The mood at this year’s International Hotel Investment Conference (IHIF), held in Berlin in March, can be described as one of ‘cautious optimism’. Although the economy seems to be firing on all cylinders worldwide and most hotel markets are performing at all-time highs, there’s somehow the feeling that things cannot get much better and that a downturn may be lurking around the corner. Nevertheless, Megan Greene, Managing Director and Chief Economist at Manulife Asset Management, who kicked off the proceedings on Monday morning, was quick to point out that there are no compelling reasons to believe that a recession is on the horizon. Instead, we are living in a world of oversupply of practically everything, including labour and productive capacity, but also of debt and regulation.
A cyclical highpoint?
Robin Rossmann, Managing Director at STR, noted that occupancies now are almost 10% higher than they were at the previous peak during 2008. He expects that revenue per available room (RevPAR ) will increase by a further 5% in Europe during 2018. He sees a rebound in demand growth in Asia, but is cautions on growing oversupply in key Middle Eastern markets. Nevertheless, Dubai has maintained its position as the fourth most visited city in the world.
Brand proliferation set to continue
While it can be wondered what will support the creation of yet more hotel brands, the trend towards proliferation seems unlikely to die anytime soon. Indeed, when the CEOs of some of the world’s top hotel companies (Hilton, IHG, AccorHotels & Choice) took the stage, it was noted that between them these groups operate over 90 brands in all –with more on the way. The CEOs justify such dispersion in their branding as a way to target every possible customer niche.
IHG’s CEO Keith Barr announced that the chain was looking to purchase an existing luxury brand that would trade at a premium to the group’s InterContinental-branded properties. The Hilton’s boss Chris Nassetta tipped the chain’s new millennial-focussed midscale Tru flag to be the company’s fastest expanding brand, with over 20 new hotels due to open this year and 50 in 2019. Meanwhile, Choice’s CEO Patrick Pacious noted the company’s mid-February deal to acquire the brand and franchise business of WoodSpring Suites, which has added some 240 extended-stay hotels in the US to the chain’s portfolio.
Serviced apartments join the mainstream
For the first time at IHIF, there was a session dedicated to serviced apartments, which are now recognised as a viable alternative to hotels. According to Guus Bakker, CEO EMEA at Frasers Hospitality, there has been a major shift towards leisure clientele, who now account for 70% of the total at the group’s properties. Otherwise, Christabelle Morgan Desouches, International Hotel Development Director at Accor’s aparthotel brand Adagio, said that their client breakdown is 50/50 between business and leisure.
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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