Hospitality Investment Trends

Last year, HPG Advisory Services looked at the Global Hotel Investment Landscape as international travel was beginning to re-emerge after Covid-19. We explored some of the key considerations for investors and owners and looked at which geographic regions and styles of properties were most likely to see an immediate uplift post-pandemic.  

Since then, consumer confidence towards travel has increased, and as restrictions are being lifted in numerous countries, and many hospitality businesses are reporting a promising return to growth.  

Here, we review the emerging trends and what opportunities the hospitality sector presents in the future. Whilst we’ve taken various insights into consideration, we must acknowledge the ongoing conflict and humanitarian crisis in Ukraine which continues to threaten stability throughout Europe and events there could quickly shift any current trends in unpredictable directions. 

What happened in 2021? 

Firstly, let’s recap on some of the hotel investment highlights from 2021. The Caterer has reported that hotel investment in the UK grew by 84% on 2020 levels and at £4.14 billion, was just shy of the 15-year average. Private equity was particularly interested in regional hotel investment which was particularly buoyant, and it was clear that international investors still see great value in the UK market with investments relatively split between investment from within and from outside the UK. 

The hotel sector has had a resilient year with strong momentum in the final quarter showcasing the appetite for UK hotel assets. While there remains operational challenges in the short-term, investors continue to be positive on the long-term outlook of the sector and we anticipate another strong year in 2022 for the UK hotel investment market.” – Tim Stoyle, Head of UK Hotels at Savills. 

Investor trust also returned to Spain as the €3.19 billion (as noted by Christie & Co.) where investments exceeded pre-pandemic figures. 2020 had seen a strong pull away from urban hotel investment, a trend reinforced by one of HPG’s clients that completed two transactions in the Iberian Peninsula during the pandemic. 

Continuing Trends into 2022 

Recruitment and Retention   

One of the biggest challenges in hospitality, since the start of the pandemic and closure of so many businesses, has been recruiting and retaining employees. Furlough, redundancies and the continuing effects of Brexit forced many front-line employees to either join new industries or return to their home countries, precipitating a perfect storm for the decline in available talent in the hospitality industry.  

As with every challenge, there is an opportunity and any hospitality organisation that can make their business more attractive in what is currently a candidate-driven marketplace will have a huge advantage. Working from home, digital nomads, flexible working and reimagined office space all became the norm during the pandemic. New working trends are condensing the space between business and leisure and the portmanteau Bleisure has re-emerged.  

Hospitality, especially at the luxury end, has always given employees an insight into a luxury lifestyle and the opportunity to travel or live abroad. Company benefits that replicate this can still be very appealing to potential candidates while also giving them a valuable insight into customer expectations and a road to building empathy and genuine connections with the guests they take care of.  

Hospitality’s Digital Transformation 

Investors will be keeping a keen eye on the increased digital transformation of hospitality service and how they may be able to leverage these digital innovations to drive customer experiences, revenues and return on investment.  

The pandemic was a catalyst for the hospitality industry to accelerate processes for everything from contactless payments to online ordering and mobile hotel check-in. The expectations of digital-savvy customers are very high, but the concept of creating completely new digital experiences to complement the more traditional in-person experiences doesn’t seem quite as far away as it did two years ago. While taking on too much could harm the existing customer experience, successfully integrating innovative, creative and exciting digital experiences could be very tempting to investors, eager to catch the next big wave of this transformation. 

ESG and Property Investment 

We recently explored how the Environmental, Social and Governance strategy of businesses is a key consideration for potential employees when choosing a new organisation to work for. Unsurprisingly, ESG is now playing a large part in how property investors are thinking about their investments. Since property is usually a longer-term investment, ensuring that all new buildings have sustainable credentials and retro-fitting existing buildings with environmentally friendly features will help future-proof their investment. 

ESG Investment Funds are also increasingly popular and have rewarded investors with solid returns over the last few years. Larger Hospitality chains, who form part of these funds are often keen to ensure that the hospitality operations are aligned to the expectations of these funds manager and investors. As a result, the role of Hotel Asset Management has become increasingly popular as owners look to listen to the market in order to protect their assets and drive growth.  

General Investor Trends 

The recent 2022 Knight Frank Wealth Report looked at investment trends for popular luxury items such as art, whisky, classic cars, diamonds, wine and watches. While these investors had different experiences through the pandemic, they all seem to be predicting some sort of future that embraces digital transformations with Cryptocurrency, NFTs and the Metaverse featuring heavily. Many investors appear to be dipping their toes into this area so as to not be left behind, but the majority seem to have little understanding of how this digital future might actually play out. In many ways, the future is unwritten and it will be the innovators that best capture their moment that will ultimately succeed.  

 

HPG Advisory Services have exceptional industry relationships and proven successes with operators, developers and investors in the hotel, and hospitality sectors across Europe, Middle East, Africa, Asia and the Caribbean. Our services include executive search, human capital architecture, talent management consultancy, behavioural profiling and a range of human capital services tailored to meet the specific challenges of each of our clients.  

We are proud to have delivered some of the industry’s most talented leaders into key appointments. If you’re looking to build, strengthen or diversify a role, a team or your entire business, please contact us today.  

Dan Akhtar, Managing Director of HPG Advisory Services +44 20 8600 1166 / +44 7808 157796 / dan@hpgsearch.com 

Briefing: Hospitality leadership is more than revenue management

A survey published in the Harvard Business Review has revealed that the top two leadership qualities, as rated by global leaders, are having ‘high ethical and moral standards’ and ‘providing goals and objectives with loose guidelines/direction’. In hospitality, leaders at hotel management level and brand executive level have different but equally important roles to play in the success of a business.

In these videos industry experts discuss the importance of good leadership in hospitality:

In 2016, 89% of companies see leadership as an important or very important issue (up from 87% in 2015). That is according to Deloitte’s Global Human Capital Trends 2016.

As a business or industry develops leaders must be able to change and learn. This was reflected in the number four choice in the HBR survey; having ‘the flexibility to change opinion’.

One report that focused on leadership in a world of change is IBMs Global C-suite Study. This found that today’s CEOs say technology is the chief external influence on their enterprises. They think that user-based mobile solutions and cloud computing will be big drivers of change. 82% of the CEOs surveyed expect to engage more digitally over the next 3 to 5 years.

If you’ve been sent to this page and you’re not yet on the circulation list to receive these regular briefings and you would like to sign up, you can do see here. It’s free.

Video clips produced by ybc.tv for the Hospitality Channel, including interview from industry conferences such as the IHIF conference as well as specific Hospitality Channel shoots.

Briefing: appreciating the growth opportunities in Africa

The Tipping Point for Africa has been imminent for a long time. The continent clearly holds huge opportunities, but the complexity and size of the 50+ countries means it is often very difficult to get product there. Having said that, many Governments are working together to try to encourage and break down the barriers for investment, as explained by Dr Nelson Githinji, the Tourism Secretary for Kenya.

For whatever reason, some African countries currently have no branded hotel product within their borders at all and although there are intricacies which need to be ironed out, you certainly shouldn’t dismiss Africa. Reasons why are explained in this briefing by:

  • Patrick Fitzgibbon, SVP Development – Europe & Africa of Hilton Worldwide describes the plethora of opportunity on the continent.
  • Dr Nelson Githinji, Tourism Secretary of the Ministry for Tourism – Kenya, on the concessions for those who invest.
  • Jalil Mekouar, of Jones Lang LaSalle Hotels on the resurgence of curiosity seen for Africa
  • And Joy Albright of the African Export-Import Bank on where she sees the appetite for investment

If you’ve been sent to this page but you’re not yet on the circulation list to receive these regular briefings and you would like to sign up, you can do so here. It’s free.

Video clips produced by ybc.hpgcms.wpengine.com for the Hospitality Channel, including interviews from industry conferences such as the most recent IHIF conference as well as specific Hospitality Channel shoots.

Briefing: hospitality being noticed by global Governments

One of the biggest problems hospitality has is demonstrating to the Government’s of the World the value the industry brings to their economies. Hospitality seems to continually fall off the radar when it comes to the key drivers of change and growth across the World.

With the work of Taleb Rifai at the UNWTO and David Scowsill of the WTTC the industry is beginning to put its head above the parapet and be noticed.

In this briefing we hear from:

  • Taleb Rifai on the UNWTO and the WTTC tackling Governments together.
  • David Scowsill of the WTTC on how much tourism generates for the global economy.
  • Ed Fuller, former MD at Marriott International on the need for Governments to help the industry.
  • And Sir Nigel Knowles, co-CEO of DLA Piper LLP on problems faced by Governments at the moment.

If you’ve been sent to this page but you’re not yet on the circulation list to receive these regular briefings and you would like to sign up, you can do so here. It’s free.

Video clips produced by ybc.hpgcms.wpengine.com for the Hospitality Channel, including interviews from industry conferences such as the most recent IHIF conference as well as specific Hospitality Channel shoots.

Chat Button