Between 15 and 17 May, more than 2,500 senior representatives from across the hospitality industry will head to Berlin for the International Hospitality Investment Forum (IHIF) 2023.
This year’s speakers include: the CEOs of IHG and Accor as well as senior representatives from Blackstone, Brookfield Asset Management, Goldman Sachs, and more.
The following interview is part of a series aimed at bringing you a flavour of the conversations you can expect on stage, highlighting some of the big-picture trends and themes ahead of the event.
While the transaction market might still be pretty quiet, there is no shortage of work for an investor looking to turn around an asset either through repositioning or ESG improvements. The latter is especially important given the weight of new reporting disclosures and legislation coming up over the next few years.
There are opportunities, however, especially in the arena of green finance but how do you position your property to qualify? Ahead of IHIF we caught up with Dominic Seyrling, managing director at Archer Hotel Capital. Seyrling will be speaking on a panel entitled 'Green Finance Under Scrutiny: Assessing the Requirements, Benefits and Potential Hurdles' (Wednesday 17 May, 11:45am ESG Track).
Hospitality Investor: The hotel transaction market still seems to be in a state of stasis. How do you view things as we head toward the midway part of the year?
Dominic Seyrling: Real estate is probably the most leveraged industry out there hence interest rates have a disproportionately high impact. The fact that we are dealing with a fairly illiquid asset class makes it difficult to get live data. As a result we are definitely in price finding mode as an industry and very few people want to be the first ones to really dip their toes into the water. We are happy to submit bids for properties we like but are certainly careful ourselves.
Hospitality Investor: What types of properties are you looking to buy and have you seen many opportunities over the past six months?
Dominic Seyrling: In line with our strategy anything where we have a medium term horizon to operate ourselves, generally prime locations. Capex optional. There are plenty opportunities we have seen – a lot of them though have not traded.
Hospitality Investor: How has the rise in interest rates impacted your strategy?
Dominic Seyrling: I don’t think the rise in interest rates per se has had a drastic impact on strategy, more on our ability to price assets. Tactically we will try to see whether cash bids will give us an edge in the credibility rankings of any bidding processes.
Hospitality Investor: What is your view on ESG when it comes to investing? Are you noticing that these assets trade at a premium?
Dominic Seyrling: ESG has been a hot topic for us for a few years now. On the investment side we are definitely starting to see push back on assets where our own exit doesn’t assume that the asset is ESG friendly. In a nutshell, if we buy with a strategy to deploy capex the inherent assumption is we make the asset sustainable and we need to allow for the cost associated with that. If we buy something stabilised we either need it to have good credentials or prices will have to be adjusted. In summary, no premiums for sustainability, but discounts for poor sustainability credentials.
Hospitality Investor: The theme of this year’s IHIF is Fortune Favours the Bold. Do you have any examples of a strategy — either your own or someone else’s — that represents this?
Dominic Seyrling: We are in the process of spending €500 million of capex on three hotels and have another two to three projects of sizeable magnitude lined up after that. While we might be conservative on new acquisitions this is probably as significant as most investors on renovations alone. We use this capex to take control of operations or adjust the strategy of the asset(s) towards more luxurious demand drivers. Hopefully this pays off.
If you still haven’t registered yet, you can do so here. You can also view the latest programme, here.