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International Hotel Investment Forum

Second day of International Hotel Investment Forum looks at industry future with optimism

REPORT – BERLIN – IHIF: The second day of the International Hotel Investment Forum opened with a warm welcome extended to the delegates by Kerry Gumas, CEO of Questex Media Group LCC and one of the two organisers and founders of IHIF (the other is Jonathan Worsley, Chairman of Bench Events). Gumas reiterated the presentations of the first day showing that the European hotel industry is well on its way towards recovery from the economic cycle of the previous years and that, according to DLA Piper Outlook Survey…

REPORT – BERLIN – IHIF: The second day of the International Hotel Investment Forum opened with a warm welcome extended to the delegates by Kerry Gumas, CEO of Questex Media Group LCC and one of the two organisers and founders of IHIF (the other is Jonathan Worsley, Chairman of Bench Events). Gumas reiterated the presentations of the first day showing that the European hotel industry is well on its way towards recovery from the economic cycle of the previous years and that, according to DLA Piper Outlook Survey, 67% of the European hoteliers describe their 12-month outlook for the industry as “bullish”, up from 27% in 2010.


Kerry Gumas

Alex Kyriakidis from Deloitte LLP then took the floor and had a very interesting conversation with Hilton’s CEO Chris Nassetta. During the conversation Nassetta had the opportunity to talk about the achievements of Hilton Worldwide since 2006 when Hilton Hotels Corporation and the Hilton International chain were brought back together as a single entity but also about future plans. “Our major achievement”, he said, “is that we are providing one of the best guest experiences in the world and that’s not only down to consistency and quality of service standards but also due to our culture”. With regards to Hilton’s priorities for Europe, Nassetta said that it is a very important market since it has a higher relative profitability than other markets due to the company’s bigger base of business and richer infrastructure. Hilton Worldwide currently operates 205 hotels across 30 countries in the region. “After our team meeting last night we are today in the position to announce that we have the largest number of rooms under development across Europe with 17,400 in our active pipeline”. Nassetta also said that the Blackstone ownership had dramatic contribution in the successful transformation of the company over the last years. “You are dealing with some of the smartest people in the world”, he added, “that know our business really well – they are the largest investors in hotels in the world – so, when you sit down and want to get to conclusions, you can do it really fast with some very smart and engaged people”. When Kyriakides pointed some lack of transparency in terms of decisions and results, Nassetta said that this ‘non-disclosure’ is not imposed by Blackstone but, with all these changes that Hilton underwent, it was in its interest not to disclose information. “People that need to know what we are doing, that is our team members and our owner community, DO know because we are very good in communicating with them; for our competitors really we don’t care if they don’t know.”

 


Alex Kyriakides and Chris Nassetta

The importance of understanding the risks and the rewards of hotel investment in today’s climate was the topic that was discussed in a panel discussion that followed and was led by Sir David Michels, Chairman of Michels & Taylor (hotel asset management firm). Michels said that although the budget sector may have recovered in Europe, it may take until 2013 or 2014 for the industry to get back to the levels of 2006 and 2007. Anthony Gutman from Goldman Sachs offered the investment banking perspective, Martin Kandrac from the Blackstone Group the alternative asset management perspective and, finally, Majid Mangalji, from Westmont Hospitality Group the hotel developer’s perspective.

The ‘high point’ of the morning’s general session was the very educational and, at the same time, entertaining CEO’s panel where Accor’s Denis Hennequin, Hyatt’s Mark Hoplamazian, Carlson’s Hubert Joly and Starwood’s Frits van Paasschen, were ‘grilled’ by Simon Johnson of CBRE Hotels who asked them the questions that everyone would want to ask but nobody would ever dare (for example, which brands do not work for you and you should get rid of? are your loyalty programmes useful to anyone?). The way the session was moderated by Johnson put the CEOs really ‘on the spot’ and gave them the  opportunity to present (and often defend) their companies’ business models, ‘distinctive’ competences, brands and loyalty schemes in a manner that the audience enjoyed thoroughly.


Johnson, Hennequin, Hoplamazian, Joly and van Paasshen

The end of this session, which – as was expected – attracted the interest of almost all 1670 participants, gave the opportunity for Starwood to announce that it will open 50 hotels in EMEA over the next five years with 12 of these hotels opening within 2011. Globally, Starwood expects to open 70-80 hotels in 2011 as it continues to strengthen its lead as the world’s largest operator of luxury and upper upscale hotels. Marriott too announced the addition to its portfolio of four new hotels in Spain (two in Madrid, one in Granada and one in Baqueira) under the flag of one of its newest brands, the Autograph Collection.

The afternoon breakout sessions offered the participants a wide choice of twenty ‘hot’ topics covering the full range of operational (such as “Designing for change while keeping costs down and quality high”), financial (“Alternative sources and forms of financing”), marketing (“What next for the mature resort markets?”), strategic (“Unplugging the pipeline – navigating the snakes and ladders of developments”) and corporate (“Taking and giving bribes – what regulators are serving up). All topics were presented by distinguished subject experts coming from the hotel industry as well as the academia and the consultancy sector.  


Breakdown Session Panellists

However, the event that attracted the most attention was the ‘Banker’s Forum’ hosted by Taylor Global Advisors and BNP Paribas Real Estate. A number of lenders from across Europe such as the European Bank for Reconstruction and Development (EBRD), Aareal Bank AG, Barclays Corporate, Credit Agricole Corporate and Investment Bank, Societe Generale Corporate & Investment Banking, NIBC Bank N.V. and Santander Corporate Banking presented case studies and share transactions details representative of their current interest to IHIF attendees. Investors and developers were given the opportunity to understand what type of deals banks can and will support in these challenging economic times so that they will not be working in the dark.

The day concluded with an evening reception hosted by NH Hoteles at the new hotel NHow Berlin.

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