Three bold predictions for 2015

David EisenBy the time you will have read this, the International Hotel Investment Forum in Berlin will have wrapped. (Shameless plug: If you didn’t already, go back and check out our February issue that was devoted to the show, with a detailed look at hotel investment and development in Europe.) IHIF, as it’s popularly known, is a true international hotel investment gathering, where delegates get a true take on the pulse of the global marketplace.

Writing this now, knowing full well that I’ll have already partaken in the event by the time this issue hits the newsstand, is like something out of “Back to the Future,” which, I guess, makes me Marty McFly—nylon vest, Calvin Klein’s and all. Only difference is, unlike the movie, I won’t be going back to 1955 and then trying to find a way to return to 1985 (when I was nine and had a bowl-cut hairdo).

No, for the purpose of this column, I’d like to jump back to more recent news and, channeling Carnac the Magnificent, make some bold predictions about the industry. If I am right you can lionize me; if wrong, well, there’s always next year. Here are my three predictions for the rest of 2015.

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BOLD PREDICTION 1: 2015 GLOBAL HOTEL TRANSACTIONS WILL OUTPACE 2014

One of the smartest things anyone can do when making predictions is to make predictions that almost always will come true, and then take credit for it. That’s why I am saying, unequivocally, that global hotel transactions in 2015 will best 2014. What are the chances I could be wrong? According to JLL, global hotel deal volume rose 10 percent to nearly $60 billion in 2014. JLL predicts (smart thing No. 2: use other people’s predictions as part of your own) global hotel transaction volumes​ could reach $68 billion in 2015—a 15-percent increase.

It may not be going out on a limb, but as hotel real estate becomes more attractive to investors as a high-yield alternative to bonds, and hedge against volatile securities, transaction volumes will rise. Meanwhile, cross-border transactions​ are predicted to account for one-third of deals in 2015. Which brings me to bold prediction No. 2

BOLD PREDICTION 2: CHINESE INVESTORS WILL RULE 2015

Ok, maybe a tad hyperbolic, but the Waldorf Astoria and Baccarat hotels in New York are now owned by Chinese insurance groups, bought at sky-high, record-level prices, mind you; and China’s richest man is laying the seeds for a global hotel empire. It’s not going to end there now that the Chinese government has relaxed its rules on how much companies in mainland China can spend on overseas assets without government approval. Let the buying begin!

BOLD PREDICTION 3: AIRBNB, LIFESTYLE, MILLENNIALS WILL DOMINATE TALK IN 2015

Remember those sophomoric drinking games whereby those playing were compelled to take a drink after some designated word was uttered? Well, if you played this game at any recent hospitality conference, and assigned the words Airbnb, lifestyle and millennials, you wouldn’t be upright for long. Everyone, from hotel brand executives to developers, has these words cued up as if on speed dial. And while Airbnb is surely a disruptor, this year, regulations will dominate the discussion; specifically, how Airbnb will be forced to play by the same rules as hotels.

Meanwhile, hotel companies are pivoting quick to capture millennial loyalty, which is a difficult proposition: Are millennials loyal to anything? Branded hotel companies have been eager and fast to launch lifestyle brands, or even acquire ones when they can—see IHG and Kimpton. The question is: If millennials are such a vital market, and have shown to be less brand loyal than generations before, are brands destined to become obsolete? While I don’t think brands will ever become unnecessary, they will need constant attention and tweaking so that they remain relevant.

Those, reader, are my three bold predictions for the rest of the year. My other being that the Baltimore Orioles will repeat as AL East champions (a homer pick, sure, but this is my column) and A-Rod will not hit 15 home runs. If you are a fan of hotels and Maryland baseball teams, 2015 should be your year!

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