Blurred lines and changing times - the International Hotel Investment Forum Berlin

Amid a backdrop of political and economic uncertainty in Europe and the US, approximately 2,000 delegates from the hotel and hospitality sector gathered to celebrate the 20th anniversary of the International Hotel Investment Forum (IHIF) on 6–8 March.

Overall, the mood in the Hotel InterContinental Berlin, Germany, where the forum was held, could be best described as optimistic, albeit cautious.=

Several notable announcements – IHG revealed it had signed eight new hotels to the Holiday Inn & Holiday Inn Express brand in Germany, while Hilton reported it now has over 100,000 rooms trading across its Europe, Middle East and Africa portfolio – indicated an industry enjoying strong demand.

Roger Bootle, chairman of Capital Economics, set the scene for the conference, using his opening address to declare that the world economy was “set reasonably fair”.

Bootle, however, voiced concerns over the US market, particularly at the hands of the rising dollar and President Trump’s already turbulent incumbency in the White House.

The eurozone, too, is in the midst of upheaval thanks to Brexit, he said, adding major divergences were starting to grow between the monetary union’s member states.

“I can’t remember a time so fraught with political risk,” he said, before adding that “if there is a fracturing in the eurozone, it is likely to spread.”

Despite its decision to leave the European Union (EU), and a spike in inflation, Bootle was sanguine over the UK market, noting three quarters of growth at a rate of 0.6%. The City of London “will remain strong”, too, he said, even in the event of losing “a bit of business and some jobs”.

Bootle was followed on the day by Michael Hirst, consultant, CBRE Hotels, to host the ‘20/20 Vision: Looking Back 20 Years, Looking Forward 20 Years’ panel session with Alison Brittain, chief executive, Whitbread; and Richard Solomons, CEO, IHG.

When quizzed by Hirst on the biggest changes to possibly hit the industry in the coming two decades, Brittain answered artificial intelligence and robotics; Solomons replied technology, specifically mobile. IHG has seen a growth to $1.6 million in five years of its mobile business, he added.

On the agenda

The next session on the programme, ‘Hotel Investment Today’, featured a collection of presentations from Robin Rossman, managing director, STR; Jamie Chappell, global business director, Horwath HTL; Andreas Scriven, international managing director and managing director consultancy, Christie & Co; and Philip Ward, CEO hotels and hospitality group EMEA, JLL.

Of the main takeaway points, Rossman felt alternative accommodation, including hostels, would be the most significant change to the hospitality industry in the next 20 years, while Scriven noted the resilience of the sector and its potential to reinvent itself continuously. Ward claimed “the emergence of hotels as a mainstream real-estate asset, and the development of lodging REITs, had been one of the most significant changes to the industry over the past two decades.

All speakers agreed that the sector was experiencing a blurring of previously clear boundaries and responding to this would be a challenge for the future.

Sanjay Singh, managing director, Fico Corporation, kicked off the ‘Investors on the Spot: Updating the Fundamentals of hotel Investment’ session on a positive note, saying he was “reasonably confident in the UK as an investment target for the next six to 12 months’ time”.

Desmond Taljaard, managing director – Hotels, London and regional, L+R, added the EU referendum results in the UK created a “fourth quarter dip as people started to get nervous but this had now stabilised”.

In the final session of the first day, ‘The Next 20 Years: A Collective Look at the Hospitality Investment Landscape’, Cody Bradshaw, senior vice-president and head of European hotels, Starwood Capital Group, said brands needed to be more overhead and asset-light than ever to create desired cost-efficiency.

“Cost synergies are subsidising many of these deals, but there’s no trickle down in cost savings to owners,” he said, before forecasting Google to be a “real disrupter in this space”.

“In the next 20 years, something has got to give – the brand fees are not that different to the OTA fees,” he said.

Bradshaw also noted that, although much has been made of millennials as shapers of the industry, they have “significantly less disposal income than previous generations due to high levels of student debt”.

More to offer

The second day began with a keynote speech from AccorHotels CEO Sébastien Bazin, who chose to address the escalation of alternative accommodation providers, such as Airbnb, that continue to force the hotel sector to adapt in line with blurring of traditional boundaries.

Rather than dismiss new entrants to the sector – as is sometimes common among more reactionary figures in the industry – Bazin said, “these are the companies that the industry needs to watch; they are very good and what they are doing is legitimate.

“Every time they grow, they take something away from me. They also bring me something; they bring me traffic.”

Dara Khosrowshahi added Airbnb was “both a threat and an opportunity. Anytime new supply is introduced, it’s a threat to pricing” but that it may also potentially introduce new travellers.

Design was also on the agenda, with Raj Chandnani, vice-president of strategy, WATG, Wimberly Interiors, imparting advice on how hotels could stay ahead of the curve. He said: “memories are formed from individual moments” and it was vital to ask the following questions: Who is the customer? Why are they coming? What are they willing to pay for? Where are they coming from?

Chandnani cited the first “Instagram hotel” in Sydney, Australia, as a new model of experiential accommodation, warning that “cookie-cutter design solutions are no longer acceptable”. He concluded that the industry needs to “reconnect hospitality with humanity”.

In the final plenary, the ‘CEO Debate: Striving in a Changing Market’, the question of Brexit was, perhaps unsurprisingly, raised again.

David Kong, president and CEO, Best Western Hotels & Resorts, told moderator Russell Kett, chairman, HVS London office, that “it is important to focus on the brand building of your business in times like this; focus on what you can control and influence”.

The final question Kett asked his panel was on the subject of food and beverage in hotels, and how to drive revenue through it. The responses from the panel were mixed; while Kong said it was “very difficult, particularly in the US, due to the high level of good competition”, Puneet Chhatwal, CEO, Deutsche Hospitality, claimed it was “the biggest upside for us”.

Across the two days, several awards were handed out, including the second annual HAMA Europe 2017 Asset Management Achievement Award, presented to Chris Pfohl from Pyramid Hotel Group and Angelo Gordon. Elsewhere, The IHIF Young Leader Award went to Eva Bachmann, director of acquisitions and strategy at MEININGER Hotels. Arne Sorenson, president and CEO, Marriott International, was the recipient of the IHIF Lifetime Achievement Award. Sorenson, when later asked about the recent acquisition of Starwood by Marriott, said the deal was “a starting point for something we have to build. We need to create something better, not just bigger, than what there was before.”