Five key trends shaping the hospitality investment sector
Investors share current challenges and opportunities at IHIF Advisory Board meeting
Industry experts on the International Hospitality Investment Forum (IHIF) 2022 Advisory Board have set out five key trends that will shape the sector’s recovery this year.
While challenges such as rising costs and talent shortages remain, there are reasons to be optimistic with borrowing terms expected to improve and hoteliers set to start spending again after two years of cost-cutting during the pandemic.
The IHIF Advisory Board, which is made up of representatives from across the industry including investors, asset managers, operators and professional services from businesses such as Hilton, Invesco, Accor, Marriott International, IHG Hotels & Resorts, Brookfield, Bain Capital and Union Investment, met recently to discuss the hospitality industry’s current state and shape content for this year’s event.
The five key trends discussed by members at the meeting were:
1. There is money to be spent - it’s been a recurring theme of the last two years: investors have raised plenty of cash but haven’t managed to deploy it yet. In the hotel sector, there is still some disagreement over pricing with sellers not needing to offload cheaply because of government support. That is likely to change this year with creditors being more aggressive.
2. Borrowing should become easier – at the start of the pandemic, traditional lenders took a critical view of the hospitality sector, making it harder for those borrowing money to get a good deal on debt. With more optimism in the market, those investors looking to do more, or bigger deals, should find things a little easier in 2022.
3. The time for cost cutting is over – after several years of cost cutting to make their businesses leaner, owners and operators are now turning to capital expenditure to add value. This could see many upgrading their facilities or repositioning within the market.
4. The labour problem isn’t going away - the backdrop now is one of rising inflation pushing up the cost of raw materials and labour. Even before the pandemic, the hospitality industry was having a hard time keeping and retaining staff and this will continue to be a key challenge.
5. Consumer spending habits are changing – the pandemic has left many middle-class westerners with more disposable income to spend on luxuries like travel, while restrictions have further increased their desire for overseas holidays. This is giving owners and operators more confidence to reposition their properties as they believe consumers will be prepared to spend more.
Many of these trends will be addressed in detail at IHIF, which returns to Berlin on 3-5 May 2022. Organised by Questex Hospitality Group, IHIF is the leading event in the global hotel industry calendar, attracting senior leaders and top brands from over 80 countries, including global investors, asset managers and leading hoteliers.
With a core focus on people, planet and profit, this year’s programme will feature 180 world class speakers across three days of thought-provoking content with sessions including Decoding the data: a deep dive on what the future of hospitality investment looks like with Michael Grove of Hotstats and Robin Rossman of STR and an investor panel looking at all things ESG titled hospitality investment with purpose on Wednesday 4 May. Breakout sessions on areas such as sustainability, investment and leadership, will also run on both days.
For more information, including the programme, and to register for IHIF (3-5 May 2022) visit www.ihif.com.