Scheduled fortnightly on Wednesdays at 2pm BST, editor-in-chief George Sell is hosting an urban innovator webinar series in the run up to URBAN LIVING FESTIVAL 2020: stay-live-work, November 25-26 at Tobacco Dock in London.
The most recent webinar focused on the changes in hotel funding and investment, and how future lenders may view the potential of a hospitality industry investment,
Joining Sell in the discussion were:
- Andrew Harrington, owner of AHVP Associates LLP
- Merzak Kaddour, investment director of Edyn Group
- Mariapia Intini, development and investment director, Europe for CitizenM Hotels
- Tim Helliwell, director of international coprorate banking for Barclays
Sell began the conversation, asking how the attitudes to lending and investment have changed as a result of the pandemic.
Andrew Harrington answered first, saying: “I actually do not think that lending and investment will be fundamentally changed as a result of this. You’ve got masses of money out there, you’ve got banks with twice the amount of equity capital they had 12 years ago, and you’ve got interest rates at rock bottom.
“In the hospitality sector you’ll get some businesses that go bust, and a delay in development. So the ones that are left are going to be more efficient, with less competition, and with huge amounts of capital, so there’s a pretty decent investment story.”
Tim Helliwell responded: “I think the attitude now is that clients in hospitality don’t really want to talk to the banks now. They are now utterly and rightly focused on opening their businesses.
“I think the next question for us as lenders will be ‘How is that opening going?’, and I think it’s going to be more pragmatic now. There will be more time to assess how business models are working now, as the opening periods progress.”
Helliwell added that he may expect more government loan schemes to come through in the future.
Maria Intini, providing a more specific perspective, said: “We have kept a very regular and transparent relationship with our lenders – we have shared with them the liquidity situation, liquidity forecast, and the support coming from shareholders. These conversations have been positive, because they’ve been with us for a very long time, since 2008 and 2011 respectively, and know the strength of our business.”
Sell questioned whether Citizen M’s status as an owner operator helped, to which Intini responded: “Knowing we have skin in the game helps a lot.”
Merzak Kaddour noted the importance of close relationships, saying: “If you want to expand into europe like ourselves, you can’t have 30 different relationships. On a development front, I have 2 relationships; with the investment side, I have one super bank.
“You may call that a concentration risk, but they understood the hospitality segment that we bought into. We had really strong conversations with our lenders, and it goes back to relationships, and we chose our lenders well.”
Sell turned the conversation toward extended stay, noting the rise in market share relative to the rest of hospitality.
Helliwell replied: “It’s a business that, in terms of its modus operandi, sits very well with where we find ourselves. I believe Serviced apartments and extended stay will do well, but ultimately I have confidence in all operators and how they have reacted to this pandemic.”
In questioning the importance of brands regarding consumer confidence, Harrington said: “From an equity perspective broadly speaking there’s support for a broad range of hospitality. On the debt side, debt will be particularly sensitive to the level of consumer confidence and brands, so you need to segment the sector.”
To watch a full recording of the webinar, click here.
Next week there will be a pair of webinars, one hosted by George Sell about Co-living, and its longevity, and one hosted by Mark Harris about business travel post-Covid.
Co-Living: Fad or Phenomenon, sponsored by Resharmonics, will feature
- Douglas Edwards, head of equity raising at CORESTATE Capital Group
- Mathias Saleborn, managing director EMEA and APAC at BridgeStreet
- Mindy Teo, deputy manging director at The Ascott limited
- Joe Pereschino, head of residential and student accommodation at AXA IM-Real Assets
Click to register here.