Hospitality Matters

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Welcome to the second edition of Hospitality Matters, our regular bulletin for the hotels industry. The feedback on our first edition was very good, so we have decided to publish these every six months, to keep you up-to date, inform and challenge current thinking. Please do let us know what you think.

‘May you live in interesting times’ is an often-cited old Chinese curse and is beginning to look very relevant as we consider the impact of the growing Eurozone crisis on the UK and other European economies and even the wider effects on the global economy.

Six months ago we predicted a steady improvement in the transactional market and that prediction has been borne out with a number of larger portfolios successfully coming to market, including Mint and Von Essen and reported strong interest in other portfolios such as the Concorde portfolio in France as well as strong demand for some single assets, particularly those located in London and Paris.

It is clear that there is still limited financing available in the market, particularly as we come to the end of the year and many banks have closed their books for 2011, but on the other hand, we hear positive talk of new finance becoming available again at the start of 2012, so those transactions in the market now, may be able to pick up some financing in the New Year.

Quality continues to remain key to a successful transaction and gateway cities remain well in demand whilst provincial hotels remain a tough sell, particularly those where there is a lack of any visibility of any signifi cant profi t growth in the medium term.

The benchmarking companies continue to show slow and steady improvement in trading figures (although in some cases off a very low base). But there is some talk of these figures not being truly representative in some international and regional markets because it is the better-performing hotels only that are measured, masking an underclass of poorly performing hotels that do not contribute data to the likes of HotStats and STR.

We hope that the next six months will bring some clarity on what is going to happen across Europe to counter-act the depressing effect that uncertainty and volatility is having on the markets. But even if we get that clarity, full economic recovery still looks a long way off.