“If you’re sure about something, get on with it” – Richard L. Solomons, Director, Chrome Hill and former Chief Executive, IHG
The most recent edition of the European Hotel Investment Conference took place late September in London. Over 200 delegates, most coming from the biggest firms in debt, equity and development, attended the key networking event to discuss investment opportunities and threats.
Airbnb – is it the beginning of the end of hotels?
According to a presentation by Lorraine Sileo, Senior Vice President of Phocuswright, a provider of hospitality market research, private accommodation is the new trend. More importantly, the millennials that all hotels are trying to capture are more likely to stay at non-traditional lodging than other consumer groups. In the UK, there are less hotel stayers and more apartment renters between 2016-2018, according to Phocuswright data. On the bright side, surveys show that the main reason why people choose to book Airbnb is due to the Location and Value. This means that Airbnb’s USP of a “local” experience is not what is driving its’ bookings. If hotels focus on these two criteria, they still have a fighting chance to capture the millennial market.
Edinburgh, Budapest and Copenhagen all have something in common – they have the biggest share of Airbnb’s. They also have the biggest returns on hotel investment, showing that so far there is little financial impact of Airbnb on the overall EU hotel investment market, and that there is enough demand.
Where would the experts invest?
Everyone attending the conference had the same question on their minds. According to Robin Rossman, the Managing Director of STR, the best place to invest now is Lisbon, Portugal. The Portuguese capital was also a recommendation of Sophie Perret, Director of HVS, a global consulting firm specializing in hospitality. She added that it was an even better opportunity a few years ago.
Knowing what type of hotel to invest in is crucial as well. Independent and budget hotels better rival the Airbnb power, as discussed earlier. When discussing where he would invest in, Richard Solomons, Director, Chrome Hill and former Chief Executive, IHG, said “I really like the boutique sector.” The potential success of boutique hotels was highlighted when Tim and Kit Kemp, Co-owners of Firmdale Hotels, were awarded the Hot.e Hall of Fame award. They have a vision of a chain of bespoke, boutique hotels, with one opening at a time. All of the hotels are individually designed by Kit, for whom a success means making people pay attention to their surroundings. They believe hotels shouldn’t just be a space of leisure time, but education. Firmdale hotels invite authors to come speak, and host wellness talks. The Kemps also mentioned that they were looking into Lisbon as a future location.
The key to good hotel design: Believe in yourself and stick to your guts.
“I’m scared of beige.” – Kit Kemp, Co-owner, Firmdale Hotels
Author: Vani van Nielen