The pandemic was encouraging investor to look at resorts, attendees of the R&R advisory board, hosted by Questex Hospitality, heard.
The outbreak meant that the sector had to listen more to what customers wanted, and were being more creative as a result.
Philip Bacon, senior director, Horwath HTL Spain, said: “In terms of assets that exist we have been through a period of panic - what do we do? Shall we pay the rent or not? - but we’re coming out of that now and we are seeing a period of creativity.
“Change is difficult - it’s like riding a bicycle and changing the wheel at the same time. The desire for people to continue with their developments has not gone away. But now we are really focused on the consumer and their behaviour. The time out that we’ve had has made us really attentive to consumer behaviour. There will change and we are designing products with far more attention to the new normal. We’re seeing a lot of attention to branded residential or serviced apartments.”
Chris Graham, managing director, Graham Associates, agreed, adding: “We’ve been as busy as we’ve ever been and had results for major European resorts during this period. We have been able to connect - there’s buyer interest out there and people are thinking about how they want to live their lives going forward and how they want to adapt their lives.”
There were new entrants into the market, despite the concerns around travel, with Roger Allen, founder & group CEO, Resources for Leisure Assets, commenting: “We are seeng individuals moving into hospitality for the first time. We have been very busy in Croatia, the south of France, Portugal, Spain. The pattern that we have seen is luxury products, boutique, backed by HNW individuals are picking up pace. Generally we are very optimistic. The big question facing the resorts is what will be the economic impact on the asset class and on guests. We can’t generalise, it will be dependent on location and the type of guest and that will have an impact on what properties can survive the summer season and which will be in a fire sale in Q4.”
Commenting on the current state of the sector, Questex Hospitality managing director Alexi Khajavi, said: “We’ve hit bottom and now we’re working out way back and now we’re looking to see what that looks like - it won’t be the same for all destinations. Resorts offer an interesting hedge against urban markets at the moment. We expect there to be a lot of activity in the resort market.”
The market for transactions remained buoyant, with Philip Ward, CEO hotels & hospitality group, EMEA, JLL, which was involved in last week’s Roompot sale, said: “We’ve spent most of our time talking to people who are short of cash and people who have cash but are looking for opportunities to arise. It’s proved very interesting and so far we’ve been rewarded.”
Bacon too identified enthusiasm for deals, with investors on the hunt for distressed small operators. Yannis Ermilios, managing director - portfolio management, Colony Capital, said: “We are seeing a lot of activity from people with cash. There is now almost no appetite for transactions which involve debt. This huge amount of liquidity will be a solution to unlock complicated situations.”
Orfanos, partner, Arbitrage Real Estate, said: “The big deals that we were hoping that we were going to close have seen some delays, but we expect that in September. Developments are moving on and we have been pitching for work as people are taking advantage of the time, not just now but in the coming months. A lot of people are asking for feasibility studies, looking to 2022, when people believe that thing will be normal again. The government in Greece has done well, but the issues are that the locals are afraid that the visitors will bring the virus, so even though we are open for business we don’t believe that we will be busy enough. People we are expect are those who are repeat clients or those with a house. What the government wants to do this year is manage the pandemic, but also maintain jobs and we need to diversify to extend the season.”
Commenting further on destinations, Savvas Perdios, minister of tourism, Cyprus “Early signs snow that demand from families is not really there yet. This is going to be huge this summer, impacting a lot of Mediterranean destinations. We are having to diversify into new markets very quickly. We’ve added airlines to the portfolio but it needs a lot of effort to penetrate the new markets quickly. The markets that we are used to seeing - UK, Russia - are not really in the game in terms of outbound Europe. Eastern Europe, southern Europe, the Middle East and the Gulf are becoming important.
“There is increased pressure to offer a differentiated product. It’s not enough to offer just sun and sea. The one thing that is going to lag behind in sun and sea - we need to enhance what we offer with sun and sea tourism.”
Luis Araujo, president, Turismo de Portugal, added: “We are focused on the reopening phase and the reimagining phase. The situation with the EU, the UK and the US is becoming quite chaotic and we are trying to manage the information. The past three months have been focusing on efficiency and working with startups to help innovate.”
Insight: Khajavi looked back at the founding of the event as a conference looking at distressed assets, since expanded, commenting: “We’re now right back in a distressed market”. There are whispers around distress in the market, but, as Ward noted, there were no significant discounts being seen in transactions yet.
Yet. The merry-go-round is set to stop as the various markets open and hotels are forced to sustain themselves with whatever they can muster of a summer. It is likely that distress will be felt once the sun has set but there is a hope that, much like in the mainstream hotel market, it will mean a clearing out of the less-loved assets, the famously under demolished. But, as Graham said: “We don’t know with this one, we don’t know where it’s going to go.”
The comments from Bacon and Allen suggest that what we will see coming out of this pandemic will be products tailored to, well, what the customer wants. Not only what the customer wants,but what it doesn’t know that it wants, but will be delighted by. And that gives us all something to look forward to - and gather to celebrate.