7 minute read
HOTELS, TOURISM AND LEISURE
Tulip Residences, from France’s Louvre group
Better apart?
After a second summer of restricted travel, hotel owners and operators are daring to look to the future. And there are reasons for optimism, writes Chris Bown — the sector is emerging from the pandemic stronger, more fl exible and better prepared for a changed world of travel and accommodation
AS COVID-19 spread around the world in early 2020, most travel markets saw a precipitous drop in business as governments acted to restrict the spread of the virus. Today, however, there are brighter signs. China, the market first affected by the pandemic, is racing back to levels of business previously seen in 2019, giving hotel owners, operators and investors confidence in the future. Adding to that confidence is polling showing a strong desire from consumers to resume travelling just as soon as their governments allow them to do so. There is also increasing evidence that business travellers, too, are fed up with connecting via Zoom and Teams and are eager to return to face-to-face meetings. “We know there’s a huge pent-up demand for travel across the globe — and the key to opening up markets is having
a successful vaccination programme. As they’re rolled out globally, travel will return,” says Karin Sheppard, IHG’s senior vice-president and managing director Europe.
Karin Sheppard: “We know there’s a huge pent-up demand for travel — and the key to opening up markets is vaccination. As they’re rolled out globally, travel will return”
Hotels have had to endure a complicated mix of inputs that have affected their capacity to operate. National government lockdowns meant that, for many, their business declined to next to nothing, as consumers were instructed only to travel for essential reasons. Business trips were effectively stopped for anybody who could work online — only those in construction, infrastructure and engineering were permitted to travel. And leisure travel was banned during lockdown periods. The easing of restrictions has allowed tourism to recommence but, with restrictions on international travel still in force, many consumers have opted for domestic holidays or staycations. The massive impact of these travel restrictions is laid bare in the financial performance of the major hotel groups. Hilton, for example, declared a $720m net loss for 2020, with revpar — the industry’s revenue-per-room measure — down revpar — the industry’s revenue-per-room measure — down 56.7%. Europe-based Accor, meanwhile, posted 56.7%. Europe-based Accor, meanwhile, posted 2020 revenues of €1,621m, 60% down on 2019. 2020 revenues of €1,621m, 60% down on 2019. Other landlords and operators coped with Other landlords and operators coped with the downturn as best they could. In many the downturn as best they could. In many markets, lenders, property owners and markets, lenders, property owners and those paying the rent were forced to come those paying the rent were forced to come together to work out how to share the pain. together to work out how to share the pain. Most achieved consensual agreement on rent Most achieved consensual agreement on rent standstills, deferrals and discounts, helped by sigstandstills, deferrals and discounts, helped by significant government support programmes. nificant government support programmes. In many areas, the pandemic has acted as an accelerant, forcing changes that were already taking place slowly. “We’ve invested in cloud-based technology to fasttrack the rollout of digital enhancements that support safe and secure guest
In many areas, the pandemic has acted as an accelerant, forcing changes that were already taking place slowly. “We’ve invested in cloud-based technology to fasttrack the rollout of digital enhancements that support safe and secure guest experiences and reduce unnecessary contact,” IHG’s Sheppard says. “These include rolling out digital check-in and check-out across IHG’s hotels, along with digital cleanliness checklists. Digital ordering has been also been implemented for food and beverages, while some hotels have started using their kitchens as facilities for preparing meals for the growing home-delivery food market. During the pandemic, with the focus on staying apart from other people, hotels suffered while accommodation alternatives with their own front door benefitted. Few wanted to share a restaurant or buffet breakfast space where they might contract COVID — despite hotel brands racing to reassure guests by launching accredited cleaning protocols. In the short term, serviced-apartment operators benefitted, as well as those offering home and villa rentals, with consumers attracted by the perceived safety of their own private space. Major hotel brand groups, including Choice, IHG and Hilton, reported that their serviced-apartment brands outperformed their hotel offerings around the globe. The flight to whole home rentals was also seen on booking platforms such as Airbnb and Booking.com — anything with its own front door and kitchen facilities was in demand as consumers looked for family holiday accommodation during the summer of 2020. The experience has certainly led to the alternative niches accelerating their plans for growth. Irish-based es accelerating their plans for growth. Irish-based aparthotel group Staycity refinanced in early 2021, aparthotel group Staycity refinanced in early 2021, allowing it to continue the pace of its European allowing it to continue the pace of its European expansion, which will take it to 15,000 units. In expansion, which will take it to 15,000 units. In early June 2021, the company also signed up a early June 2021, the company also signed up a property in Heidelberg for rebranding. property in Heidelberg for rebranding. Big brand groups are also looking at the space. Big brand groups are also looking at the space. French group Louvre recently launched Tulip French group Louvre recently launched Tulip Residences as an extended-stay brand, with first Residences as an extended-stay brand, with first sites in Joinville-le-Pont in France and Warsaw sites in Joinville-le-Pont in France and Warsaw in Poland. Accor is expanding its Adagio in Poland. Accor is expanding its Adagio aparthotel network and has also addaparthotel network and has also added Movenpick Living, which is opened Movenpick Living, which is opening in Istanbul this year, to its porting in Istanbul this year, to its portfolio. And Radisson has declared it folio. And Radisson has declared it will ramp up its apartment offering will ramp up its apartment offering with the opening of a 227-suite with the opening of a 227-suite aparthotel under the Radisson aparthotel under the Radisson IHG’s Karin Sheppard brand. Developed by ECHO Partbrand. Developed by ECHO Part-
ners, the 10-storey block in south Amsterdam will operate under a lease signed by operator Cycas Hospitality. In France, investor BC Partners has agreed to inject €104m into French serviced-apartment business Edgar Suites. The move will allow Edgar, which currently trades from 18 addresses, to shift from leasing space to owning its own properties. Xavier O’Quin, Edgar president and co-founder, has said the company will look to acquire and convert small office buildings with floor plates that are inefficient for office space.
After many months of waiting and watching, investors are returning to the hotel space with confidence. In April, major German real estate investor Union Investment signalled its return to the German hotel market when it bought a project in Stuttgart, due for completion at the end of 2021. The €137m investment, which will be placed in the UniImmo open-ended fund, combines two preleased properties: an Adina aparthotel and a Premier Inn budget hotel operated by Whitbread. “The pandemic has passed its peak, so now is the perfect time for us to re-enter the market, enabling us to secure a strong position,” says Andreas Locher, head of investment management hospitality at Union Investment. “We are planning to expand our high-quality portfolio of some 80 hotels and are focusing on core products with resilient
Union Investment’s Andreas Locher
concepts and operators. In this context, we consider the premium budget segment and apartment hotels to be particularly interesting.”
As investors return, one thing that has been missing from the market is bargains. Following the previous financial downturn, private-equity investors were able to purchase distressed hotel assets cheaply as banks took on properties from failing companies. But this time round, there have been few failures, as landlords, lenders and operators mostly found ways to help each other through the pandemic.
HOSPITALITY
09.30 > 10.30 | Workshop Room - Palais 3
WHAT’S HOT IN ATTRACTING HOSPITALITY INVESTMENT?
Debate to what extent investors still believe in hospitality in a post pandemic environment and what strategies the industry can employ to attract investment.
In partnership with
Johanna CAPOANI
Head of Hospitality, Portfolio Management Swiss Life
Alex FIGUEIREDO
Chief Operating O cer Apex-Brasil Europe CONFERENCES & EVENTS AT MIPIM
TUESDAY 7 SEPTEMBER
Willemijn GEELS
VP Development Europe IHG Hotels & Resorts
Xavier GRANGE
SVP Development France& Southern Europe Accor
Tugdual MILLET
CEO Covivio Hotels
Vanguelis PANAYOTIS
CEO MKG Consulting
