Excerpt from CoStar

Unique Challenges Exist in Europe for Hotel Transactions, Development

European hoteliers are patting themselves on the back for surviving the bleakest years of the pandemic, but they also realize that the hardest work is ahead of them.

Are they cautiously optimistic? Are they sensibly looking at the long-term play? On the first day of the International Hotel Investment Forum, there were almost as many opinions as there were attendees of the conference.

"It’s about time people understand our industry is vastly different now than it was 20 years ago, and it will be vastly different in 20 years," Accor CEO Sébastien Bazin said. "Anyone in the room who wants to open a hotel: Open it, design it for the local community. Make sure you give people a reason to come. Make sure they use the bar, the restaurant. If you achieve the business from the local community, don’t you worry a minute about getting the traveler. You have to change your entire thinking of hospitality from 40 years ago. Forty years ago the only thing we cared about was trying to cater to the traveler. That was wrong. If you have 60% of your revenues from the local community, you are safe. So I’m trying to go upside down in the way we do things. It's more difficult but more fun."

“This is the paradox of globalization: We're moving from an economy based on where the raw materials are — near rivers, near manufacturing — to being where you want to be. It's a knowledge economy.”
— Ian Goldin, economist and professor at Oxford University, shared his view that dynamic cities that appeal to where people want to live, work and interact will sustain future travel and tourism growth as well. Right now, he pointed to the Persian Gulf states as knowledge economy-based hubs of the future.

"The big question mark for the entire industry, of course, is what are we going to do with all of these buildings that are no longer viable as offices. Part of it is working from home and changing how we work, but the other part is ESG energy regulations. If you look at the U.K. as an example, by 2027, 50% of existing stock can't be used as office space. That's 10 million square feet in London alone of office space."
— Kristen Kozlowski, managing director of PineBridge Benson Elliot, discussed why buying unused office space might be a fertile path for hotel development in the absence of traditional distress.

Click here to read complete article at CoStar.