#TIF18 | The change in hotel investment model: from Conrad Hilton and Bill Marriott to Blackstone and Covivio

For the year 2017, if we look at the evolution of RevPAR in Europe, figures were good until September 2018, when results deteriorated in some destinations.

If we look at the long term, we can see the positive effect of the 2012 Olympic Games on the market in the United Kingdom.

Let's look back at the history of our sector, there was a time when integrated value creation meant a customer base, know-how and walls. Then enter OTAs, which started the emergence of specific actors. Most of the distribution went to the OTAs, while the customer base, know-how and walls remained in the hands of the franchisees.

Under management contracts, distribution remains with the OTAs, while know-how and customer base with the brands and the walls are the responsibility of the owners.

We are seeing the emergence of specific actors: third party managers, investors, administrators.

What is the value creation strategy for operators? Within 10 years the market will have at least 3 operators with 1 million rooms. Cash flows are becoming one of the major indicators of the valuation of a hotel group since the net cash valuation is generated by the hotels' business. Operators invest very little CAPEX.

Operators have different strategies, AccorHotels has carried out a capital increase partly reinvested in acquisitions that have enabled it to brands that have brought the high-end and luxury brands to represent 24% of its fleet. IHG has opted for the payment of dividends and the redemption of shares.

Hotels have become an attractive asset class for new types of investors. Concerning this new class of actors, namely landowners, rates will be fundamental in terms of the underpinning on which they are based. Their goal when they invest a lot of money over the long term is to outperform inflation. It...