IHIF: How will hotels look in 20 years?

March 17, 2017
3 min read

The 20th anniversary of IHIF (International Hotel Investment Forum), held in Berlin on 6-8 March, was an occasion to look forward into the future to see what the next 20 years might have in store for the hotel industry. In a session titled “The next 20 years: a collective look at the hospitality investment landscape”, a roundtable of industry experts explored some trends likely to impact the future of the hotel sector, covering the topics of customer segments, operational efficiency, branding and investment trends.

Misplaced Millennial focus

Cody Bradshaw, Head of European Hotels for Starwood Capital Group, kicked off the session by debunking the current industry obsession with Millennials. He noted that most Millennials have less spending power than their predecessors of 20 years ago due to rising inequality. In fact, according to him, the industry should rather focus on customers aged 60 and above, a fast-growing cohort in the developed world with high discretionary spending power, which will have grown by a third to 225 million by 2030. Tim Helliwell of Barclays Bank remarked that disabled people also constitute an underserved market for hoteliers. In the UK there are 6.7 million disabled people who represent a total market of £249 billion. In order to better accommodate this market segment, guestrooms should be designed in a flexible way so that they can be quickly adapted to the needs of mobility-impaired customers.

New, more efficient structures

Jim Abrahamson, CEO of Interstate Hotels & Resorts, the world’s largest ‘white label’ hotel management company, noted that there is a growing need for major refurbishment in the hotel industry, as many structures were not built to last more than a few decades.

Hubert Viriot, CEO of Yotel, the small hotel chain known for its minimalist hotel properties, emphasised the growing need for efficiency in hotel properties. The future hotel will be leaner, operating with less staff and no food and beverage offerings. One example he gave of increased efficiency through the use of technology is check-in kiosks, which have been used in airports for some years, but are just making their way into the hotel sector.

Diverging views on branding

Abrahamson also predicted that franchising will grow to be the dominant structure, as opposed to management contracts. Indeed, he projects that the major brands will evolve to be mere distribution platforms. However, Hubert Viriot rejected the idea of franchising for Yotel, which favours leases in order to retain better control over the customer experience. He also noted that it’s difficult to convince hotel property owners to constantly change brand standards.

Changing investment landscape

Cody Bradshaw noted that the current rash of merger and acquisition activity, as exemplified by the mega-fusion of Marriott and Starwood Hotels & Resorts, is being paid for with cost synergies. Furthermore, he predicts that institutional property investors will broaden their scope of what they consider to be acceptable categories of investment. He cited the recent example of the success of the new Ace Hotel in Shoreditch, a hip, gentrifying district of London. Universal Design Studio, known for Damien Hirst’s Pharmacy bar, designed the property, delivering a “warehouse aesthetic” that’s in line with the area’s historic architecture.

For more key findings and insight from IHIF 2017, check out our related posts here and here.

Macy Marvel is a freelance analyst at Mintel focused on the global hospitality sector. Also a consultant at Opus Hospitality in Geneva and an advisor to Lausanne Hospitality Consulting – a division of Ecole hôtelière de Lausanne, Macy is a frequent presenter at international hospitality and tourism industry conferences.

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