Hotels in an upswing – Outlook for 2015

The annual Finance for Hotel Investment and Development in the UK and Continental Europe conference will take place next Wednesday and will feature some of the industry’s leading lights discussing the outlook for hotel financing and development in the coming year and beyond. The key issues to be taken up in multiple sessions cover topics ranging from hotel values, sources of investment capital and financing, to brand expansion and jurisdictional peculiarities. The dark days of crisis and recession in 2008-2010 are fast fading from memory as growth has returned to the sector in earnest with nearly all major regions reporting good growth in rates and occupancy. The one-day event will be kicked off by keynote speakers, Joe Stather from CBRE Hotels and Robert Ryan of Travelodge, who will provide an overview of recent performance and will examine the outlook for supply and demand in the main markets.

Hotels have now become an accepted asset class in the portfolios of major property investors. As such it is important for investors to have an idea of the relative performance of hotels compared to other types of commercial real estate, as well as to analyse where we are in the investment cycle. An important question at the present time is: will the increase in supply impact performance in the London market, which is now starting to lag the provinces in terms of RevPAR gains? Indeed, regional UK hotels recorded year-to-date RevPAR growth of 10.6%, while London finished the same period up only 3.2%, according to STR Global data, published in late November. Even though the European economy remains morose, hotel performance is starting to perk up with RevPAR up 5.2% on average year-on-year. However, when investing cross-border, one needs to be aware of specific jurisdictional issues that can impact hotel owners.

A key question for many hotel owners and developers of new properties is how to select a brand? With the hotel landscape becoming increasingly competitive both for property owners and for brands, it is important to base such decisions on a broad range of well-established criteria. At the same time, the brand management companies have been obliged to sharpen their expansion strategies in order to entice hotel owners with benefits, such as ‘key money’ (i.e. up-front cash payments to hotel owners to induce them to sign a management or franchise contract with a brand) and profit guarantees.

These and other issues will be reviewed in detail at the “Finance for Hotel Investment and Development in the UK and Continental Europe” conference, organised by Henry Stewart Conferences and Events (HSCE), which will take place on Wednesday 26 November at the Le Meridien Piccadilly Hotel. Macy Marvel will be representing Mintel and reporting back from the conference on these and more of the latest trends, so keep an eye on this blog for more news and insight.

Readers of this blog can benefit from a 10% discount on the conference entrance fee when booking online – just enter the discount code MINTEL10 when prompted. Register here.