainable tourism in particular.
We have destinations that are increasingly invested in a sustainable development strategy.
We have funders who are increasingly aware of this, from 56% to 85%. The funder is becoming a regulator and accelerator of this ecological transition.
The story of a partnership or how to generate maximum value together by Olivier Devys, founder and president of OKKO HOTELS and Jean-Luc Guermonprez, director of the hotel division at Vinci Immobilier
You need a developer, an investor and an operator. It's a three-way marriage.
On the first definition of the project, from then on we know that we are going to go all the way. We know what we want to do from the start. We come to a conclusion very quickly.
As soon as the product is well defined, it can be delivered on time and without additional construction or costs.
What makes the alliance between an operator and a promoter is the speed, the direct contact and the fact that we know directly what we want to do.
We generate 50% of our turnover from the rehabilitation of derelict areas.
We are committed to having zero land artificialisation within 10 years.
Beyond the environmental strategy, it is to have less tension on the land. Our wish is to have more flexibility on the part of local authorities.
Let's not be under any illusion, a budget will be allocated to CSR in the years to come. It will be much more expensive than before, we must be prepared for that.
The open-air hotel segment: deciphering a rise in power by Johanna Capoani, Deputy Director of the hotel portfolio, Swiss Life Asset Managers France, Pierre Dupuy-Chaignaud, Associate Director, 123 Investment Managers and Jacques Masson, Member of the Board, Siblu
A booming sector despite a shrinking offer, but a great premiumisation that is developing with the opening of 4 and 5 star campsites.
All the campsites had a very good season. We wondered if the mobile home manufacturers could keep up with the demand.
The sector is experiencing a real upmarket trend that is not likely to stop and it is also proving to be very resilient.
Today, a campsite is mainly equipped with mobile homes, which are 91% recyclable, so they are interesting in terms of CSR and more mobile. We have flexibility in our stocks and we can adapt according to unforeseen circumstances.
The crisis has not had too much of an impact on the campsites because the clientele is very domestic and when the recovery begins many English people return to French campsites.
The outdoor hotel sector has passed the "crash test" represented by the health crisis.
There are very important markets such as English, German is very dynamic as well as Dutch where it is common to go camping. The European market is relatively strong and resilient.
There are many regulatory constraints, notably tourist taxes, property taxes and the coastal law.
The camping business is a very down-to-earth business. We are holiday destinations.
There are 5 large groups in France today with obviously very profitable products.
Our capex can be put into equipment such as the swimming pool and the opex into the improvement of animations for example.
The observation today is that the HPA sector has weathered the crisis much better than the hotel industry.
We are in an ultra-fragmented market and therefore a very important source of income.
It is very difficult to buy small family groups one by one, it is almost impossible. So you have to find partners who know the sector well and who want to grow.
Broadening the lens of post health crisis performance, what levers? By Laurent Fléchet, Chairman of Primonial REIM and Dominique Ozanne President of Hova Hospitality and Business Angel
We need to get back to basics. Who are our clients and what do they need?
Our clients are essentially individuals who expect annual distribution performance and property expectations. The first expectation is a regular and secure return.
At the time, the returns on the office market were around 6%.
When you want to succeed in asset classes, you need to have teams that come from the sector in which you want to invest and you also need to have a critical size. Without these two factors, it's complicated to get there.
You have to have a lot of strings to your bow to create value in the hospitality sector.
Real estate represents just under 900 million euros in our portfolio. (Primonial)
The ambition is to create almost industrial schemes to respond to the various problems of operators.
The French model has all the assets to relaunch itself by David Djaïz, essayist and senior civil servant
Post-1945 France has rebuilt and remodelled itself, but it was not easy because it was devastated at the time.
However, the country got back on track in a few years and gave itself a new direction. What allowed this model to take hold was resistance.
Despite these differences, there was a desire to build a shared future thanks to several pillars. These three pillars are: great confidence in the future, heavy industrialisation and social security.
We are at a crossroads and we have the opportunity to rebuild a model of society in which hospitality will have its full place.
We are seeing a profound change in consumer habits, the share of the budget for manufactured products is falling in favour of spending on well-being.
People are looking for uses and experiences rather than just products for use.
It is an economy that tends to transform all of life's experiences into something much more enjoyable.
We haven't written the economic story that will enable France to do well. This economic narrative is based on transition.
This economy of well-being must be thought of in a global way. We have to think about tourism with a transport network and a network of services to the general public, for example.
We are moving away from a logic of primary, secondary and tertiary sectors, the welfare economy is moving away from this classic framework.
Digital technology links all these sectors, and is currently a vector of transition.
We have seen how much we have learned in recent months in alternating current, to adapt and reorganise. We must be confident and optimistic.
Already signed up? Already signed up? Already signed up? Already registered? Login here!