A Letter To Santa From The European Hotel Sector
I admit that at the start of 2010 I may not have behaved as many would have liked, but in the last few months I have more than compensated. Hopefully you will look at my recent behaviour and grant me some of my wishes.
My first wish is for some cash to invest in all those hotels that have missed out on capex and thus neglected maintenance over the past few years. I am concerned that without this investment they are a ticking time bomb that will eventually disappoint you again.
I would love to continue to welcome our guests from across the globe to Europe. It is wonderful that so many have discovered the UK recently and that some Americans are coming back, but please ask these visitors to remember the other UK cities and the rest of Europe.
A closer link between pounds sterling and the euro would help a number of cities, like Dublin; Ireland is just too expensive for many Brits and the Irish do need the short-break market to return. A closer tie may also help economies like Spain and Portugal that are still struggling to benefit from UK visitors returning to their vibrant cities and sunny coasts.
When you visit the banks, could you please remind them to lend into markets other than the capital cities and Germany? Their involvement has had a wonderful impact on these markets, but I think it’s now time that this valuable support is spread more widely.
Please could you also encourage the banks to consider their position with some of their loans and, if they need to come to the market, to do it sensibly so as not to damage confidence in a fragile recovery period. It would be great to see some sales of hotels in locations other than London and hotels that are not at death’s door. Whilst many buyers are looking for deals and prepared to pay cash (in the expectation that the hotels can be refinanced in a few years’ time), it would be nice if banks were prepared to chip in with some debt finance every now and then. By all means, make sure that the valuation has been prepared by a suitable expert and that there is a reliable cash flow forecast which supports a realistic level of debt, but don’t leave the sector high and dry for lack of available finance. Sooner or later, banks are going to start shedding more staff if they don’t do enough deals.
On the topic of confidence, most hotels would benefit from a recovery in the conference market. I am not (yet) asking for growth back to the levels previously enjoyed, just a steady return to offsite meetings and conferences will do for the moment.
Many hotel guests are confused by the various hotel classification systems adopted by different organisations and countries. Could you please encourage all to establish one simple system that recognises the quality of the experience rather than just the facilities at the hotel? The facilities are important but the overall experience more so. It’s a bit hit and miss relying on TripAdvisor alone.
Transport issues had significant impacts on various markets this year. I know you are used to the snow, but the Eurostar and various airports aren’t. Could you please give us some advice on dealing with adverse weather? Equally, any tips you have for flying through ash clouds would help the many airlines that suffered with the eruptions in Iceland. Oh, and by the way, if Britain’s international airports haven’t asked for more snow ploughs so that they can remain open in snowy conditions, please leave some for them.
Perhaps the most difficult request to fulfil, but one that is important to so many generations, is to align the various interests so we can find a suitable model to create sustainable hotels. You must see the impact on the environment each year; I would love to help, but just need some assistance to push ahead from the existing goodwill to actual developments.
Finally, and I know I ask this every year, but some recognition from government would be most welcome. The European hotel industry is important in so many different ways, from employment to providing accommodation to visitors who invest elsewhere. The assistance in changes to the tax regimes in France and Germany had a significant impact, could others please follow this most helpful initiative? Common-sense help for planning would be of universal assistance.
These are but a few simple wishes from a European hotel market that has suffered, almost without complaining, for two years and would now like to start the New Year in a positive frame of mind. I have tried to improve myself, but a little helping hand would be most welcome.
Safe Travels
Tim Smith of HVS – London Office
pp. The European Hotel Sector
About HVS
HVS is the world's leading consulting and valuation services organization focused on the hotel, restaurant, shared ownership, gaming, and leisure industries. Established in 1980, the company performs more than 4,500 assignments per year for virtually every major industry participant. HVS principals are regarded as the leading professionals in their respective regions of the globe. Through a worldwide network of over 50 offices staffed by 300 experienced industry professionals, HVS provides an unparalleled range of complementary services for the hospitality industry. For further information regarding our expertise and specifics about our services, please visit www.hvs.com.
