On 19th November, the IHIF Advisory Board met virtually to take a temperature check on industry sentiment in a fast-changing market. Kicking off the conversation was a panel of investors hosted by Michael Hirst OBE, Chairman of the UK Government’s Events Industry Board, with Keith Evans, Chief Investment & Development Officer at Ennismore, Benjamin Habbel, CEO & Founding Partner of Limestone Capital, and Jan-Willem Terlouw, Director of Development Finance at Westmont. The panellists shared their experiences of the past year, and views for 2021 and beyond.
2020 was certainly a challenging year for hospitality investment and operations. On the property management side, companies had to make adjustments, change some operating standards to mitigate some of the losses, and be smart with the various government support schemes available. Properties in city centres and airport hotels suffered the most but in the summer season, as domestic and leisure travel came back, some segments proved very strong: resorts, private homes, longer stays. Jan-Willem Terlouw added that some city destinations such as the Hague, Amsterdam and Dresden benefitted from domestic travel and tourism from Germany.
On the investment side, Benjamin Habbel said he was ‘almost surprised at how slowly prices are coming down’. His company is looking for deals in small and medium size boutique hotels, particularly in key Mediterranean markets such as Portugal and Italy. Keith Evans said investment in 2020 has been concentrated on Capex, a focus he has also seen with other investment partners. 2021 will be a more active investment period but uncertainty of recovery is affecting both buyers and sellers’ decisions.
New hospitality models are attracting interest, particularly as the corporate segment and hotel properties catering for large events will be slowest to recover. Ennismore is working more on hybrid hotels with co-working spaces as well as membership-based models, and Limestone is focusing on the conscious traveller segment, with an interest in the membership model too. Panellists agreed there is pent-up demand for leisure travel which will drive recovery as soon as travel reopens.
Asked about the impact of events such as the US presidential election or Brexit, they agreed that while they may affect foreign exchange, inflation and trade, Covid is superseding any other impact.
In conclusion, the panellists gave their prognostics on when recovery may happen in the hospitality market:
-Keith Evans: 2023 for the domestic and leisure market, 2024 for the corporate and international market
-Benjamin Habbel: 2022 in the destination/experience market
-Jan-Willem Terlouw: 2024 for properties relying on corporate markets and trade fairs