The 22ndÂ International Hotel Investment Forum (IHIF) opened in Berlin on Monday 4 March 2019Â with Alexi H. Khajavi, Managing Director EMEA & Chair of Hospitality + Travel Group, Questex LLC and Jonathan Langston, Chair, IHIF Advisory Board welcoming over 2,500 delegates to the InterContinental hotel in Berlin.Â
The Economic Overview was delivered by Thanos Papasavvas, Founder and CIO, ABP Invest Ltd who opened his presentation with the statement, in reference to the global economic crisis,Â â€śwe have just survived a hurricaneâ€ť. He noted that one tool that drives the economy is Federal Reserve Fund Rates and looking at the economies of China and the US saidÂ â€śneither were a concernâ€ťÂ and would maintain economic growth with Trump likely to stay in power until 2025. On the other hand,Â â€śEurope is my biggest concernâ€ť. Papasavvas said that MerkelÂ â€śhas been keeping the EuropeZone and Germany together and she is about to depart with no one ready to replace her leadership.â€ť
Looking at UK and specifically Brexit, Papasavvas said in his view,Â â€śMay will deliver Brexitâ€ťÂ and the weaker EU economy will have significant impact in the UK. There will be opportunities for non-Sterling investors to invest in the UK and for medium to longer term investors, the UK represents a good opportunity. Providing the central banks maintain an ample level of liquidity, Papasavvas is positive about the economic outlook but warns of social and political unrest if the global economy, specifically the European economy, weakens.
Robin Rossmann, Managing Director, STR took to the stage to look at the markets, Past, Present and Future in A Global Hotel Market Overview. Rossmann opened by looking at the rise of brands and saidÂ â€śowners are choosing more branded hotels than they are independent hotels. In the last 10 years there has been a massive shift towards branded hotels.â€ťÂ He cited OYO as a brand to watch as in contrast to other franchise hotels, all their hotels are required to give 100% of their pricing control to OYO, thereby giving them total control.Â
Rossmann mentioned Germany as one to watch as it should be stable in 2019 but with 100,000 hotel rooms in the pipeline, the supply growth could negatively impact the market. Unfortunately, a World Cup hangover for Russia is unavoidable and many feared Spanish resorts hit a peak in pricing capacity in 2018. The later is largely due to the huge capacity in Istanbul and the Red Sea (Sharm El Sheikh) and Marrakesh all offering a compelling alternative to Spanish resorts at better value now the safety concerns have abated.
Rossman concluded by stating theÂ â€śdrivers to travel remain strong and whilst 2018 was amazing, 2019 is still expected to be strong.â€ť
Chris Day, Global Managing Director, Christie & Co delivered the next presentation on Buyers and Sellers: The Global Picture on Hotel Transaction Trends. Day opened by sayingÂ â€śless than 20 years ago it was almost impossible to convince institutional investors to consider hotels as an investment opportunity. How times have changed.â€ťÂ He stated yields are continuing to sharpen with increased activity being seen in the Middle East and buoyant hotel investment in Spain. Regarding the UK market Day saidÂ â€śsome overseas buyers, particularly from Asia have withdrawn from the market until the uncertainty around Brexit has reducedâ€ť. Statistics support this with Asian investment 46% down compared to 2017. Institutional investors represented nearly 50% of the 2018 capital mix demonstrating hotel assets are now seen as a serious asset class by this group. Day cited risks to the market as new supply, geo-political risks and cost pressures and predicted that asset management will become increasingly important in our markets. He noted that banks have a better understanding of the asset class, with specialists deployed within their teams. He said thatÂ â€śwe will continue to see low yields in prime locations with increased demand for opco/propco structuresâ€ťÂ andÂ â€śinvestors will seek leaner and more cost effective models and hostels and serviced apartments provide these.â€ťÂ Day concluded by sayingÂ â€śsavvy investors already see the hotel market as mainstream. Demand for quality assets in our market continues to grow. The hotel market has come of age.â€ť
The IHIF Lifetime Achievement AwardÂ was presented to Sol Kerzner (KCMG) â€“ Founder, Kerzner International and collected by his daughter on his behalf. Michael Hirst OBE, Consultant, CBRE Hotels presented the award to Chantal Kerzner. Hirst said during his meeting with Kerzner in London he confirmed his life lessons were; keep going, good enough never is and we can do even better. Kerzner was credited as an innovator and perfectionist and we all wish him a safe and speedy recovery to full health.Â
The highly anticipated Investorsâ€™ Panel: Money Makes the World Go Around: Identifying the Key Trends in Global Money Movement followed moderated by Michael Fishbin, Global Hospitality Leader, EY in conversation with Mai-Lan de Marcilly, Director and Head of Hotels Europe, KKR, Cody Bradshaw, Managing Director and Head of International Hotels, Starwood Capital Group, Abhishek Agarwal, Managing Director, The Blackstone Group, Khaled Bichara, Chief Executive Officer, Orascom Development Holding and Christophe Vielle, CEO & Co-Founder, GCP Hospitality (Gaw Capital Group)
Bradshaw said,Â â€śthe majority of hotel deals done over the last few years have been done by investors who invest across all asset classes, so they donâ€™t have to invest in hotels if they donâ€™t want toâ€ťÂ with which de Marcilly agreed by sayingÂ â€śwe donâ€™t need to invest in hotels if we donâ€™t believe the dynamics are good.â€ť
Vielle believesÂ â€śSome of the investors will be a little bit more careful. They believe there will be better deals to come at the end of this year.â€ť
Looking at the investment options across real estate, de Marcilly said:Â â€śretail is challenging, office is very expensive which leaves beds and sheds. We are investing a lot in beds â€“ hospitality, student accommodation and hostels.â€ť
Bradshaw confirmed Starwood Capital Group are looking for properties that they can fix (reference theÂ HAMA Asset Management AwardÂ for details on Starwood Capitalâ€™s creation of The Principal Hotel Company) and in looking at Europe said thatÂ â€śEurope is a city level strategy, not a country level strategy.â€ťÂ Discussing Airbnb, Bradshaw saidÂ â€śwe were supposed to be dying because of Airbnb but Airbnb are achieving staggering growth rates and the hotel sector is achieving fantastic occupancy and itâ€™s retail which is suffering. So have survived the mother of all disruption.â€ť
Agarwal said Blackstone are looking at innovation cities for investment opportunities. These are typically where the technology is and where the Millennials want to work. He saidÂ â€śglobal travel grew by 7% last year and. European airlines order books are set to grow by 7% until 2020 so there is a healthy appetite to serve.â€ť
The panel discussed the recent sale of Belmond to LVMH and their response to the transaction. De Marcilly said the transaction represented a long term trend for luxury whilst Bradshaw saidÂ â€śthis acquisition was a marketing managerâ€™s dream, a real opportunity to own the customerâ€ť.
A final note on sources of future capital from Bradshaw,Â â€śIsraeli capital buys in the U.K. In 2018 this equalled ÂŁ2bn and a lot of people do not know that as only a few press releases come out. Israeli Investors and Israeli Money is becoming a major player in the European Lodging industry.â€ť
The presentation of theÂ HAMA AwardÂ was then made by the The Hospitality Asset Managersâ€™ Association Europe. The winner of both the overall award as well as the and re-positioning strategy category was Starwood Capital Group and the creation of The Principal Hotel Company. Goldman Sachs won the HAMA Value-Add Strategy category for their work completed with the Tifco Hotel Group.
An asset management panel session followed in the penultimate session of the day, Improving Performance: The Rise of the Asset Manager. The session was moderated by Ben Godon, Head of Hospitality Asset Management, Colliers in conversation with, John Brennan, CEO, Amaris Hospitality, GaĂ«l Le Lay,Deputy Chief Executive Officer, Covivio Hotels and Ă–mer MĂĽftĂĽler â€“ Partner, Odien Group. Brennan opened the discussion by statingÂ â€śasset management is not really a role or a function, itâ€™s a mindset of a business.â€ť
The panel discussed asset management within the life cycle of an asset and where can an asset manager can create most value? It was widely agreed that sometimes some of the most critical executions can be during crisis situations. Godon concluded the discussion by sayingÂ â€śthe brands are so busy growing brands that, at a local level, the asset manager can focus more energy.â€ť
The final session of the opening day was an interview with Chris Nassetta, President and CEO, Hilton with broadcaster and presenter, Nick Ross. Hilton are celebrating 100 years of operation in the hospitality industry this year and Nassetta praised the noble promise that Conrad Hilton founded the group on. Nassetta and his team aim to work out the next great thing that customers want and deliver it with a customer centricity and a sprit of innovation. He concluded by saying thatÂ â€śleaders should be responsible for ensuring there is a great culture and great strategy, the rest runs itself.â€ť
All attendees were invited to the IHIF 2019 Global Welcome Reception at the InterContinental hotel. Day 2 ended with a Gala Networking Reception - Hosted by IHG at the InterContinental hotel.
The second day started with Tim Arthur, Creative Director of the Need To Know Club and former Creative Director of Virgin Money and CEO of Time Out who shared his view from outside the hospitality industry. Arthur encouraged us all to make our brands loveable. You can read an interview completed shortly before IHIF with TimÂ here.
The first panel of the day was an unmoderated conversation between SĂ©bastien Bazin, Chairman and CEO, AccorHotels and Mark Okerstrom, President and Chief Executive Officer, Expedia Group. The CEOs discussed leading performance through innovation and opening up to models outside of traditional hospitality.
Bazin began by saying that the transformation of Accor is complete in terms of fundamentals like segment, geography and business model and what is left to be done is a culture shift. But that, Bazin saidÂ â€śis going to take me another 5 years.â€ťÂ
Okerstrom said thatÂ â€śany time that someone stands on a higher or broader mountain than you do, you have to be carefulâ€ť. He announced that Expedia have reached the 1 million property milestone this year.Â
Sharing their concerns, Okerstrom saidÂ â€śI worry about Google. They have everyone in the world telling them what they like and donâ€™t like.â€ťÂ
Referring to the new Accor loyalty programmeÂ ALL (Accor Live Limitless), Bazin said he had purposely hired 90% of the team from outside the hospitality background to provide insight, experience and a different way of thinking.Â
In a light hearted exchange, Okerstrom said his job was to bring Bazin customer. Bazin agreed that he was,Â â€śits costing me a fortune, but you are. It then becomes vital to convert them to an Accor customer.â€ťÂ Â
On the relationship between Accor and Expedia, Bazin saidÂ â€śfive-years ago, everyone wanted to admit that we were in a fight. Weâ€™re not fighting with anyone. Our relationship with Expedia is very adult and sophisticated.â€ťÂ
Concluding points from this conversation from Bazin included the positive attributes of the industry being that it is profitable, scalable and predictable and the understanding thatÂ â€śyou have to be daring, you have to be audacious, you have to learn from other industries.â€ťÂ Okerstrom agreed and saidÂ â€śitâ€™s up to us to make sure this eco-system remains.â€ť
The first panel of the second day was hosted by Russell Kett, Chairman, HVS - London Office in conversation with Marloes Knippenberg, CEO,Â KertenÂ Hospitality, Rainer NonnengĂ¤sser, Chief Executive Officer, International Campus GmbH, Kike Sarasola, President and Founder Room Mate Group and Oliver Winter, CEO and co-founder, a&o Hostels. The panel discussed the opportunities in alternative models.
Looking at the development of the alternative model structure, Knippenberg predicted thatÂ â€śretail will meet hospitality on the ground floorâ€ťÂ and at the moment they have no issues with raising cash or investment.
Turning to sustainability and how much it a hallmark of their brands, Knippenberg said;Â â€śwe take being local and part of the community very seriously. If we can source a product locally, then we will. We have made a big impact in countries and communities where we can support local.â€ť
Sarasola, to applause from the audience, announced how all Room Mate employees have clothes made from recycled material and how he strongly felt that the sector had a very long way to go in terms of sustainability.Â â€śIf all we are going to do is stop using plastic straws, thatâ€™s pathetic. We donâ€™t have a planet B.â€ť
When asked about OTAs, Sarasola (whose company Room Mate works on a 35% direct booking structure) saidÂ â€śOTAs understand that I want to steal their client. They will come once and they will be mine, but we are all working together.â€ť
Looking to other models like glamping, etc, Sarasola saidÂ â€śthere is always going to be something new. Anything new that comes up, weâ€™re going to be there.â€ť
The final comment on technology in the industry garnered different views. Sarasola firmly believes thatÂ â€śwe still have an industry where we can see our client, touch them and I donâ€™t want to lose that physical interactionâ€ťÂ whilst Knippenberg was slightly scathing of conversations around automated check-in sayingÂ â€śthe world is going to voice (activated technology) and AIâ€¦â€śweâ€™re so behind.â€ť
The International Hotel Investment Forum (IHIF)Â andÂ The International Society of Hospitality Consultants (ISHC)Young Leader Award 2019Â award was presented to Brian Kaufman, Managing Partner at The Kaufman Companies. Kaufman commented that he wasÂ â€ślucky to be part of global industry which is widely dynamic and continues to innovate. Innovation will continue to drive change.â€ť
The final panel of the morning was the Global CEO Panel - Adapting to Survive & Thrive: Hear from the CEOs Leading the Change. The panel was moderated by Kevin Mallory, Global Head, Senior Managing Director, CBRE Hotels who was joined by Keith Barr, CEO, IHG, Sonia Cheng, Chief Executive Officer, Rosewood Hotel Group, Federico J GonzĂˇlez, President & CEO, Radisson Hotel Group, David Kong, Chief Executive Officer, Best Western International and Thomas Willms, Chief Executive Officer, Deutsche Hospitality.
Barr opened by saying that 1 in 10 jobs globally are being created in the hospitality sector yetÂ â€śgovernments globally fail to understand the importance of the industry in terms of job creation. We are seeing more populist governments which will continue to put pressure on the industry. We need to continue to communicate to governments as an industry.â€ť
Willms saidÂ â€śkeeping people in the industry is important, keeping people in our hotels is better.â€ť
When discussing automation and how it fits into the future, Barr explained IHG are adopting machine learning for their workforce and thatÂ â€śthere are a lot of functions of the industry that are very manual/back office pieces where it can be used to be more efficient. Iâ€™m not convinced about using to enhance the customer experience. It wonâ€™t ever replace the human interactions.â€ťÂ
Willms made the point that without automation, airlines would have gone out of business.
Turning to the sharing economy Cheng believesÂ â€śRosewood are not traditional or mainstream so the sharing economy will not have an impact on us. Consumers are looking for authenticity, variety and a sense of place whilst being immersed in a city.â€ťÂ She believes Rosewood areÂ â€śdelivering with quality and consistencyâ€ťÂ and thatÂ â€śin an economic downturn, consumers will go to reliable and trustworthy brands, like Rosewood.â€ť
Kong from Best Western saidÂ â€śAirbnb have significant reduced occupancy and affected our profitability.â€ťÂ But he says,Â â€śThe Airbnb experience is inconsistent, if something goes wrong there is no one to put it right. Our industry should wise up to how we market our industry and promote what we offer over Airbnb. We are a different product.â€ťÂ
The panel then discussed consumer behaviour in particular that Millennials were largely brand agnostic and turn first to social media, friends, OTAs and review sites for opinions and recommendations.
GonzĂˇlez believes Radisson remain relevant due to the importance of marketing.Â â€śIn many other industries involving consumer goods, they pay a lot of attention to how the brands resonate with consumers. The moment a consumer sees you think about them, their thoughts and experience, you have their loyalty.â€ť
Barr understands that marketing needs to become more data driven and more personalised but admitted that he worries whenÂ â€śpeople say they are building something for Millennials as people change over time.â€ť
Cheng is working on marketing partnerships across Rosewood as well as how the product is packaged. Unique experiences remain the focus point in the knowledge thatÂ â€świth Millennials, everything is about social.â€ť
Barr is eager to reflect the dynamism of how airlines use data to drive their prices and feelsÂ â€śthe hospitality industry hasnâ€™t raised their game as much as the airlines have.â€ťÂ
Following lunch, the afternoon programme involved a series of breakout sessions.
The final day of IHIF 2019 opened with a series of interviews with providers of alternative models within the hospitality sector. The first of these was Greg Greeley, President of Homes, Airbnb interviewed by Ă–mer Isvan, President, Servotel. Greeley said that from a company â€śwhose owners opened their homes 10 years ago just to pay their rentâ€ť Airbnb now operates in 191 countries and has 7 million listings. Greeley believes they are in â€śthe magical travel businessâ€ť. Isvan questioned Greeley on the relationship with hotels to which he answered â€ślast year we opened our arms to boutique hotels and our phones have been ringing off the hook. Any boutique hotel who provides a unique experience should not think of us as a competitor, they should think of us as a partnerâ€ť. According to research, 89% of people who use Airbnb say they do so because there is no hotel in the area they want to stay so Airbnb say they stimulate travel in areas where it wouldnâ€™t normally be. Talking about the types of accommodation listed, Greeley said â€śtraditional vacation rentals, which have been around for years, have found that Airbnb is a useful platformâ€ť. Isvan wanted to understand the percentage of real estate that is purpose built for listing on Airbnb. Greeley replied that â€śthere is there dialogue between developers and Airbnb. Airbnb is an open platform so developers who want to create a unique short-term rental, can do so.â€ť
For a brand that is now a noun, Greeley believe the values are community and connecting. â€śWe give the opportunity to stay somewhere there wasn't previously a hotel. People are going to places that are magical and they're making a connection, they're not having a commoditised travel experience.â€ť
This was followed by an interview with Liam Brown, President & Managing Director Europe, Marriott International interviewed by Alexi H. Khajavi, Managing Director EMEA & Chair of Hospitality + Travel Group, Questex. Brown, having recently returned to Europe from a period living in the US praised the European hotel market for having â€śremarkable breadth and depth of cultures and languagesâ€ť. Marriott, who have 18 brands in Europe want to create â€śraving brand fansâ€ť and whilst listing guests, owners, investors, developers, technologists as stakeholders in their business, Brown said â€śthe guest is the true profit centre for all of us â€“ they pay the billsâ€ť. Discussing the balance of high tech and high touch, Brown said â€śif there is a seamless operation for checking in and checking out, that frees up our people to deliver amazing experiences because itâ€™s the human experiences that people remember â€“ they are the most magical moments.â€ť
When questioned about the data breach, Brown said â€śit happened in the Starwood reservation database which has since been retired. Our forensics are complete. Our mission is to continue to work to have the trust of our guest and ensure it doesnâ€™t happen again.â€ť He said that Amazon and Google are brands that he admires for their constant innovation and dominant position but he also remains wary of them.
When challenged by Khajavi to name all 30 Marriott brands in a minute, Brown took up the challenge and concluded by saying that â€śour industry has a great opportunity to bring people together - hospitality has a higher purposeâ€ť.
The final panel for the morning was the CEO Panel - Evolving Hospitality: The Trends Shaping the Future of Hospitality moderated by Philip Ward, CEO Hotels & Hospitality Group EMEA, JLL who was joined by Peter Fankhauser, CEO, Thomas Cook Group; RaĂşl GonzĂˇlez, CEO, BarcelĂł; Merilee Karr, Founder and CEO, UnderTheDoormat; Amar Lalvani, CEO & Managing Partner, Standard International and Lindsey Ueberroth, CEO, Preferred Hotels & Resorts. The engaging panel opened with Karr saying â€śin 5 yearsâ€™ time, every one of the major hotel brands will have a home accommodation brand in their portfolioâ€ť and when questioned about the number of operators said â€śin an industry that is growing at 30% each year, there is space for a lot of playersâ€ť. Ward suggested there was an â€śinstitutionalisation of hotel accommodationâ€ť emerging. On consumer demand for home accommodation like Airbnb and UnderTheDoormat, Lalvani said â€śthe customer wants home accommodation and ultimately that is what wins. But what we can do is bring people together for common experiences and Airbnb can't.â€ť He challenged the usefulness of many of the hotel brand apps which simply put website content on them and said their app, One Night Standard, listed all their unsold inventory after 3pm to huge success.
Discussing Preferred Hotels (80% of which is individually owned), Ueberroth said â€śthe hard brands have all launched a version of what we do. It is not competition but validates what we doâ€ť.
Talking about the number of hotels and brands, Lalvani said â€śrepeat bookings are totally driven by the experience on property â€“ the number of hotels and brands doesnâ€™t matterâ€ť.
Karr pointed out that â€ś10% of stays in London are in home accommodation. I donâ€™t think itâ€™s a case of distruptors vâ€™s hotels. Itâ€™s about how the whole sector of accommodation grows.â€ť
Coming back to the demand for different types of accommodation from various consumer group, Lalvani stated â€śyoung people around the world now first think about home accommodation before hotels. Hotel companies are naĂŻve in not recognising thisâ€ť.
Ward suggested that business travellers didnâ€™t use home accommodation, largely due to their employers not reimbursing home accommodation expenses. Karr responded by saying â€śhome accommodation is part of the mix that business travellers will increasingly wake up to. I see companies paying more attention to the wellbeing of their employees and opening up their minds to home accommodation. The ability to have a bit of space and to be able to make your own healthy breakfast for example.â€ť
On F&B Fankhauser said â€śin Cook's Club, the centre of the activity is in the restaurant and bar.
GonzĂˇlez said â€śas a family business we want to maintain a balance between ownership, leases and managementâ€ť and he believes they â€śare competing in the happiness sectorâ€ť.
The subject of loyalty concluded the session and Ueberroth feels â€śwe need to remove the word loyalty, now it's about lifestyle, about providing experiences and how do you pull that into the programme. Travel is about more than that time on propertyâ€ť.
The morning closed with a keynote from Mark Gallagher, Founder, Performance Insights and Formula One industry analyst who spoke to the conference theme of Partnering for Peak Performance.
The 22nd IHIF closed with a sit-down, three-course meal, with many tables being hosted by the IHIF Sponsors and Patrons.