Despite a sluggish transactions scene, the “fortunate” hospitality industry and asset class continues to convince an increasing group of investors, delegates heard at the IHIF EMEA in Berlin on Tuesday.
Vincent Mezard, global head of living & hospitality at AXA Investment Managers, said: “We are in a fortunate industry and asset class. We went through Covid without crashing operations, and we are going through this yield shift cycle without crashing valuations and the capital markets.
“We never went through the extremes of yield compression that we saw in offices and residential; we have these strong, structural tailwinds post-Covid; there is still capital available, and transactions are happening – there is equity out there.”
In a discussion moderated by Kenneth Hatton, managing director, head of hotels, Europe at CBRE, IHIF delegates heard about the underlying trends supporting hospitality investment theses.
Experience-Led Spending
Noted Tina Yu, partner, KSL Capital Partners International: “Consumers want to spend more on the experiences that we offer in our hotels than on material goods. We are also looking at wealth transfer, with the Baby Boomers expected to pass around $84 trillion to the next generation over the next 20 years.” She added: “We’re interested it where that next generation wants to travel – they are more tech savvy and seeking more authentic places. We’re not questioning the demand but where the demand wants to go.”
Keith D. Evans, CEO of Lifestyle Hospitality Capital (LHC) Group, tackled the burgeoning lifestyle sector. Evans founded LHC and leads its global investment and asset management platform. He noted: “Lifestyle is a wide band. It requires well-designed hotels, with strong F&B, rooted in local community. It requires a movement away from a commodity to a specialist product, which is demanded by consumers.” He suggested that lifestyle properties require a “more difficult skill set to execute that design” and said that LHC was “building a competitive advantage in that space."
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