Speakers urged hoteliers to focus on long-term strategies and be able to react nimbly to the new uncertainties in global economies.
LONDON—Although there was some buzz in the air about uncertainty following the United States’ presidential election, the first day of Deloitte’s two-day European Hotel Investment Conference focused on the challenges faced by hoteliers in mainland Europe.
Italy is high on that list. Keynote speaker Roger Bootle, managing director of Capital Economics, stated that approximately 18% of Italian loans, across all sectors, currently are non-performing. The monetary value of those loans is approximately €350 billion to €400 billion ($387 billion to $442 billion).
There was some speculation that Italy could be the next country, after the United Kingdom, to leave the European Union. The Netherlands and other countries also were mentioned as markets where anti-EU sentiment is already high or growing.
Such capital and human restlessness is the new arena of uncertainty, the direction of which hoteliers and others can only guess at.
Meanwhile, Bootle—vocally always a keen proponent of Brexit—said UK gross domestic product is still slowly growing.
“The Eurozone continues to be pretty gloomy,” he said. “The U.S. election is not the most important thing to worry about.”
Hoteliers need to be certain about their long-term strategies, he said, and be nimble enough to surf “the crest of a wave,” which was the title of the conference’s opening session.
Another challenge is interest rates. He said he expects them to rise in the U.S. by the end of 2018 to approximately 2.5%, with those in other developed markets likely to follow suit.
“Lower interest rates may not work,” Bootle said, adding that distortions to the financial system are becoming quite serious.”
The overriding sentiment across the day, and the conference’s motto, was “opportunity out of uncertainty.”
Speakers stressed that the hotel industry is still growing, albeit slowly, and that whatever happens in the larger political spectrum, changes regularly present news opportunities.
Photo of the day
Quotes of the day
“Electorates are clearly pushing against something. … A hotelier is president.”
—Nick van Marken, global head of hospitality, Deloitte. Those at Deloitte’s European Hotel Investment Conference last year may remember Hilton Worldwide CEO Chris Nassetta mentioning Trump, only a few months into his election campaign at that time, as being “one of us,” a reference met with guffaws.
“The press said (Marriott International’s acquisition of Starwood Hotels & Resorts) was a good deal for Marriott, which bemused us, as a good deal for Marriott was also a good deal for Starwood. The press was really concentrating on that line, which prepared us for a counteroffer.”
—Carlton Ervin, chief development officer, Europe, Marriott International, speaking at a panel on mergers and acquisitions titled “M&A: Riding the crest of a wave?”
“We go with operators who have been through the cycles. There is a little stickiness right now, which for us is a good thing, as opposed to when there is too much liquidity.”
—Mark Lanspa, EVP and head of hotels at bank Wells Fargo, speaking about bank lending to the hospitality sector during this era of political upheaval and heightened competition to allocate capital.