Hotel investment in the spotlight

Opportunities in China, the unavailability of finance and investing in technology were key themes at this year’s International Hotel Investment Forum (IHIF), held last month in Berlin

The 15th International Hotel Investment Forum (IHIF) in Berlin welcomed more than 1700 delegates, a far cry from the 250 attendees at the inaugural event in 1998.

Running from March 5-7 at the InterContinental Hotel Berlin, the event covered a series of topical issues from contract terms to social media.

But as always, the mass were focused on identifying new opportunities through networking, debates and forums. And there were three topics that kept cropping up: China, finance and technology.

China, China, China
Whether hoteliers are expanding their portfolios in China or more focused on attracting Chinese guests to their properties outside of the country, the lucrative market was a hot topic at IHIF.

Speaking on the CEO panel ‘Thinking outside the box’, Jumeirah executive chairman Gerald Lawless emphasised just how important China had become, claiming business from the country was “tripling” every year.

“The Burj Al Arab saw occupancies of 80% Chinese guests during the Chinese New Year,” he said.

Fellow panellist Sir Rocco Forte claimed it was “a little too early to tell” whether the Chinese guests would be a big market for the Rocco Forte Abu Dhabi. Yet, in November, Sir Rocco told Hotelier that the group had set its sights on Chinese expansion.

Jumeirah is already on its way to opening hotels in China: “We’ve got five projects under development in China and three already under construction there,” said Lawless.

However, the firm is not putting all its eggs in one basket and is keen to expand globally, according to Lawless, with plans for projects in the Seychelles, Mauritius and India.

But in spite of international growth, the group’s UAE hotels are still out-performing many others.

“The luxury sector was greatly resilient in 2011. Some of our RevPARs were higher than they were before the global financial crisis. There’s good awareness in Dubai with Emirates Airline doing a lot, which of course helps Jumeirah. Another benefit of focusing on the Middle East is that’s it’s a part of the world with more access to capital”.

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Finance, or lack of it
Lawless had touched upon another hot topic — unavailability of finance.

The panellists — which also comprised Jim Abrahamson, CEO, Interstate Hotels & Resorts and Mariano Perez Claver, chairman and CEO, NH Hoteles — said it was harder than ever to secure capital for new hotel projects.

“We started as a European hotel company that’s expanded, we’re still missing in some of the obvious destinations, but it’s very difficult to get finance. Banks may lend money — around 50% of the asset value — to existing projects, but for new developments there’s nothing,” observed Sir Rocco Forte.

DLA Piper’s 2012 European Outlook Survey (unveiled on the first day) revealed that most respondents felt hotel investment in Europe in 2012 would mainly come from the Middle East, closely followed by Brazil, Russia, India, China and South Africa.

Bed, bath, breakfast and internet access
Even the basics of the hotel business came into question at IHIF this year.During the session ‘Which technology should I invest in’, experts said for many guests, internet was more important than breakfast.

“When I joined the hotel industry 12 years ago, I was told that it’s a ‘bed, bath and breakfast business’, but now it’s a ‘bed, bath, breakfast and internet business’ and for many guests, internet’s probably more important than breakfast,” said Nick Price, CEO of Netsys Technology.

The Rezidor Hotel Group COO and executive VP Wolfgang Neumann and NH Hoteles chief strategy and development officer, Francisco Zinser, said the most common complaints from guests were now over internet related issues.

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Arabian Hotel Investment conference
Later this month, the Hotelier Middle East team will bring you news and trends from the Arabian Hotel Investment Conference.

Name: Arabian Hotel Investment Conference (AHIC)
When: April 28-30
Where: Madinat Jumeirah, Dubai
Audience: 500 delegates from 40 countries
Speaker snapshot: Alex Kyriakidis, president & managing director MEA, Marriott International; Kurt Ritter, CEO & president, The Rezidor Hotel Group and Jan Smits, CEO, Asia, Middle East & Africa, IHG, among others.
Theme: Exploring the outlook for hotel investment in the Middle East’s ever changing landscape. As well as focusing on the Middle East’s investment landscape after the Arab Spring, AHIC will hold a session that looks at the issues facing Egypt, while key industry figures will address the challenges of developing and operating in the holy cities of Mecca and Medina in Saudi Arabia. There will also be a separate dedicated session exploring investment opportunities outside the Middle East.
Website: www.arabianconference.com

Confused about Carlson Rezidor?
Moderator Simon M Johnson, director CBRE specialist markets, put five hotel chiefs through their paces in the CEO panel; one of them was Hubert Joly, president and CEO, Carlson & chairman of the board, The Rezidor Hotel Group.

Johnson: Hubert, you said publicly that that the two names Carlson and Rezidor were confusing. How does renaming it to The Carlson Rezidor Hotel Group make it any less confusing? And how exactly, by putting the names together, do you intend to raise more than $400 million in additional hotel revenue by 2015?

Joly: It’s a major step forward. There was a lack of understanding about Rezidor and Carlson, but now it’s easier to say we have a global portfolio. Carlson Rezidor is a B2B brand, but our consumer brands have had a lot of success. Since renaming Radisson SAS (Blu), a trendy, design-led upscale brand has emerged.