KKR watching for signs of a slowdown in Europe

Attendees gathered for the general session at the 2018 International Hotel Investment Forum. Photo credit: IHIF (IHIF General Session)

Mai-Lan de Marcilly, director and head of hotels, Europe, at private equity firm KKR, will take part in a panel at the upcoming International Hotel Investment Forum March 4-6 at the InterContinental Hotel, Berlin.

The session, "Money Makes the World Go Around: Identifying the Key Trends in Global Money Movement," examines the state of hospitality investment and trends to come, including key investors and alternative sources of capital and debt, key markets and next investment hotspots, and major trends to expect in the coming years.

De Marcilly joined KKR's real estate team in 2013 and is in charge of France and hospitality investments. Prior to joining KKR, de Marcilly was at PGIM in London where she focused on pan-European opportunistic and value-added investments across sectors. She also worked at LaSalle IM, Morgan Stanley Real Estate Funds, and RBS in Paris and London.

Ahead of the conference, de Marcilly shared her insights on the future of Europe's hotel scene, and what challenges hoteliers are likely to face.

1. How would you describe the hotel investment market in 2019?  

Macroeconomic trends, such as experience over things and the continued growth of tourism in Europe, are positive factors for the hotel industry. There also is growing appetite from institutional investors for alternatives—in particular hospitality, which should continue to fuel the investment market in 2019. We therefore expect the investment market to remain competitive and liquidity levels to stay high. 

Having said that, we think we are late in the investment cycle and warning signs of economic slow-downs and/or continued cost pressures should not be disregarded when forecasting performance in the next five years.  

2. What is KKR’s position and strategy for the year to come? 

KKR’s real estate strategy is not hotel-specific and we continue to see opportunities in Europe across sectors; in particular we are keen to continue our deployment efforts in residential, student housing and logistics. 

In hospitality, we will continue to look for value in resort markets in Western Europe and opportunities to reposition assets in key European gateway cities. 

3. What are the biggest challenges faced by hoteliers/investors in the current hotel-investment market?  

As a value-add investor, one challenge we face is the large and increasing amount of capital available for the hospitality sector [that] pushes pricing up, skewing the risk/reward balance   

4. What existing hotel brands do you think are most interesting to watch? 

Citizen M is a very exciting group. We believe they have understood what a growing number of travelers are after today: exciting product, great service at competitive rates. 

A group like Ruby hotels is very interesting as well, as they have the same exciting customer offer as Citizen M, with increased flexibility in accessing new assets given their model (they can lease-up part of existing buildings). 

5. What are you most looking forward to at IHIF? 

Networking opportunities at IHIF are always great. It also is one of the best times in the year to take the market beat. Given the increased volatility we are noticing, it will be interesting to see how people react and what is anticipated for 2019. 

6. Can you give us a brief insight into some of the key markets for hotel investment in 2019? 

We continue to see the key European cities, Iberia and the resorts’ sector as interesting places to invest. Given our private equity DNA we also will continue to focus on corporate situations. 

Mai-Lan de Marcilly will be speaking on Money Makes the World Go Around: Identifying the Key Trends in Global Money Movement, 3:30-4:20 p.m. on Monday, March 4 during the International Hotel Investment Forum (IHIF) which takes place March 4-6 at the InterContinental Hotel, Berlin. IHIF is produced by Questex Hospitality Group, the parent company of Hotel Management Magazine.