At the upcoming International Hotel Investment Forum being held March 4-6 at the InterContinental Hotel, Berlin, Oliver Winter, CEO of A&O Hotels and Hostels will participate in the "A Brave New World: What Are the Opportunities in Alternative Models?" panel, examining the most attractive alternatives for hospitality investors. The session will examine the business behind the concepts of hostels, serviced apartments, resorts, co-living, co-working, extended stay, student accommodations and more
Winter has established a budget-chain concept across Germany, and with the entry of TPG Real Estate, A&O looking to have a Europewide market leadership role in the individual and youth-travel segment.
TPG Real Estate, the real estate platform of global private investment firm TPG, a year ago completed the purchase of A&O, acquiring 31 leased and owned assets, with more than 20,000 beds.
Ahead of the session, Winter examined growing trends in the hospitality market, disruptors and innovations that are changing the way the game is played.
1. How would you describe the hotel investment market in 2019?
There are two bottlenecks: property/land prices and construction capacities. We are looking in Southern Europe, where there are still some great value investments available, and staying in our niche of refurbishing existing buildings (office/storage/factory) to avoid competition over the same plots.
2. What is A&O Hotels and Hostels' position and strategy for the year to come?
Clear focus to cost/price leadership. We will proceed with the new design relaunch that we started last year. Almost 20 percent of our beds are complete (new public areas, new guestroom designs), and in 2019 we will spend another €14 million on the existing assets and will redesign another 40 percent of our portfolio. We will invest in AI-based advertisement, voice search, the roll-out of digital key (10 assets) and self kiosks.
3. What are the biggest challenges faced by hoteliers/investors in the current hotel-investment market?
To find enough—and right—[talented people]. All skills are needed and we are all looking for high- and low-skilled people. And the capacities and capabilities of the construction companies.
4. What existing hotel brands do you think are most interesting to watch?
Hotels and hostels growing together—if you see a new lobby today (living room/working tables, etc.) it becomes more difficult to see the difference. All hotels have discovered the value of the public areas in contrast to years ago when lobbies were the most boring spaces. So it’s interesting to see who develops really unique strategies.
I’m fascinated by watching the trends in the fast-food industry and see similarities with the hospitality sector. McDonalds is not suffering because of one, new, large brand—there are several unique boutique-burger concepts challenging [it]. It’s the same with Starbucks & Co: the small, independent coffee shops are taking the customers away.
I’m not afraid [of] any big brand but am keenly watching the unique, emerging concepts, like Fabrika Hotel in Tiflis, for example.
5. Who or what is the biggest inspiration guiding your career?
[Ryanair CEO] Michael O’Leary, the bravest disrupter in the travel industry of the last 20 years. And concepts like IKEA or Lidl.
6. What are you most looking forward to at IHIF?
To be honest, it’s my first time in 18 years as A&O CEO that I have attended (in my home town), because—as a budget guy—I've always been too stingy to buy a ticket for more than €1,000. So, I’m most excited to see if the conference is really worth the entrance price.
7. You are taking part in the CEO Panel A Brave New World: What Are the Opportunities in Alternative Models? What advice do you have for others considering investing in hospitality/
Understand what is unique: Is it price or product or location? And never forget your customer. We are not creating the products for us, our friends, wives or husbands. There are 7 billion people on this planet and most of them don’t have any access to professional accommodations or travel today. Every single day some of those 7 billion gain access to travel and they are looking for basic products. The young customers and those new to travel are seeking digital means to access travel through their mobile platforms.
Winter will be speaking on A Brave New World: What Are the Opportunities in Alternative Models?, 9:50 a.m.-10:30 a.m. on Tues., March 5 during the International Hotel Investment Forum (IHIF) which takes place March 4-6 at the InterContinental Hotel, Berlin and is organized by Questex, the parent company of Hotel Management magazine.