The hospitality market is expected to see little or no growth in the next 12 months as a result of a combination of over-valued assets and difficulty in raising finance, according to DLA Piper's European Hotel Outlook Survey for 2012.
The hospitality market is expected to see little or no growth in the next 12 months as a result of a combination of over-valued assets and difficulty in raising finance, according to DLA Piper's European Hotel Outlook Survey for 2012.
The survey notes that the current lack of development finance in the sector will impact asset-light strategies and an increase in joint ventures (55%), leasing (29%) and franchising (44%) is expected.
Only 12% of respondents feel that the industry is well prepared in the face of another downturn and many have taken measures in the past year to protect their businesses against the threat of a future slump. Measures that well prepared businesses have taken include increased efficiency, deleveraging portfolios, hoarding cash and investment in marketing.
The most active investors in 2012 will be high net worth individuals (26%), private equity funds (23%) and sovereign wealth funds (19%). Over 63% of respondents said 2012 would be a buyers' market. Most investment is expected to come from the Middle East (64%) and the BRICS (Brazil, Russia, India, China, South Africa) (53%).
Despite the eurozone crisis, 40% of respondents think it is a good time to invest in the PIIGS countries (Portugal, Italy, Ireland, Greece, Spain). However, only 8% said they would look to invest in Greece over the period. Spain emerged as the most favoured investment destination with 26% saying they would consider investing there.
The UK is still seen as a very attractive investment destination with 61% of respondents saying they would target the UK as an area for investment outside the eurozone.
