There is a wall of money waiting to invest in hotels, Carine Bonnejean, managing director – hotels at Christie & Co told us in the first of the In Focus podcast series from Hospitality Insights.
Christie & Co recently completed on the sale of Chrysos Hotel in Paddington and when asked about additional opportunities, Bonnejean said: “We’re currently in a wait and see position. Sellers are generally waiting to see and dealing with operational issues. However, on the other side, there is a wall of money with dozens and dozens of funds ready to invest in the hotel sector which is very positive because they still believe in the future of hospitality which is good news.”
She added: “We’re still in an adjustment phase and so not seeing a lot of transactions at the moment. People are waiting to see how pricing is going to be adjusted. We’re starting to see a bit of pricing adjustment, but I think we’ll see a lot more in the coming weeks.” Bonnejean anticipated opportunities towards the back end of the year, in Q3 and Q4, most of it being as a result of government support lessening and people being forced to sell. She envisages a rise in the distressed part of the market at this time as well as opportunities in the independent sectors, where a number of owners are already making contact and expressing an interest to sell.
When asked whether brands should be shouldering more responsibility in their relationship with owners, specifically contributing more equity, Bonnejean said that: “Whilst brands have been helpful during this period going forward they need to support more owners as much of the impact is very much on them. Based on the discussions we’re having with hotel groups, quite a few of them are keen to support, keen to offer more equity and some are happy to do some white labelling for a while to give the owners time to recover and undertake the capex that needs to be done to comply with brand standards. I think we’ll see a lot more involvement from the brands going forward.”
Discussing sustainability and whether it was being forced to take a back seat in favour of cash preservation, Bonnejean said: “There is no doubt that cash preservation and liquidity is going to be a short term worry for a lot of owners so it might be that sustainability is impacted by this lack of cash. But, in many ways, this situation has promoted sustainability even more and the need to help the environment.”
Bonnejean admitted that some of the alternative models “will be challenged over the medium term” and noted hostels will be under pressure as their business model “is going to be quite tricky in the socially distanced world. But, she added: “At the end of the day, people are resilient, and they forget. I don’t think the crisis will cause a complete change to the industry. I think we will have to adjust some elements in the short to medium term and that may take the form of conversions into other uses.
In summary and looking to the future of the hospitality industry, Bonnejean said: “I hope people will travel again. Hotels are great and we need to travel. I hope that the travel market recovers, over time. I hope people will have the confidence to travel: to go wherever we want, when we want, with no mask. I also hope we will have learnt through this and improved some of the practises, like sustainability and protecting the environment. I just hope people continue to travel. A world without hotels would be quite sad.”
Listen to our full series below: