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48 p41 AO hotels 1st.qxp 27/11/2007 18:27 Page 41 www.propertyweek.com Analysis + opinion – Hotels UK 41 30.11.07 9 How is the credit crunch biting? What are the rooms of the future? Property BEDS, Week and adviser PKF answered these questions at a new annual event: BRICKS Hotels UK. David Hatcher reports. Photographs by 45 AND Oliver Knight BRAINS 40 35 30 25 8 Suite wise (clockwise from top left): 20 Real Hotel Company’s Michael Prager, EasyHotel’s distinctive orange, and Premier Inn’s David Penniston presented future strategies 15 VISITOR NIGHTS IN LONDON BY ORIGIN – 2000 AND 2006 (MILLIONS) 10 SOURCE: VISIT LONDON 5 0 Poland India Japan US Continental Europe UK 2000 2006 2000 2006 2000 2006 2000 2006 2000 2006 2000 2006 3 48 p41 AO hotels 1st.qxp 27/11/2007 18:28 Page 42 42 Analysis + opinion – Hotels UK www.propertyweek.com 30.11.07 Bed and board directors 1 (clockwise from above): answering questions about hotels, the credit crunch and the future were PKF’s Robert Barnard and RBS’s Peter Anscomb; Rod Taylor, head of hospitality and tourism at Europe Arab Bank; HSBC’s Huw Zachariah and Barclays’ Tim Helliwell; and EasyHotels’ Lawrence Alexander NO TOWN, LET ALONE ANY UPMARKET DEVELOPMENT, £150m is about the maximum amount approach, given the current financial climate, seems complete without a big-brand hotelier of debt being made available.’ and ‘to put plans in place that take into to boost its credentials, but is the industry’s Nevertheless, Huw Zachariah, HSBC hotels consideration a longer timescale.’ boom coming to an end? global relationship manager, said: ‘We are very Another ominous question about the UK hotel With the credit crunch biting other parts much open for business,’ he said, adding that industry was: has it peaked? Many expressed of the property industry, are hotels safe? And ‘a welcome normality has come back to the concern that, after a successful run, a leaner what of environmental concerns, the weak lending market’. But developers and investors period may soon be upon the industry. Robert dollar and a lack of sites? But the crucial still need to obtain funding. Barnard, a partner at PKF, said prospects for question everyone was considering at Property ‘Use sector-specific advice,’ Helliwell urged deals on the scale of Blackstone’s £12.9bn Week and PKF’s Hotels UK conference in central prospective borrowers. He also stressed the purchase of Hilton this year had ceased. London last week was: where’s the money? importance of rigorously testing an Graham Dodd, senior vice-president at Tim Helliwell, head of hotel finance at investment’s cashflow to ensure viability. Jones Lang LaSalle Hotels, noted a mismatch Barclays, attempted an answer for the 170 Peter Anscomb, head of the travel and hotels in perceptions of price between buyers and delegates. ‘Traditionally you have lenders who team at the Royal Bank of Scotland, suggested sellers, highlighting the abandoned sales of lend straight off the balance sheet and then you the restructuring of hotel companies into Malmaison and Hotel du Vin in September. have debt that is packaged and sold on, but the operational and property entities along There needs to be more distinction between more sophisticated end of the market is shut ‘op-co/prop-co’ lines could make it easier to brands if the mid-market sector is to remain down,’ he said. obtain finance. With banks cautious to lend, robust and avoid a decline, believes Shane ‘It is harder to push deals through and, when Anscomb said bankers are looking for sector Harris, head of hospitality and leisure at sharing the risk with other banks, there’s specialists and ‘cherry picking knowledgeable Moorfield. ‘I dread the day that I open the always the chance that one bank might fall parties for the right transactions’. He also newspaper and see that the number of budget away. Deal sizes are going to go down and encouraged borrowers to take a realistic hotels in London has tripled,’ he said. 48 p41 AO hotels 1st.qxp 27/11/2007 18:28 Page 43 Analysis + opinion – Hotels UK 43 30.11.07 Quilt-edged: Guest Invest, 8 with its ‘Nest’ in London’s Bayswater (above), is one of a new breed of investment vehicles trying to kickstart a market, which, according to Graham Dodd of Jones Lang LaSalle Hotels (left, centre) has all but stalled Premier Inn, the biggest provider of hotel the opportunity to buy individual rooms in EasyHotel CEO Lawrence Alexander’s explanation rooms in Britain, was represented by UK central London serviced hotels. The company of his business model showed how ruthless and development director David Penniston, who assumes an occupancy rate over the year, from efficient successful hotel operations have to be. had a positive outlook. He hopes to enhance which it deducts half of the gross revenue as a Competing with ‘one- and two-star hotels that Premier Inn’s appeal to visitors by developing management fee and provides a minimum 6% are not fit for purpose’, EasyHotel has 71 hotels adjoining restaurants. yield in the investment’s first year. in the pipeline and six already open. ‘I want to create clear water between us Guest Invest CEO Johnny Sandelson hopes The day ended with predictions of the nature and other operators,’ he said. that the market for serviced accommodation of the hotels industry in 2020. Jones Lang Premier Inn bought Tulip Hotels in September will become ‘as fluent as selling a terraced LaSalle Hotels managing director Jonathan for £44m, as part of its plan to add another house’. But he saw the continued weakness Hubbard predicted: ‘We’ll see high-quality 100 hotels to its 500 UK and Irish properties. of the dollar as the main threat to the business. hotels in small spaces and ultra-luxury at It plans to open 38 by the end of this year. The Yotel! is another hotel concept that has been the other end of the market.’ Whitbread-owned company holds 18% of the stretching the boundaries. The operator, which Environmental concerns, notably involving UK’s budget hotels market and has signed joint has brought the Japanese concept of pay-by- air travel, pose a great threat to the hotels ventures to open hotels in Dubai and India. the-hour capsule accommodation to western industry. However, Real Hotel Company chief Europe, opened hotels in Gatwick in July and executive Michael Prager was confident about ROOMS OF THE FUTURE openings at Heathrow and Amsterdam’s the future of international travel. ‘Travel will Innovation was another key theme of the day. Schiphol airport are imminent. Yotel! finance become more expensive but I can’t see air New models and schemes are being created director Hugo McNestry hopes to expand into travel being brought to an end,’ he said. 9 to rejuvenate customers’ and investors’ interest city centres, ‘stuffing rooms everywhere we and to keep the market healthy. can’ in London, Hong Kong and New York. Hotels UK was also sponsored by Premier Inn Guest Invest’s ‘quilt-edged investment’ offers Further exploring the theme of innovation, and Jones Lang LaSalle Hotels.