Bisnow Commercial Real Estate News

BySharita J. Wilson

May 11, 2022 #Archive Collection Family Travel Journal, #Brexit Travel Implications, #Busiest Automobile Travel Months, #Cdc Travel Guidelines For Infants, #Couple Travel Map Pictures, #Covid Test Bristol Travel, #Cruise & Travel Report, #Fco Travel Advisories, #Florida'S Travel Restrictions, #Food Babe Travel Snacks, #Fresh Sparkling Snow Travel Size, #Heaviest Travel Times On I95, #Heraldic Device For Space Travel, #How Do Invasice Species Travel, #How To Travel Too Anguilla, #Infants Air Travel, #Pers Out For Travel, #Santa Maria California Travel, #Sell United Electronic Travel Certificate, #Socal Travel Baseball Feeder Teams, #Switzerland Alps Summer Travel, #The Points Guy Travel Compensation, #Travel Agency In Dudley, #Travel App Like Tripadvisor, #Travel Bottle Washing Up Liquid, #Travel Caution Ongoing In Europe, #Travel Documentaiies On Netflix, #Travel Label Template, #Travel Mangement In The Usa, #Travel Mineral Makeup Kit, #Travel On Sling, #Travel Over Labor Day Weekend, #Travel Rt Jobs Hawaii, #Travel Savy Mom, #Travel Slp In Antigua, #Travel Solar Charger For Deployment, #Travel Squeeze Bottle Wholesale, #Travel Tax Flying Cathay Pacific, #Travel Tip Switching Sim Cards, #Travel To Israel From Dubai, #Travel To Packard Plant, #Travel To Peru Covid Testing, #Travel Tours Ucc, #Travel Trailer $3000.00 Roseburg, #Travel Trailer Frameless Window Replacement, #Travel Trailers 2900 Lbs, #Travel Vlogger Gossip Carpetbagger, #Travel Warsaw Biali, #Ucsd Ece Conference Travel, #Uga Travel Pillow

London’s hotel market is at a delicate moment and those in the market are waiting with bated breath to see if a fragile recovery can be maintained.

After the most challenging two years imaginable, London and the UK’s hotel sector has rebounded strongly in the past two months as pent-up demand for travel and leisure is unleashed. Bumping up against that, though, are rising costs for both consumers and operators, and the hope that long-haul and business travel will now start to recover and complete the job started by leisure and domestic customers.

Placeholder

The St Pancras Renaissance hotel in London

Data from hospitality analytics firm STR showed the UK to be the best performing hotel market in Europe in the month to 11 April, with occupancy at 87% of 2019 levels, putting it ahead of Poland and Ireland. 

It’s a phenomenon those in the market confirmed to Bisnow anecdotally, ahead of the London Hotel Outlook event on 24 March.

“We’re seeing a strong recovery in many markets,” Tristan Capital Managing Director of Hospitality Investments Luc Boschmans said. “Here in London, if you look at the hotels we recently acquired, they achieved the same occupancy in March 2022 as in March 2019.”

Tristan bought a majority share in the Point A budget boutique brand in April. The deal valued the company, which has 10 hotels in London, at £420M. 

Leisure travel is driving the recovery so far.

“There is a lot of pent-up demand, people want to get out and travel after two years at home,” Cedar Capital Partners Vice President Maurice Petignat said, pointing to the fact that airlines like Qantas and Ryan Air recently released figures showing demand for flights exceeded their capacity by around 25%.

People want to pay for experience, and they have a bit of money in their pocket to do it, CallisonRTKL principal and EMEA Hospitality Lead Todd Lundgren said.

“One of the big trends we’re seeing at the moment is a move to premium,” he said. “People spent a couple of years in lockdown, they saved money, and now they want to treat themselves. We’re seeing more of a focus on luxury, people willing to pay more for a premium offer, in terms of rooms and food and beverage.”

This is manifesting itself in the design decisions hoteliers are taking, he said, citing one project the firm is working on where 60 rooms are being broken up and turned into 25 larger rooms. Even though the property will have fewer keys, the increased room rate for the larger rooms will increase revenue, the owner believes.

But there are competing factors at play, which is what makes this a make-or-break moment for the hospitality industry. While there is pent-up demand and people do have post-pandemic savings, inflation is at a 20-year high in the UK and rising costs are set to put a strain on both consumers and hotel operators alike. 

“My word of caution would be, how much of this is catch-up travel, or revenge travel people are taking after a few years without seeing anyone,” Hyatt VP of Acquisitions & Development for Europe & North Africa Felicity Black-Roberts said. “We know that people want to see people. But we don’t know where things will settle, what the new normal will be.”

Black-Roberts said rising fuel costs will hit both travellers and hotel owners and operators. In addition, she said, hospitality is finding it increasingly difficult to recruit and maintain staff, which is putting pressure on wage costs for the industry.

“If you talk to anyone in hospitality or go to any event, human resources is the No. 1 issue they talk about,” Wyndham Hotels & Resorts EMEA President Dimitris Manikis said.

Supply chain issues, which are slowing the delivery and increasing the cost of items like furniture or building materials, are also driving up costs, he added. 

“The rebound in occupancy is driving rates, but you have to drive up rates because costs are also rising,” Tristan’s Boschmans said. He said he had spoken to one hotel general manager who could only run their hotel at 75% capacity because filling it would require hiring staff at higher costs and eroding profit margins. 

In spite of these challenges, interest in the sector — in London in particular — remains high from both real estate investors and hotel operators. Tristan has invested hundreds of millions in the sector, Cedar Capital is looking to buy in London, and both Hyatt and Wyndham are looking at expanding in London and the UK. 

The acquisitions include few distressed properties even though many hotels were completely empty for months at a time and not producing any income.

“The banks just didn’t want to take empty hotel properties onto their books Katten partner Peter Sugden said.

“We disbanded the team we set up to look at distressed hotel deals because there just weren’t any,” Boschmans agreed. “Instead, we’re looking at value-add deals where we can invest in the properties themselves and improve them, or bring in a new operator or brand, or change the business model.”

“London is a deep market, with a good balance between leisure and business travel, when that comes back,” Cedar Capital’s Petignat said. “It’s not going to go away.”