The team at Global Asset Solutions sends our very best wishes for the new year.
Last year closed with strong performance in the hotel sector, tempered by high costs and rising inflation. We’re confident that 2023 will be a year in which inflation and energy costs stop their ascent and hotels start to see solid trading patterns.
Throughout what was at times a turbulent year, the luxury segment continued to outperform, attracting guests and investors and seeing a fair few brand launches.
At Global Asset Solutions, we believe that an informed team can help you get the best out of your property and we are pleased to announce the promotion of Dimitris Mittas to the role of COO, as we expand globally.
Mittas previously held the role of VP, finance, Europe and has worked at companies including Nobu and InterContinental Hotels Group.
He said: “I am thrilled to have been promoted to COO at what is an exciting time at Global Asset Solutions. There is growing demand for experienced asset management, particularly in the luxury segment, where the brands have turned their development focus.”
“The industry is under multiple pressures; from finding and retaining team members, to rising costs and financing issues. The search for profit calls for a thorough understanding of this rewarding, but complex sector.”
The team is currently lining up its travel plans for the year and will definitely be attending IHIF in Berlin in May. Get in touch if you’d like to meet up.
A return to ‘normal’ hotel trading in Europe requires a global approach
Many international firms have now dipped a toe in European operations and ownership.
Summer 2022 saw a return to travel around the world, with leisure travellers eager to feast on foreign sights and a sudden explosion in accents in sought-after destinations such as London, Paris and anywhere sporting blue seas and relaxing views.
One of the biggest movements has been travellers from the U.S., who have been leaping on flights to Europe, yearning for culture, sun and gourmet dining but also drawn to the bargains to be had with a strong U.S. dollar.
But it’s not just holidaymakers eager to enjoy much-delayed holidays and get a change of view. Investors from the U.S. have been eyeing Europe with growing enthusiasm as the market continues to mature and as they are able to get more for their money
To read more, click here.
Viewpoint: is debt a sure bet or a threat?
If you’re a hotel owner looking to relieve debt by selling a business, there’s more opportunity than you might think, according to Global Asset Solutions’ Robert Walters.
”The hotel market has enjoyed a rather frothy time of late, with domestic post-lockdown demand driving increases in rate now being matched by occupancy and revpar returning to 2019 levels. The lifting of lockdown saw huge numbers of people wanting to go on holiday in the UK, since buoyed by overseas travellers lured by a weakened sterling hinting at good value.
”This has been echoed in investment interest, which remains high with transaction levels also back up to 2018/19 levels, featuring both traditional real estate-focused funds and private equity funds, with KSL’s investment in the Pig Group being one of the most notable deals.
“Of course, the problem with froth is that it lacks substance, and I am concerned that challenges lie ahead. The obvious one is the swiftly changing economic situation, especially in terms of inflationary pressures. This hits particularly in terms of the costs of the operation. But inflation also has a very negative effect on the cost of living of the guests.
And, with around 38% of the UK market being domestic, is that going to affect the choices people make in terms of the number of times they travel, where they travel, where they stay and how much are they prepared to pay?”
To read more, please click here.
Budgeting for luxury
Writing in HOTELS magazine, our CEO Alex Sogno, advises how best to approach budget season so that all parties are aligned going into the new year:
Budget season has been made more complex by the ongoing choppy trading following the pandemic.
The market is still experiencing short lead times, and corporate travel has yet to fully return, all of which makes putting a budget together challenging.
To read more, please click here.
Italy’s government drives investment boom
Dimitris Mittas, COO, Global Asset Solutions, looks at Italy’s recovering hotel sector
As you read this, Italy’s new government will be revealing its plans for the years ahead, with investors hoping for a continuation in the support which has bolstered the volumes finding a home in commercial real estate.
The previous government committed €2.4bn to the tourism sector, with a particular focus on driving digitisation and sustainability.
The previous incumbents helped to drive a 14% year-on-year increase in total investment volume in commercial real estate, to €10.4bn, with familiar private equity houses such as Blackstone and Apollo showing their enthusiasm for the country.
In our sector, these were aided by a number of tax measures, including tax credits for commercial leases under certain circumstances and a ‘tax-free’ revaluation for legal and tax purposes of real estate assets owned by entities carrying out hotel activities. As part of efforts to revive the country’s tourism market, some property taxes were waived for hotel businesses, although this proved only temporary, in the wake of the worst of the pandemic.
To read more, please click here.
Managing the whole asset
Before March 2020, hotel operations varied hugely. The sector was on a high. STR reported a record year in 2019 and, although costs and supply were both rising, it seemed that a cyclical dip was being pushed ever farther back, and the good times could continue indefinitely.
One cloud floating on the horizon before the pandemic spread was that of costs. Revpar growth was slowing. Revenues were unable to keep pace with growing costs and ADR was rising at a slower rate than inflation, which was being stoked by a multitude of issues, including staff wages.
Then, in early 2020, many hotels were forced to close entirely, forcing owners to face an unheard-of situation, with zero revenue. A situation few had ever modelled and one which exposed the flaws in their operations, issues which, when times were good, they may have overlooked.
The time for overlooking was now past, and we found that owners were coming to us, wanting an even closer look at every aspect of how their hotel functioned. As specialist asset managers, being those fresh eyes on a property is at the centre of what we do, but it was rare that we had a chance to take hotels back to the very beginning and create a whole new approach.
To read more, please click here.
The sector in numbers
A strong start to the new year
It was a wobbly year last year for hotel shares, as pent-up demand met growing inflation and leisure and corporate travellers came under pressure from a number of sides, while still feeling the urge to travel. Hotel CEOs were optimistic, but their optimism was tempered by rising costs and a lack of staff, which limited operational capabilities.
2023 has started off strongly, with analysts confident that a new variant was not going to strike and limit travel and that we may well have seen the last of rapid inflation. There were some issues around travel from China last year, but despite requirements for testing from the US and some European countries, outbound travel is expected to grow. The spike in H World’s share price reflected more freedom in the country’s travel.
IHG was one stock to benefit from a more attentive eye, with Peel Hunt upgrading the group to ‘buy’, describing it as having been “left behind”, adding: “At its core, IHG is a global franchise business which we believe is under appreciated in the UK market where it has no peers and where it is associated with the cyclical and capital-intensive hotel business”.
Hyatt also saw a boost at the end of last year, when its acquisition of Dream Hotel Group underscored its strong position in the lifestyle sector – somewhere everyone very much wants to be at the moment.
Looking ahead, the luxury segment continues to hold the interest of investors, meaning that moves such as Accor’s decision to split off its own luxury business will keep eyes on them as we get deeper into 2023.
Sign up for our asset management course
Global Asset Solutions has launched an online training course with external accreditation which will support the growing demand for asset management.
The course will target aspiring asset managers who are already working elsewhere in the sector, as well as students and new entrants.
Alex Sogno, CEO, Global Asset Solutions, said: “Asset management has been growing in recent years, with detailed operational knowledge much sought after as the search for profit becomes ever-more challenging.
“Asset management at its best sees on-the-ground knowledge combined with experience to ensure owner, brand and all stakeholders are aligned and function at their best. This course teaches the skills required to build the hotels’ value for the owner, helping you to understand the real estate side of hotels as well as the capital issues.”
For more details, click here or enjoy the video below.
