The UK and Ireland were expected to lead distress-driven transactions this year, according to Whitebridge Hospitality.
Phil Camble, director, Whitebridge Hospitality, said: “They tend to be quickest to resolve such situations, the rest of Europe will most likely take longer to come to market.”
Within the UK Camble forecast more deals in the regional UK.
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.”
Last year London came third in Europe in terms of transactions, thanks to the sale of the Ritz, while ‘other Europe’ was the second most active market and the leading market, for the first time in 16 years according to Whitebridge, was the Benelux, led by the Roompot sale.
Looking ahead at performance, Camble forecast that London revpar would grow to over £75, from less than half that last year.
Speaking at the group’s annual event, Michael Grove, MD, EMEA, Hotstats, said that it was likely that cost savings earned and learned in 2020 would become permanent. Grove said: “Generally open hotels around the world have hovered at the breakeven point for the past six months and we should start to feel the benefit of this leaner cost base. Closed hotels is not a new thing, it happens in seasonal locations and hotels which are being renovated. The difference here is the severity and the lack of time to prepare.
“We need to look at the best use of space with the limited demand which the industry is facing. As hotels are coming out there appears to be much leaner payroll costs and, as rates start to ramp up, we should see a better GOP as hotels reopen.
“Luxury really struggled during the dark months of April, May and June. Generally extended stay properties managed to stay afloat during the crisis. The focus now is on profitability.
“In the past three months hotelier in Europe have been able to breakeven at 25% in the past three months with the aid of government support. Luxury hotels break even earlier than the other asset classes, they drive a higher premium in normal times, not just in the bedrooms, but F&B, spa pricing. It’s very different without those ancillary revenues, luxury hotels cannot just shave off the costs attached to a specialised business.
“Hotels do seem to be opening cleaner from a cost point of view. They are set up for the ramp up and are hopefully after to take advantage as things ramp up in 2021. The costs operating look like they have normalised to prior year levels. One thing that we should be able to guarantee is that it should be better than 2020.”
Insight: The Whitebridge summit usually kicks off the year and the mood around the canapés sets the tone for the coming 12 months. Watching Camble display his string vest while sober mid afternoon just wasn’t the same, but there was still pondering and deliberation, not to mention some forecasts.
Nick Pattie, managing director, Whitebridge Hospitality, opened up with “you’d have to be very brave to forecast a recovery, but we have such heroes here today” and indeed there were, although some of them may not be to the liking of the hotels which benefitted from the UK’s staycations last year, as those with vaccinations are likely to set off as far away from home as they can get.
As for deals? That the UK and Ireland will be first seems like a banker - ever since Brexit was announced the wall of money has hoped for perky returns. Welcome to 2021.