It seems fitting at the dawn of a new president in the US to look back to a time when the office was associated with words like Hope and Change and other cheery stuff. For those of us who have been enjoying lockdown/curfews with the help of president Obama’s weighty look back on his early years in office, it has been hard to imagine another time, but it served to remind us that This Too Shall Pass.
So Obama picked the right time to release a 751-page book, but is now the right time to be embarking Hope and Change or are we a few months out? Audacity was very much the word on Accor chairman & CEO Sébastien Bazin’s lips in his new year video (or address, depending on your presidential mindset). For those of us with a sharp pencil and a 6pm curfew, the word ‘audacity’ popped up a couple of times, which is probably two too many for the company’s shareholders, who are deeply not into audacity unless it is used with hindsight over a big round of drinks and bonuses.
(Bazin also talked about being close to government, which may well be a reference to Carrefour, the French supermarket currently involved in takeover wrangling and looking to the government to protect it from overseas action. Is Accor looking to defend against an overseas takeover? Hotels are not a protected sector in France, no matter how many former presidents you have on your board. And he’s a little busy right now. Is this an overthink? Let’s wait until the bars and restaurants reopen and see).
We have come to expect audacity from Accor and, although the pandemic engendered some fun moves - Ennismore - the company hasn’t done anything audacious as yet. One suspects that it has been distracted by issues at AccorInvest, but those are coming to a close and Accor is still well capitalised, giving it room for manoeuvre. Will it look over IHG again? Audacious enough? Get into an OTA? Too retro?
While we wait to find out, the wall of money is cracking under the tension of the perfect moment to deploy and the rumours are starting to build about asset sales small and large, some in the city of light, some in the Mediterranean, but some on the island which many have dubbed Plague, despite the excessive volumes of fish currently languishing on docks.
At the Whitebridge Hospitality new year summit, the sector’s annual sounding of the new year starter’s gun, UK and Ireland were expected to lead distress-driven transactions this year, according to Whitebridge Hospitality.
Phil Camble, director, Whitebridge Hospitality, said that distressed situations “tend to be quickest to resolve such situations, the rest of Europe will most likely take longer to come to market”.
Looking at deals last year, Camble added: “The transactions market fell off the proverbial cliff in 2020. Hopefully the market will return but the question is when - when will the reticence recede? European investors continued to lead the way in terms of investor profile and there was a big increase in Middle Eastern buyers, while buyers from Asia all but evaporated.
“The proportion of deals done by HNW increased materially, while institutions had a quiet year, as did hotel companies, while they preserved cash.”
The biggest deal last year was the Roompot sale, which saw KKR buy the holiday park group for a rumoured €1bn.
It was very much a deal of its time, offering socially-distanced holidaying with all the wholesome joys of nature and all the private equity houses announced that they would quite fancy one too, please. Only this week Blackstone was linked to Butlin’s owner Bourne Leisure for more of the same plus a cabaret.
One hotel operator of this hack’s acquaint was concerned that all these non-core deals were a distraction for investors, leading them down a garden path where they thought that traditional hotels were dead and only extended stay and its ilk were the future. This cannot be.
It is likely that the brands will be the winners the second everyone is armed with their vaccine passports, as people look to the safety and security of the flags while they get their travel legs back. This is not only because of their enthusiasm for cleanliness protocols, but also for their refund policies, which were found to be lacking on the fringes, notably at Airbnb.
Reassurance will be key, as will standards. The consumer is likely to be very demanding on that first trip out and only perfection will do. This implies that the audacious investor will be looking for something which is far more traditional than we saw during the pandemic itself - although if it comes with a side of, say, serviced apartments, then that’s no bad thing. After sitting on dry power for so long, for many investors there will be no better time to buy. Expect an explosion.