Hospitality Matters - Autumn/Winter 2018

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Autumn/Winter 2018

Welcome to Hospitality Matters, our regular bulletin for the hotels and leisure industry.

We are going to press with the business world facing uncertain times, perhaps more than usual. No Brexit deal has yet been secured, so we remain uncertain as to the UK’s future relationship with its largest trading partner. We await the outcome of the US midterms, which will determine whether Trump can continue to push through his legislative agenda. World stock markets have been jittery through October and oil prices are being affected by events in Saudi Arabia and reimposition of US sanctions over Iran.

But looking at hotel operational performance, you would have thought all this matters not a jot. Across those markets with stable demand/supply metrics, underlying performance remains good; and whilst inflationary and exchange rate-driven costs pressures are challenging the bottom line, rates and occupancy are mostly holding up.

High levels of operational performance and plenty of international capital still looking for a home, paired with very low yields across more conventional real estate asset classes and the winds of distress blowing across the retail sector, mean hotels are an increasingly popular investment class, even for conventional real estate funds that have not previously looked at operating businesses.

It is in this context that our Hotels & Leisure sector group is performing stronger than ever. We are now the only law firm in the UK ranked #1 for Hotels & Leisure in both Legal 500 and Chambers and Partners legal directories and remain top of the sector league table for deals by some margin. Chambers even lists CMS as the only top tier firm, backed by one client quote as follows:

‘The team stands out as #1; others may be good, but they are not CMS’

I do not know which client said this, but whoever it was, if you are reading this, thank you!