IHIF Preview: Creating multifunctional real estate

Between 15 and 17 April, more than 2,500 senior representatives from across the hospitality industry will head to Berlin for the International Hospitality Investment Forum (IHIF) EMEA 2024.

This year’s speakers include: the CEOs of IHG, Hilton and Accor as well as senior representatives from Starwood Capital, TUI Group, KSL Capital Partners, and more.

Not only will you hear from leading hotel investment executives, but the multiple networking opportunities mean you’ll be able to capitalise on the return to dealmaking we are seeing this year.

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.

How should we be thinking of our urban centres in this post-Covid era? Certainly we don't need as much office or retail space as we once did and it is likely that hotel developments can play a part in the changing nature of these spaces.

Ahead of IHIF, we caught up with Harold Coenders, chief strategy officer of occupier services Netherlands at Colliers​. Coenders will be speaking on the main stage in a session entitled: ‘Trends Keynote: Adaptive Real Estate for Changing Consumer Demands​’ (Tuesday 16 April, 05:10pm).

Hospitality Investor: Are things as bad in the office and retail real estate space as it looks?

Harold Coenders: The vacancy in the office and retail are on the rise. The vacancy level in the central business districts is higher in the US than in Europe. For the office sector hybrid working is the structural game changer and is here to stay. The impact of hybrid or remote working is bigger in the US because there way of working was more traditional before the era of hybrid working. Nine to five, five days a week working in dedicated cubicles. Europe had already more desk sharing and more acceptation of homeworking. The office world will become an even more winner takes all market. Successful office locations with excellent public transport, attractive amenities and sustainable buildings will become stronger. Unsuccessful office area’s will become even less attractive.

The market is not as bad as the financial crisis but a structural reset of how we work will structurally change the office market dynamics. All companies with office dominant work will right size their portfolio towards less but better office space.  

Hospitality Investor: How easy is it to convert these assets into hotels or other operational real estate concepts?

Harold Coenders: In the past the market only thought in full conversions from one asset class to the other. A conversion from an office building into an hotel or in residential. Now the market is more focussed on multifunctional real estate and combining different asses classes in one building. This makes conversions impactful and more easy to reach a good business case. Plus traditional different asset classes like hotels and offices or residential and hotels are blending into new concepts hybrid hospitality, new forms of operational real estate in combination with traditional lease contracts.

Greatest challenges for conversions are now the current financial market dynamics of higher interest rates combined with higher construction costs. This makes it more difficult to create a solid business case. . But the post crisis years of the financial crisis the real estate industry has shown how fast they can spot the market opportunities and realise conversions. The transformation from office space towards hotels and student housing was impressive.

Hospitality Investor: How are urban areas and cities changing and what does the future look like for leisure real estate in these locations?

Harold Coenders: What types of things do consumers want from their hotel or living spaces?The new generations Z and Alpha will become dominant towards 2030. These two generations can be can be characterized as the ‘convenience generation’.

The have a so called CHIPS lifestyle. CHIPS is an acronym for convenience, health, indulgence, price and sustainability:

  • Convenience: Generation that has less the time or inclination to cook. Agitation and stress determine their lives. They are therefore regularly looking for solutions that save time. Convenience is playing an increasingly important role in their lives.
  • Health: The importance of healthy eating is clear to the convenience lifestyle, both at home and outside the home. On the other hand, they don't need a pedantic finger.
  • Indulgence: The convenience generation balance between discipline and enjoyment. They regularly let go of their self-imposed rules. This causes hybrid behaviour around (un)healthy eating.
  • Price: Good news for the hospitality industry, they like to eat out a lot and they spend a lot of money on it. At the same time, a majority of them think eating out is too expensive. Price is crucial for these generations.
  • Sustainability: The convenience lifestyle sees the importance to the impact of their diet on the environment, but often do not yet make concrete choices in this regard. Sustainable consumption becomes more difficult, the more it demands from one's own actions.

Hospitality Investor: The theme of this year’s event is “Making the Markets” emphasising the need to take control of any given situation, rather than simply rising the wave. Have you got an example that you could share either in your own business or the wider market?

Harold Coenders: The theme is spot on! The market circumstances are challenging and traditional solutions are not enough to answer the new market and consumer demands. Riding the wave is hard when there is no wave. It is all about making waves. Redefining the multitenant office building by combining the office lease building model with operational real estate models for co working. Combining work with leisure in hybrid hospitality hotels and combining traditional hotel concepts with co living concepts. Not waiting on the market to change but redefining the market. Key is to know the winning consumer life styles and end user insights and translate this toward the right service and real estate concepts. A world where the match making between life style and brand becomes essential.

If you still haven’t registered for IHIF EMEA yet, you can do so here. You can also view the latest programme, here.