Key destinations across the continent have been hit by a string of terror attacks and the shape of Brexit is undecided. Meanwhile, the battle against home rental and OTAs rages on, and owners are changing their approaches to branding, as well as pouring investments into hotel-adjacent spaces like wellness, in a bid to find safety in diversity.

These were just some of the topics up for discussion at the 2017 Hotel Investment Europe (Hot.E) Conference at the Hilton London Bankside on 26 September. Always a highlight of this annual event, the ‘View from the Boardroom’ panel saw four hospitality leaders sitting down to give their views on the state of the industry, led by Andrew Sangster, editorial director of Hotel Analyst. In the face of uncertainty, optimism was the word of the day.

Jean-Jacques Dessor, CEO of Hotel Services Europe for AccorHotels, joined Peter Fulton, Hyatt’s EMEA group president; Claus-Dieter Jandel, vicepresident and chief development officer of Deutsche Hospitality; and Bernold Schroeder, newly minted chief operating officer for Europe at Kempinski Hotels. Between them, the panellists brought insights into Asia and developing markets, as well as perspectives from a variety of market segments. The conversation ranged from geopolitics and the impact of terrorism to monetary policy, redistribution and branding strategies, investing in hospitalityadjacent businesses, and who would reap the benefits of business tourism post-Brexit.

Schroeder is originally from Germany, but has spent much of his career in the Asian market with Pan Pacific Hotels Group, Jin Jiang International and Banyan Tree, as well as time at Hyatt. He fielded the first question: how much time was spent discussing geopolitical threats at Kempinski, and what plans were in place?

Panic in Europe

“I think Europeans panic a lot – they see the water glass as half-empty,” Schroeder said. “In Asia, they’re thinking more about the day-to-day issues they have in their own countries and more about opportunities. It’s so entrepreneurial; I’m not that negative about this outlook.”

Jandel was unruffled by the recent German elections, won by Chancellor Angela Merkel with a diminished lead, while the right-wing, populist AfD became the third-largest parliamentary party.

“I think everybody expected what happened. Everybody was getting a little bit fed up,” he said. “I must say, Germany has proved within the past 30–40 years that its democracy and politics are very solid. It's a bit more colourful,” he concluded, to laughter from the audience.

More of a worry was an increase in deadly terrorist attacks, with London, Manchester, Paris, Nice, Barcelona and Brussels all suffering tragedies over the past year. The topic was at the top of many onlookers’ minds, London having experienced a botched train attack just two weeks before the event.

“I was actually in Paris when [the 2016 attack] was happening. We were particularly exposed, when we look back to 2016, in France – four hotels sitting directly in Paris and two down on the coast – and you just saw a total dilution of leisure travel,” Fulton recalled. “It just goes to show how sensitive the world is to news, and how quickly word can be spread – and it also gives us a great opportunity to counteract that. We focused a lot more on the digital side [of marketing] than we did on traditional media, and that has proved very beneficial.”

However, Dessor noted that occupancy rates had shown surprising resilience.

“It's a little bit unfortunate to see that we are all getting used to these events – I find it a bit cynical – but it has less impact than it has in the past,” he said. “After Barcelona, there was one day of calm in the bookings, but no major cancellations.”

No fear

Investors, too, have refused to be frightened away. “Hotel investors from China and India are following us because there aren’t enough domestic prospects for them to move forward,” Schroeder said. “Entrepreneurs have no trust in their country; European hotels are sold to Chinese buyers who have never seen their asset, just to get the money out of the country.”

Schroeder said he expected the exodus to continue without particularly adverse effects on China due to its 50% state-run economy. The discussion then moved on to the year’s biggest mergers – particularly Marriott’s acquisition of Starwood.

“It's amazing. If we thought a couple of years ago that Starwood would not be in evidence today, it's quite incredible how the world is changing,” said Fulton. “There’s a lot of opportunity for smaller acquisitions and mergers out there, but not necessarily just in hotels. I think we'll see more players into distribution channels, into other alternate areas as well, as companies begin to diversify in more portfolios.”

Diversify and prosper

Diversification has been a core part of Accor’s investment strategy, according to Dessor. In July last year, it acquired a majority stake in concierge and loyalty provider, John Paul. “We don't want to miss the next wave of OTAs and Airbnbs. We want to be ready, looking to integrate it into the core of our business. We continue to have 70% of our business coming from hotels, but you never know if you’ll find the Nikon or the Hoover of this world,” he said.

“What the company deals with, of course, is data. Our guests are loyal to several types of businesses, so when we talk about John Paul, it’s a B2B2C company managing for our clients, big companies like BMW, the high-end type of consumer – it's a way of crossing the data of our usual guests at the hotels.”

Accor’s strategy with new investments and internal launches is to ring-fence them from the core hotel business to enable them to grow more independently.

“The way to do it is to dedicate a specific team, so these brands are not fully integrated in our management process,” Dessor explained.

“You’re running what has been a traditional hotel business, and now you've got this,” Sangster pointed out, referring to Accor’s Jo&Joe ‘open house’ hostel concept. “You've got to welcome people with tattoos and piercings, whereas before, you wouldn’t have thought about it.”

“I won’t show you my tattoo, but you know I have to follow the trends,” said Dessor to general laughter.

Hyatt, too, has been spreading its cash into adjacent spaces to boost its core business, particularly wellness. It announced its purchase of boutique spa and fitness operator Exhale at the end of August.

“Isn't that competitive business with a hotel?” Sangster asked.

“To a certain degree, but it's very obvious that our customers are looking for other opportunities outside that traditional hotel stay,” Fulton replied.

Brand building

Jandel told the gathering that Deutsche was more focused on building its core brand portfolio.

“We have the best barber shop in Frankfurt; we're proud of that and we like you to come to Frankfurt, but this will not encourage us to have a barbershop in every one of our hotels,” he explained.

Two years ago, Deutsche launched its third brand, Jaz in the City, in Amsterdam to target artistic millennials.

“The development of Jaz as a new brand was a very strategic approach,” Jansen said. “Intercity is very much focused on airports and train stations, Steinberger has the atmosphere and it's more traditional. We wanted to show that we can be different.” He hinted that two further brands might also be on the cards.

Kempinski only has one brand, with no plans to change that – but Schroeder is keen to implement successful concepts from Asia and the Middle East.

“Branded residences are a huge opportunity: we have a few, and it's done well; for example, in Dubai,” he said. “If you pay five, six, seven per cent royalty on the price of the unit, you easily get it back because buyers out of emerging economies don't know the real estate market really well.”

In the past ten years, Hyatt has expanded from three brands to 13. “It's been very focused,” Fulton said. “We didn't have anything in extended stay or select service, so that came up in Hyatt Place and Hyatt House. We're now segmenting the different brands as per what is happening in that particular city.”

A card from the audience asked, “Brands, brands and more brands, but is there not also a point of brand obsolescence?”

“If you find out that at least 60% of their DNA is the same for two different brands, then you have a problem with your brand portfolio,” Jandel said. “I’m looking at the Marriott and Starwood deal – they obviously have many brands which are very close to each other. I wonder what they’re going to do but I don't want to be in their shoes.”

Corporate question

The next audience question came from Serena Althous of Ferguson Partners, who asked: “Who anticipates that they're going to be the next beneficiaries of corporate tourism after Brexit?”

“Sorry for being German and saying this, but I think Frankfurt will have a huge impact on that,” Jandel responded “A lot of international companies that did not think about looking for hotel sites in Frankfurt are looking now. We are already seeing the impact on real estate prices and rents for office space: they have two-digit growth rates already.”

As the panel drew to a close, Sangster asked each speaker to name something that kept them awake at night as well as what they were most excited about. Jandel and Fulton named human capital and the pressure to get the right people in the right places as their biggest headache. For Schroeder, the outcome of the German election was the most pressing concern, while Dessor pointed to geopolitical instability. As to their number one reasons to get up in the morning, each panellist came to the same conclusion: the best thing about the job is the people.

“It’s about the soft element,” said Dessor. “As a company we are not only about money: it's about relationships.”