Jonathan Worsley Jonathan Worsley

Jonathan Worsley, founder of the Arabian Hotel Investment Conference and CEO, Bench Events, says Middle Eastern investors with cash could find themselves rich pickings in Europe

In recent history, Europe’s financial future has never seemed quite so precarious. To comment with any certainty on the 2012 outlook for the European hotel market really depends on Europe’s politicians showing some leadership by saving the Euro through fiscal and monetary reform or allowing the Euro to collapse, which many economists believe is just a matter of time.

Industry needs a stable political environment to thrive and until the Euro crisis is resolved the sovereign debt crisis will remain, investors will be wary and entrepreneurial investors, with cash, will find themselves rich pickings

I sought advice from industry peers — my brain trust — to get their views on 2012 and for some “now is an excellent time to go shopping”, provided finance is in place. All of my brain trust agreed that owners, with a weak financing structure and a poor product offering, will be severely tested in 2012 with ownership change a possible outcome. As we have seen in the second half of 2011, banks will continue to offload hotels sitting on their balance sheets depressing prices further.

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Looking at hotel performance, I was speaking to Elizabeth Randall, managing director of STR Global and she mentioned that in direct response to the softening of European market indicators they have downgraded their RevPAR forecasts on the majority of European markets, 28 out of 32 in fact.

Puneet Chhatwal, chief development officer of The Rezidor Hotel Group predicted “low RevPAR growth for 2012” however, as he rightly points out, it is better than negative. Industry veteran Michael Hirst believes there will be much more constrained leisure demand due to pressure on consumer spending.

However, the consensus seems to be that business and event travel will fare better.
Sir David Michels, president of the British Hospitality Association and board member of the Jumeirah Group,was recently quoted in the Hotel Year Book 2012: “The majority of branded hotels throughout Europe are owned by third-parties, with comparatively few assets owned by the global brands.

“One forecast I am quite relaxed in making is that, beginning in 2012, the big brands will once again invest in hotel real estate”.

Will 2012 see the bricks and brains converge once more?
Turning to the owner’s perspective Anders Nissen, CEO of Pandox, was less optimistic stating: “We have before us a difficult year. Banks will close for new loans which will make it hard for new developments and refinancing will be difficult. This year will be more about increasing market share and productivity rather than new investments and expansion”.

Josh Wyatt, director of Patron Capital Advisors, agreed, he asserted that “2012 is all about consolidating your position and investing in existing assets”.

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