A proliferation of new brands and franchises and constantly-emerging new trends make hotels such an interesting investment, delegates heard at the PropertyEU European Hotel Investment Briefing, which was held in London on Tuesday.
'Hotels are now at the forefront of innovation in Europe and from hostels to boutiques, from five-star to budget, you can tick all the boxes,' said Dirk Bakker, head of EMEA hotels at Colliers International. 'There are plenty of rebranding and development opportunities in Europe. After all, Airbnb is there because supply in many areas is not growing fast enough.'
The last few years have seen the emergence of new concept hotels, where experience is as important as location, but also design-led, high-tech hotels targeting young customers who have different priorities. From Generator hostels to Ruby Hotels’ lean luxury, from Hoxton to Citizen M, they are all looking at expanding in Europe and further afield.
'We see tremendous opportunities in the new brands that cater for young people who prefer to travel rather than buy a car and are attracted by design and technology-led concepts,' said Eric Jacobs, founder of Horeca Investment Partners. 'They are the future.'
The new buzzword in the sector is 'blend': mixed-use projects that combine hotel facilities, extended stay, office and retail all in one and offer multiple revenue sources. In out-of-town resorts as well as in city locations, luxury apartments or villas are often linked to a hotel, with the residential aspect making the investment’s risk profile more manageable. Budget or boutique hotels tend to be retail-linked, with a focus on younger customers.
'Blending is a more efficient use of real estate, and it is a trend that will carry on,' said Jacobs. 'It is more efficient but a complex business plan and a lot of granularity is needed to generate efficiencies, as well as creative entrepreneurship.’ Bakker agreed that ‘the blend provides new opportunities but also challenges, as it doesn’t fit into any box. Facility management is key and you have to run your numbers differently.'
The pioneers are now leading the way, but institutional capital will surely follow, experts agreed. In the meantime, there is plenty of choice for all investors. 'We like good quality hotels like Holiday Inn Express,’ said Andreas Locher, head of acquisitions & sales for hotels at Union Investment Real Estate. 'But we also look at lifestyle and new concept hotels like Ruby or Indigo, or apartment hotels like Citadines, which have good potential both in Europe and the UK.'
