BHN editor Eloise Hanson reports from the 2022 Deloitte European Hospitality Industry Conference held at The Biltmore Mayfair in London.
When my colleague George Sell attended the in-person event in 2019, sustainability had dominated the agenda. At the time, though the topic was not officially highlighted in the schedule, it permeated the conversation throughout the day. Whilst occasionally referred to this time round, content mainly focussed on the different strategies to navigate a bumpy road ahead.
To kickstart the morning, Deloitte’s head of hospitality Andreas Scriven gave an overview of investor sentiment. Serviced apartments topped the chart as the most attractive UK asset class, followed by hotels and student housing. Private equity was deemed the most common source of investment next year, despite it being 50 per cent down on last year. At our own event hosted at the House of Lords, we discussed how the rising cost of debt and limited stock are compounding deals, and this message has been echoed at other events too.
Ian Stewart, UK chief economist at Deloitte, then spoke rather positively about the economic outlook. He stressed that recessions accelerate change and remarked there are opportunities ahead for businesses with strong balance sheets. On the consumer front, Stewart also highlighted that the top 50 per cent of households account for almost 70 per cent of all spending, inferring that high income individuals are in a strong position to sustain the market.
Keeping with the positive view, STR’s Robin Rossmann took to the stage announcing that global hotel demand had 94 per cent recovered (indexed against 2019), with the exception of Asia and China lagging behind. Ireland was a surprising addition to the list of countries with high occupancy levels, in this case a result of housing refugees. Most cities are around 90 per cent recovered with ADRs resilient but varied across geographies. Looking ahead, STR expects 2023 RevPAR to end 10 per cent ahead of 2019 levels, with Rossmann adding the caveat that “significant distress” is also anticipated.
On a session about diversification, Naomi Heaton, CEO of The Other House, explained how the hotelisation of residential projects has resulted in the “mashing together” of different asset classes. She went on to say that by not targeting one specific sector, The Other House is generating new revenue streams particularly from hybrid workers.
Abhijiit Prasad, VP fintech risk products at Booking.com, mentioned that Booking is in the process of collecting data on what drives conversions for hotels, with the aim to help hoteliers make the right decisions on where to invest CAPEX. Booking is due to launch this offering in the next 12-18 months.
Lauren Okada, SVP real estate investments at Brookfield Asset Management, chimed in to highlight how the company diversifies through its investments rather than revenue. For example, Brookfield has within its portfolio the extended-stay operator edyn and family holiday company Center Parcs. Okada said that Brookfield reinvests over 10 per cent of the revenue back in to Center Parcs, and is placing stronger emphasis on regenerating the activities offered.
Turning to social media, TikTok’s VP of European sales, Stuart Flint, made it very clear that with one billion global monthly users, TikTok is a viable marketing channel. 67 per cent of users are over the age of 25, and #Travel reaches more than 94.4 billion views. Flint reassured the audience that content isn’t always about the latest dance craze, and that music selection is the “golden thread”.
In stark contrast to the 2019 event, Radisson’s CEO Federico J. Gonzalez spoke about the opportunity to introduce new brands globally. Puneet Chhatwal, managing director and CEO of The Indian Hotels Company Ltd, also talked about “selective growth” outside of India following the acquisition of its third airline. “Our plan has changed,” Chhatwal said. “It now makes sense for us to be in certain destinations.”
Regarding the challenges ahead, Krysto Nikolic, senior MD and global head of real estate at ICG, referenced attracting capital and attracting talent – the latter of which took centre stage in a panel discussion on navigating the labour and energy crisis. Stephen Walker, principal at KSL Capital Partners, said that the industry had reached “a turning point in realising the importance of employee culture” and that there’s an increasing awareness to balance front-of-house and back-of-house rates of pay. “If departments received similar wages, multi-skilling would broaden the appeal of roles,” he said.
Dermot Crowley, CEO of Dalata Hotel Group, concurred: “The industry is still perceived as poor to work in, and we need to treat people better.” Crowley went on to mention that Dalata is revising how management teams communicate with their student employees, opting to interact through technology or via an app instead. In a nutshell, management must do better to understand and cater to their team’s needs. Emma Underwood, general manager of Midland Grand Dining Room, summarised it well: “What employees value and look for has changed. Now they’re interested in personal and professional development.”