IHIF 2023 - Global Asset Solutions' Key Conference Takeaways

We were delighted to connect with the investment and hotel-owning community during the International Hospitality Investment Conference (IHIF) last week and take this opportunity to share our main findings from the conference with you below.

Are the operators keeping pace with AI?

Our CEO Alex Sogno thought there was work to be done, telling delegates attending the technology panel: “We don’t have a lot of say in what technology we are given by the operator. AI should be available when you call room service, for example. It should be available so that you can operate in different languages. It’s frustrating. The OTAs do it – 20 years ago the hotels gave away the keys to OTAs, and they’re doing it again, taking the lead with AI.”

Read coverage of Alex’s panel discussion in Hospitality Investor here.

Investors - Is there going to be a pickup in transactions?

There is a strong appetite for investment with capital available, waiting for opportunities arising due to debt issues. Furthermore, it was still felt that there was a mismatch between buyer and seller aspirations, with strong trading meaning that, despite the increases in costs from teams to energy putting pressure on the bottom line, there was little distress. Carine Bonnejean, managing director – hotels, Christie & Co, said: “You need a trigger for people to sell”. Is one on its way?

Size matters

Hotels were warned that they ran the risk if being seen as a “cottage industry” if they continued to use revpar as their KPI and not look to revenue per square metre and optimise performance. Mews founder Richard Valtr said: “The rooms are not the whole property. More and more hotels are getting into models such as extended stay - we need to get to 100% usage of spaces.”

Debt - still the unknown question

Will pressure increase on owners due to (a) increased debt cost and (b) difficulty in refinancing? The likely answer is yes, as banks cannot continue providing support unless the borrower’s business strong cash-flows. Also, fewer banks are willing to lend, and LTVs are down.

This is an opportunity for the PE/Debt Funds, who can step in to the capital stack, but the cost of such funding will be higher, and there is always the risk of falling foul of a “loan to own” house.

Luxury - when will it end?

There appears to be an unceasing demand for luxury though not all luxury is created equal, of course (like residential development, luxury is one of the most overused words in the industry).

With all these luxury hotels under development, aiming to open in two years and stabilise after three, who are going to be the buyers in five years' time?

Are luxury rates going to keep increasing?

There were cautious tones on the sidelines at the conference after a mixed Q1, but there was still enthusiasm for luxury, from both developers and operators. NH Hotels’ Yuan Fang told the conference that the group was “confident that the strong ADR in the luxury universe will be maintained”.

Is the importance of local customers growing?

It was recognised that hotels needed to pay more attention to the communities around them. Guests were demanding more authentic experiences when they stayed and, with hiring hard, hotels needed to raise their profile as sources of careers.

Accor chairman & CEO Sébastien Bazin said that hotels needed to look to locals and “make sure they use the bar, the restaurant, the public spaces to work remotely” to create an attractive atmosphere. The industry needs to be more innovative to attract locals: “To generate additional profit, we are creating very successful venues for our spa and gym with a club membership concept for local members. Next to our lobbies, we are also creating trendy bakeries/coffee shops for our hotel guests and locals,” says Alex Sogno, Global Asset Solutions CEO.

If you wish to discuss any of these trends and investment insights further, please contact us on [email protected]