As we’re approaching the end of the year we thought we’d take a look back at some of the biggest stories in hospitality investment over the past 12 months.
To do that we’ve asked leading executives in the industry to tell us what they think were the notables trends and deals.
Below you’ll hear from:
- Tiago Venâncio, senior hotel development EMEA at Fosun Tourism Group
- Jon Colley, executive VP of acquisitions and development, PPHE Hotel Group
- Roger Allen, global CEO, RLA Global
- Seán Worker, founder and principal, T5 Strategies, & AdaptersTECHX
- Michael Grove, chief operating officer, HotStats
Hospitality Insights: What do you think has been the most interesting news story/trend of 2022?
Tiago Venancio: I think the most interesting trend has been the consolidation of the leisure market, and particularly the lifestyle and luxury resort sector. We have seen a number of deals in that area and a number if innovations happening to keep pushing that trend forward that no one was expecting to reach this scale – we were all aware that 2022 was the leisure year with breaking records achieved, but by the end of August I think most people were surprised with the scale that achieved.
Jon Colley: It has to be the headline performance numbers across the portfolio since opening up after omicron and the fact we are all waiting for the contraction but it hasn’t happened…… yet. And it’s across all our markets and destinations. That is impacting transactions as we are still hearing “if you don’t need to sell, then don’t.’”
Roger Allen: One of the most interesting and important developments in 2022 was seeing major institutional investors moving into the resort market. I think the entry of these more traditional real estate players into the resort segment just indicates how bright the future may be for this market, which has a tremendous appeal to new groups of investors.
Sean Worker: The hospitality space was late to the party to embrace efficiency tech such as booking, guest and user journey optimization, it's improving, but with a slight squeal of resistance and pain!
Both staff and guests have changed their expectations of what an experience is. Simultaneously, let’s face this issue enthusiastically. It must be a great place to work or stay, if not, either party will simply move on! 2022 was an exuberant transition year and may have peaked. A new benchmark level may well appear in 2023, regardless of the economic and political volatility. We all need to adapt, Innovate and upskill!
Lastly, start-ups will be pressed to prove the product has profitable legs as VC’s pivot to complex ESG/sustainable ventures
Michael Grove: Well not sure if we would like to call it interesting, but I think the war in Ukraine has huge implications that have of course rocked the world.
Hospitality Insights: Do any deals spring to mind?
TV: Sani/Ikos Resort acquisition by GIC is a good example of the trend discussed before. Also, the purchase of other hotel groups/brands as Dream Hotel Group by Hyatt, Pig Hotels by KSL Capital Partners etc.
JC: As mentioned above, deals have been a real challenge, either overpriced or non-existent.
RA: The big deal of Singaporean sovereign wealth fund GIC acquiring a controlling stake in Greek luxury beach resort operator Sani/Ikos Group - valuing the company at €2.3 billion - is noteworthy not just because of the type and size of the transaction, but also because of the very positive implications it has for the wider tourism spectrum and as it is putting affected locations on the map as potential year-around destinations. This year's interesting deals also included Union Investment's recent purchase of a Marriott Bonvoy Autograph Collection boutique hotel on Lake Tegernsee in southern Germany. Union Investment has about 90 hotels globally, but this is their first foray into the resort segment.
SW: Berlin's HR Group acquisition of the Ameida Group, which added 25% more room count to their multi-branded portfolio and Wyndham’s acquisition of the Vienna House brand was a beacon. Although the investment outcomes may have different paths for both companies, it signals that the major investment shops and brands are smart in acquiring existing, respected boutique brands that can amplify the franchise system, while investors focus on the diversified resilient assets. Edyn’s acquisition of the NH Kensington London to expand its Locke brand, sets them up nicely in a terrific location. Could Edyn be the next acquisition target of 2023?
Separately and for context purposes, the USA based Viceroy Hotels transaction to Highgate is another endorsement of high-end boutique strategies. Luxury/extended stay and efficient independent brands may well be the poster children of property transactions for the next couple of years! Amazingly these categories have generally embraced efficient user “staff” and “guest” technologies while the middle world of the curve tends to lag.
Hospitality Insights: What changed the most for your business during 2022?
TV: The last-minute booking. We had to adjust to very last-minute booking windows and less pick-up/business on the books over 30-45 days, but it ended up reflecting a huge increase in business over same time last year, and with much higher RevPAR across the board.
JC: Hidden in the markets headline performance KPI’s is the impact to the bottom- line profitability from increased staffing costs, utilities and financing costs. One additional challenge coming later in the year has been the cost and availability of development finance. We have all our projects funded but looking at new developments – it’s not easy.
RA: The war in Ukraine and the resulting geopolitical shifts increased general uncertainties about the recovery of tourism and hospitality, especially in Europe, while skyrocketing energy costs, rising inflation and increased interest rates as well as the strong US dollar all impacted the overall economic and business environment.
SW: It was a year of two halves. First-half: Reaction to the pandemic went from slow start to warp speed. Key drivers: Companies having to pull assets out of the garage and immediately hit top speed led to stressed assets and staff. Second-half: Headline ADR Price bonanza and cost hell. We advised and commented on unpacking the techstack to make tech accessible and useful. The range of products available to the Hospitality Community appeared overwhelming largely because the sector was making defensive rather than proactive decisions.
MG: The pandemic has pushed owners, operators and investors to look at data further than just the sale of bedrooms. With the operating model being so significantly impacted due to the shake up of the hotel industry and macro-economic factors, Our business has been central in supporting all stakeholders to keep their fingers on the pulse.