2021 Review: Hospitality Q&As, Part Two

In the second part of our 2021 year in review Q&As, we here from more leaders in the industry. 

What do you think has been the most interesting news story/trend of 2021?

Lionel Benjamin, co-founder of Ago Hotels: Much like the wider hotel industry, we have seen a particular rise in staycationers this year. As people have been looking for security in their travel plans, they have opted for holidays within the UK, and this has resulted in an increase in these types of guests across all of our hotels, even in the locations historically used by business travellers. 

We are also seeing a potential growth market for a new type of guest. Many people have started to grow tired of the monotony and distractions of working from home, but may not be ready or able to return to the office yet. These guests can bring a new meaning to the acronym WFH – work from hotel. They can check in for a few days at a time, set up their workstations and use the facilities we can offer such as stable WiFi, a quiet room and a change of scenery.  Ever more prevalent again with the ongoing Covid strains.

Jon Colley, executive vice president of acquisitions and development: Investment sentiment in the sector remains strong even with the lack of distress transactions. The ability for the business to respond quickly when measures are eased, consumer confidence returns and clearly, there is money out there to spend on leisure and hospitality.

Owen Pritchard, executive director at CBRE Hotels: That investor sentiment has continued to be very positive despite the challenging trading environment and new parties have entered the market. 

Also that some operators are still offering attractive lease contracts for the right opportunity. It seems the market is confident of a full recovery in the next few years.

Laura Brinkmann, VP private equity at Brookfield Asset Management: The fact that we went from crisis-response thinking to collecting some fruits of our labour and navigating 2021 in a savvier manner. 2021 has been good for our investment companies, due to very strong management and quick decisions, we’ve stabilised operations, were solidly capitalised and fed into our growth pipelines across the board at edyn, Appart’City, UxCO, and International Campus GmbH. I’m excited to see the pipeline coming to fruition over the coming 12-24 months and hope to source incremental opportunities in 2022. 

Alexander Trobitz, managing director - head of hotel services at BNP Paribas Real Estate: The fast recovery of most parts of the hospitality industry after the end of the lockdowns / the rubust performance of serviced apartments.

Do any deals spring to mind?

Lionel Benjamin: The deal which springs to mind for me in 2021 is the portfolio of 12 Hilton hotels, 2400 keys in the UK which was bought by Henderson Park apparently valued at £555m. and financed by Private Equity group Apollo Global Management. In my view it is these deals which really bolster the sector with experienced investors demonstrating tangible confidence in the UK hotel market, and are essential for the ongoing growth and development in the sector. 

At AGO Hotels, we have also had some interesting deals this year! We recently added three new hotels to our portfolio: the Orchard Hotel Gloucester, the former Travelodge Thurrock M25, and the former Grange Bracknell hotel. With these recent deals, our portfolio has expanded to 14 locations and 1,000 rooms across England, Scotland and Wales, which is a huge 90% increase in rooms in just 10 months. Among these acquisitions, the addition of the Grange Bracknell hotel is particularly exciting for us as it’s the first 4-star hotel in our portfolio. We are excited to see the opportunities that come with the hotel’s extensive amenities, including conference space and aparthotel rooms, especially as corporate travel continues to rebound in the UK.

Jon Colley: The PPHE / Clal JV in summer 2021. It highlights the robustness of London, the quality of assets and the strength of the business model. This deal was at pre-covid values.  PPHE bought Hotel Londra & Cargill in Rome – our first in Italy. Traditionally a difficult market to enter with such high barriers. 

Owen Pritchard: The sale of the BluSerena platform of 13 hotels to Azora on behalf of the Maresca family by the CBRE Hotels and Capital Advisors teams in Italy. The largest hotel transaction in Italy this year.

Alexander Trobitz: In Germany probably the purchase of the Premier Inn / Adina mixed use development in Stuttgart by Union Investment because it proved that institutional investors were still buying hotels operated by solvent hotel companies in the middle of the crisis.

What changed the most for your business during 2021?

Lionel Benjamin: We opened our doors during 2021, so it has been an exciting year of change and growth for our team. We anticipated opening our nine original hotels in January, but were unable to do so until July due to Covid restrictions. Despite the setbacks we have faced, we have experienced a strong comeback in H2 2021. There was a tremendous uplift in demand in July and August during the summer holidays, with people keen to get away for a break. We then saw a steady pace of growth stemming from the return of corporate guest, as people began to return to the office and grew more confident in travel. 

And, as mentioned above, just last month we announced the addition of three new UK hotels to our portfolio. We started 2021 with 0 hotels open and have finished with 14, so it has been an extremely positive year for us at AGO Hotels, and we are confident this will continue on into 2022. 

Jon Colley: Labour pressures but really benefiting from our pre-covid decision to insource housekeeping resulting in less labour shortages than some of our peers and flexibility to allocate resources where needed most. We have been very proactive in reviewing comp and benefits, training and development, providing benefits such as staff accommodation and increased our resourcing team with a strong digital focus and strategy. We accelerated our strategic plan to deliver a contactless and seamless guest journey with our estate now equipped with online check and check out, digital key, real time messaging for guests, contactless payments, online ordering of food and drink - elevating the guest experience and creating efficiencies for our teams
Owen Pritchard: We have made a number of significant appointments across all three global regions and, for the first time, topped RCA’s global hotel brokerage standings in H1 2021. Key appointments have included Kenneth Hatton who has recently joined us to lead the Hotels sector practice in EMEA.

Owen Pritchard: We have made a number of significant appointments across all three global regions and, for the first time, topped RCA’s global hotel brokerage standings in H1 2021. Key appointments have included Kenneth Hatton who has recently joined us to lead the Hotels sector practice in EMEA.  

Alexander Trobitz: 2020 was a year with lots of uncertainty & fear from most market participants. That changed in 2021 – hotels are back on track for many investors which has been proved by the latest deals we have signed in the last weeks and are about to sign until the end of the year – both core & value-add.