MIPIM 2020 HOSPITALITY AND TOURISM SUPPLMENT

SPECIAL REPORT

PREVIEW February 2020 www.mipim.com

Hospitality & Tourism

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CONTENTS

4

NEWS

Meininger expands into Warsaw. Reykjavik landmark to house Radisson Red

9

FEATURES

Overview 9 What are the key trends emerging in the hospitality sector? Emerging concepts like bleisure are blurring the edges between traditional formats. What does this mean for branding and for the physical form of hotel properties?

Investment trends in hospitality 13 The hospitality sector, valued at over $500bn worldwide, has seen a surge in investment activity as investors wake up to the secure long-term income streams it can provide.

Who are the key players and what locations and product types are they chasing?

13

18

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Taster of exclusive research to be unveiled at MIPIM

Formats: Brands flex their offer 21 Airbnb has given travellers a way of bypassing the traditional hotel. How are hospitality brands fighting back and what does this mean for the properties they occupy?

Mixed-use 23 The role of hotels in mixed-use buildings is changing as owners look to leverage hotel facilities as a key attractor for residential and office occupiers Innovation in hospitality 25 How is tech changing the operational matrix and the user experience in hospitality?

23

New forms of hospitality 27 The skills of the hotel operator are increasingly in demand as real estate investors struggle to provide the required service levels in new formats such as co-living and coworking IHG profile

29

The hotel of the future 31 How will global heating, new forms of communication and social change impact the hospitality sector?

31

DIRECTOR OF PUBLICATIONS Paul Zilk MARKETING DIRECTOR Mathieu Regnault EDITORIAL DEPARTMENT Editor in Chief Graham Parker Sub Editor Joanna Stephens Proof reader Debbie Lincoln Contributors Chris Bown, Steve Killick, David Sands Editorial Management Boutique Editions Head of Graphic Studio Herve Traisnel Graphic Studio Manager Frederic Beauseigneur Graphic Designer Carole Peres PRODUCTION DEPARTMENT Publishing Director Martin Screpel Publishing Manager Emilie Lambert Printer Riccobono Imprimeurs, Le Muy (France). Reed MIDEM, a joint stock company (SAS), with a capital of €310.000, 662 003 557 R.C.S. NANTERRE, having offices located at 27-33 Quai Alphonse Le Gallo - 92100 BOULOGNE-BILLANCOURT (FRANCE),VAT number FR91 662 003 557. Contents © 2020, Reed MIDEM Market Publications. Publication registered 1st quarter 2020. ISSN 1962-9974. Printed on PEFC certified paper.

All MIPIM print products are printed on paper from sustainably managed sources using printing processes that comply with the PEFC standard.

MIPIM PREVIEW • 3

• Hospitality & Tourism

news

CALEUS AND GIC ACQUIRE HOTEL DE ROME IN AN off-market deal, German asset manager Commerz Real has sold Hotel de Rome in Berlin to Caleus Capital Partners, an investment partnership consisting of Caleus and Singapore’s sovereign wealth fund GIC. The five-star hotel on Behrenstrasse in BerlinMitte, the city’s central district, operates under the Rocco Forte brand and had been owned by Commerz Real’s openended Hausinvest fund since 2007.

Constructed in 1889 as the headquarters of Dresdner Bank, the building later housed the East German state bank.

It was fully renovated in 2006, retaining as much of the original classical architecture as possible, while injecting a contemporary interior design.

Hotel de Rome now has a gross floor area of 18,300 sq m, accommodating 108 rooms and 37 suites. It also offers a ballroom and a spa area with a 20-metre pool in what was the former vault.

The purchaser was advised by JLL.

Hotel de Rome in Berlin

Meininger takes ‘hybrid hotel concept’ to Warsaw MEININGER Hotels has signed for its first property in Warsaw, marking its market entry into Poland. Together with new openings planned for Israel, the US and France, the deal sees Meininger pushing into new markets as it stays on track to manage around 34,000 beds by 2024.

Meininger plans to modernise the existing building in Warsaw from scratch, the aim being that, by the end of 2022, it will offer 151 rooms with a total of 456 beds. “The Meininger Hotel Warsaw will appeal to individuals, groups and business travellers with its room structure consisting of double rooms and private multi-bedrooms, as well as dormitories,” said Doros Theodorou, chief commercial officer of Meininger Hotels. “Our guests can look forward to enough social spaces for shared community experiences, as well as our unique,

flexible room concept.”

CEO Hannes Spanring said there was a gap in the Warsaw market for Meininger’s format.

Since 2013, 26 new hotel properties have been built in Warsaw.

However, the market is dominated by the mid- and upscale segment, meaning that the budget and economy segment still has plenty of development potential

in terms of international quality standards.

“With our unique hybrid hotel concept, which combines the service and comfort of international budget hotels with the exceptional facilities and flexible room structure of hostels, our goal is now to become the market leader in this segment in Poland,” Spanring added.

Meininger Hotels set to open in Warsaw by late 2022

Disneyland joint adventures A PORTFOLIO of three resort hotels at Disneyland Paris totalling 1,183 rooms has changed hands in a €240m deal. The themed hotels, which are adjacent to one another, were acquired off-market in two separate transactions by Benson Elliot Real Estate Partners and Schroder Real Estate Hotels (recently rebranded from Algonquin).

Benson Elliot and Schroder have bought Dream Castle and Magic Circus, both four-star hotels, from Warimpex and UBM, while Explorers was purchased from another joint venture managed by Schroder.

Developed between 2003 and 2007, the three hotels have a profitable trading profile and generate strong cash flow. While the properties have benefitted MIPIM PREVIEW • 4

from substantial investment, the new owners say significant opportunities remain to create further value through the implementation of targeted asset-management initiatives.

Benson Elliot principal Marc-Olivier Assouline said: “The portfolio represents a collection of high-quality, cash-flowing assets

acquired at a substantial discount to replacement cost. The hotels present opportunities to optimise value and grow income through targeted refurbishment programmes. This transaction marks another partnership with the former Algonquin team, with whom we have worked successfully in the past.”

The four-star Magic Circus hotel at Disneyland Paris

• Hospitality & Tourism

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PUBLI-RÉDACTIONNEL

Johanna Capoani, Head of Hospitality Portfolio Management, Swiss Life Asset Managers France

« Investing on this scale allows us to capitalise on the diversity of products available »

© Swiss Life Asset Managers France

Determined to make Europe its playing ground, Swiss Life Asset Managers invests in hotels within all of the continent’s main tourist centres.

Johanna Capoani, Head of Hospitality Portfolio Management, tells us why Europe is the right scale for minimising risk and optimising returns.

What is the weighting of hotels in your investment activity?

Overall, last year, Swiss Life Asset Managers generated trading volumes of just under €10 billion in Europe. Around €500 million was invested in project development.

At the end of June 2019, Swiss Life Asset Managers managed a pan-European real estate portfolio worth €86.5 billion.

Globally, we present a solid track record in the hospitality industry since our first foray in 2013, and it represents a growing proportion of our business activity. With a total of 80 hotels at the end of June 2019, the hospitality industry accounted for 9% of our assets under management. And we have great ambitions for the sector, thanks in particular to our Swiss Life REF (LUX) European Hotel Fund SA, SICAV-SIF created

at the start of 2019. This is the fourth fund we have launched for this type of asset, which is very popular with our investors.

Managed by Swiss Life Asset Managers Luxembourg and advised by the Swiss Life Asset Managers hospitality industry skills centre, it is fully in line with our strategy of adopting themed investment solutions across Europe presenting core/core+ yields.

Why do you think that Europe is the right scale in terms of hotel investment?

Investing on this scale allows us to capitalise on the diversity of products available. France is still the number one tourist destination in terms of the number of visitors, while

Spain is most popular in terms of nights spent on leisure trips (ahead of Italy).

Germany offers a wide range of cities where business tourism is synonymous with stable revenue. Each country has its own drivers.

Our aim is to achieve a balanced portfolio.

As such, we aim to meet the expectations of institutional investors. Everyone knows that diversification – both geographically and sector-wise – is a key factor in minimising risk. It is also within this context of securing investments that our fund takes a longterm positioning. This avoids investors being exposed to the peaks that may be experienced in the market – considered more volatile than the office sector – and allows them to benefit from solid yields over the long term.

Hotel Opera Faubourg, Paris

news

• ANGELO Gordon and EQ Group have completed the acquisition of five hotels in Paris from Gecina for €181m.

The hotels, all operated under Intercontinental and Marriott brands, total 814 rooms. Holiday Inn Paris Notre Dame, Holiday Inn Paris St Germain des Pres, Holiday Inn Paris Versailles Bougival and Courtyard Paris Boulogne will be managed directly under franchise by EQ Hotels, while Courtyard Paris Roissy Charles de Gaulle will be managed by Marriott International and asset managed by EQ. • AVIVA Investors has signed a £106m investment deal with developer Rockwell to fund the development of a 400-bed Premier Inn in London’s Docklands. Whitbread, Premier Inn’s parent company and the UK’s largest hospitality group, will take a 30-year lease on the hotel and restaurant, which will become the brand’s largest hotel in central London. The 30-storey development, designed by architects SimpsonHaugh, will provide a gateway to Canary Wharf and is scheduled for completion in early 2022. CBRE advised Rockwell; Avison Young represented Aviva.

• EUROPA Capital has sold the 311-room Radisson Collection hotel in Warsaw to Wenaasgruppen, a Norwegian family-owned fund. The hotel will continue to be run

by Radisson Hotel Group under a long-term management agreement. The property is located in the heart of Warsaw’s Central Business District and is within easy reach of major tourist attractions. The hotel re-opened in June 2019 following a six-month refurbishment and was rebranded from a Radisson Blu to a luxury Radisson Collection hotel. JLL advised Europa Capital on the deal.

Iceland’s first Radisson Red will be Reykjavik landmark

Radisson Red Reykjavik will be housed in a 17-storey ocean-front tower

RADISSON Hotel Group has unveiled the design concept for the latest edition of its Radisson Red format in Reykjavik. The new city-centre property — the first Radisson Red in Iceland — is set to open its doors in 2021.

The 203-room Radisson Red Reykjavik will be housed in a 17-storey ocean-front tower, offering guests panoramic views of the sea, city and surrounding mountains.

“Radisson Red hotels inject new

life into hospitality through informal services, a social scene that’s waiting to be shared and bold design that kick-starts the fun,” said Tom Flanagan Karttunen, area senior vice-president of Radisson Hotel Group in Northern Europe. “It’s the perfect match for Reykjavik.”

The roof of the hotel will house a two-level bar and viewing terrace, accessed from a glazed panoramic lift offering spectacular views across the city.

“The idea for this new landmark hotel is to create a special building that will reinforce the sense of the city of Rekyjavik and the landscape of Iceland to create a new and exciting destination,” said architect Tony Kettle, founder of Kettle Collective. “It’s inspired by the history of the architecture and the geology of the land, with its colourful buildings painted red, black and white, and dramatic natural phenomena of basalt columns, and red and black lava flows.”

DTZ buys prime Mayfair site DTZ INVESTORS has bought the freehold interest in the fivestar Como Metropolitan Hotel on London’s Park Lane for over £70m.

Freehold investment opportunities in London’s exclusive Mayfair district rarely become available and the property, which has 144 bedrooms, a gym, a spa and events spaces, is situated among a row of the finest and most famous hotels in London.

The site houses the majority of the Como Metropolitan Hotel, together with nine luxury apartments operated by the hotel, the majority of the renowned Colony Club casino and part of Nobu restaurant.

MIPIM PREVIEW • 6

Tony Brothwell, fund manager at DTZ Investors, said: “We have been looking to purchase a secure, prime, central London hotel investment for some time and this is just about as good as

it gets. The asset will be a core holding for Strathclyde Pension Fund, bringing the portfolio size to over £2bn.”

Knight Frank advised DTZ Investors on the deal.

Como Metropolitan Hotel on London’s exclusive Park Lane

• Hospitality & Tourism

Paris, 23 January, 2020 – Iconic and visionary creator Philippe Starck is part of an expert line-up at MIPIM 2020 which is set to expand upon the global hospitality trend this year.

Organised by Reed MIDEM, a subsidiary of Reed Exhibitions, MIPIM, the World’s Leading Property Market, will be held in Cannes from 10 to 13 March 2020.

As hotel investment returns to the fore for global funds, and the hospitality theme contaminates every sector of the real estate industry, MIPIM participants will be able to check in with a richly-focused programme comprising: • A Hospitality & Tourism summit behind closed doors (Thursday, 12 March at 8am) • A dozen dedicated conferences and networking events • An exhibition area featuring Accor, Hilton, easyhotel. com, Horwath HTL, Tui Hotel & Resorts, among others • A special category in the MIPIM Awards competition

THURSDAY 12 MARCH AT 16.00 Palais des Festivals, Cannes, France Please come join us! mipim.com

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OVERVIEW

Rooms for growth The smart money is checking into the hospitality sector as investors turn their attention to alternative asset classes in their pursuit of higher returns and the security of diversification. Graham Parker reports

0

VER the past decade, the property-investment industry has fallen in love with beds.

Any property type with beds in it, from care homes and student accommodation to health facilities and, of course, hotels, is suddenly hot property.

The deal flow has increased dramatically as investors shift asset allocations from core to ‘alternative’ or ‘operational’ property.

This is partly because hotels offer growth at a time when traditional investment products have been showing sluggish returns in a low-interest environment. It’s partly because hotel leases tend to have longer terms than those in mainstream commercial property, which matches the need of investors with long-term liabilities, such as pension funds.

And it’s partly because the performance of the asset is directly tied to the performance of the operator. In offices, shops and logistics, rents reflect the wider market but, in hotels, investors can achieve superior returns by working alongside a skilled operator, often harnessing the power of a global brand.

So far so good. But hotels are not without their risks. The biggest is technological disruption.

The rise of Airbnb in recent years has allowed guests to find lodging outside the traditional hotel industry. But Airbnb’s growth may be slowing, with cities such as Barcelona clamping down on short lets of residential property, not only because they take much-needed stock out of the housing mar-

Hotels offer growth at a time when traditional investment products have been showing sluggish returns in a low-interest environment MIPIM PREVIEW • 9

ket, but also because of the disruption that guests can cause in residential neighbourhoods.

Equally, the power of platforms like booking.com is seen as a threat to operators’ performance by driving down room rates, charging commission and eroding the relationship between guest and hotel brand.

The global hotel giants are fighting back, using their loyalty programmes to reward guests who book direct. And they are also rolling out multiple new formats to attract guests who have come to enjoy the flexibility and informality that home stays offer.

Looking further ahead, we are also witnessing the start of what could become an existential threat to the hospitality sector.

The inconvenient truth is that the tourist industry is deeply unsustainable. Already, the rise of ‘flight shaming’ is leading some guests to question whether they really do need to travel in order • Hospitality & Tourism

to do business or enjoy a holiday.

So far, hotel operators’ response has largely been limited to ditching plastic straws and rewarding guests who use less water. The eco-hotel could be the next big thing.

But for now, the hotel sector remains an attractive proposition and in this MIPIM News supplement we look at the forces driving performance in the capital and operational markets.

One key trend highlighted is the way hospitality is moving from hotels into myriad other sectors. Owners of co-living, student-housing, senior-housing and multi-family properties are all looking to add value by increasing the service they offer to their residents. Never have the skills of the hotelier been in greater demand.

CONFERENCES & EVENTS AT MIPIM

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HOTEL INVESTMENT

Time for beds?

Now estimated to be worth upward of $500bn — and growing — the hospitality sector is looking increasingly attractive to traditional investors looking to the non-core sectors for longer-term returns.

Graham Parker reports

New York Palace hotel in Budapest, Hungary

c

OMMERCIAL real estate investors are increasingly willing to step outside their comfort zone and consider new forms of property to invest in. Where once they may have been unwilling to consider anything other than the traditional core sectors of offices, retail and industrial, they are now actively looking at other asset classes that offer higher re-

turns and the benefits of diversification. And hotels have been among the biggest beneficiaries of this process.

The latest data from CBRE shows that, in the third quarter of 2019 alone, €23.3bn was invested in hotels across Europe.

And the broker says it was only the lack of properties for sale that prevented this figure from being even higher.

The UK remained the primary

destination for hotel investment in the region, capturing 27% of the capital deployed. But Italy was the fastest-growing market, with investment volumes up 72.9% year-on-year in the 12 months to September 2019. The acquisition of a 15-hotel portfolio by Oaktree helped to elevate Italy into the third most-invested European hotel market.

In France, hotel transaction volumes over the year reached

MIPIM PREVIEW • 13 • Hospitality & Tourism

€2.6bn — up 47% year-onyear. AccorInvest’s purchase of the Novotel Paris Centre Gare Montparnasse from Credit Agricole Assurances and Amundi Immobilier was one of the largest single-asset transactions.

And CBRE says Germany regained its position as Europe’s second-most invested hotel market, despite investment volumes being down 18.2% yearon-year.

HOTEL INVESTMENT One significant trend highlighted by CBRE is the growing popularity of resorts, which offer investors more attractive yields than city-centre hotels.

Key resort deals in 2019 included the €105m sale of the Capri Palace in Italy to Dubai Holding, which will re-open it under its Jumeirah brand.

Paul Kapiris, director of the CBRE hotels EMEA brokerage team, says: “Despite the overall decline in European hotel investment volumes, investor interest remains strong, particularly in Spain, Italy and the Netherlands. We are seeing increased interest in resort markets, which are proving attractive to more traditionally conservative capital, who have become more comfortable with leisure markets in their hunt for higher returns.”

Paul Kapiris:

“We are seeing increased interest in resort markets, which are proving attractive to more traditionally conservative capital”

Capri Palace in Italy, acquired by Dubai Holding

Some investors are willing to go even further off-piste in search of enhanced returns. In mid2019, for example, BlackRock Real Assets acquired a pan-European hostel portfolio as part of a €100m joint venture with hostel operator Amistat International. The acquisition comprised a seed portfolio of three assets, with an active pipeline of another six.

Thomas Mueller, BlackRock’s European head of value-add-

ed real estate, says the deal presented “an opportunity to gain early-mover access into an increasingly institutional but undersupplied asset class”. He adds: “The demand profile for hostels is particularly appealing, given the lack of quality modern stock in the market, which is characterised by fragmented ownership and very low brand penetration.”

Thomas Mueller:

“The demand profile for hostels is particularly appealing, given the lack of quality modern stock in the market” Last year also saw a rare example of a real estate investor taking an equity stake in a hotel operator when the Otto family — owners of German shop-

COVIVIO TARGETS CITY CENTRES THE HOTEL investment market got off to a strong start in 2020 with Covivio Hotels’ €573m acquisition of a portfolio of eight mainly five-star hotels in Rome, Florence, Venice, Nice, Prague and Budapest from US-based alternative-investment specialist Varde Partners. The portfolio of luxury hotels in prime locations includes Rome’s Palazzo Naiadi,

Prague’s Carlo IV, Nice’s Plaza and Budapest’s New York Palace.

Totalling 1,115 rooms, the hotels will be operated by the NH Hotel Group (part of Minor International) under the NH Collection, NH Hotels and Anantara Hotels & Resorts brands. NH has signed 15-year triple net lease contracts with a minimum guaranteed variable rent and an option to extend

the leases to 30 years.

Elsewhere, Covivio, which has a €6.9bn hotel portfolio across 12 European countries, made its Irish debut with the €45.5 m purchase of a four-star property in the centre of Dublin, operated by Hilton under a management contract. The investment produces a yield of 6.4%.

“Covivio is continuing the European development of

MIPIM PREVIEW • 14 • Hospitality & Tourism

its hotel business by establishing itself in the city centres of the 20 most important tourism destinations in Europe,” says Dominique Ozanne, Covivio’s deputy CEO. “At the same time, we are strengthening both the quality of our assets, 85% of which are located in the large European cities, and our partnerships with leading hotel players in their segments.”

HOTEL INVESTMENT ping-centre giant ECE — acquired a 25% share in the Ruby Hotel group, which was founded in 2013 with a ‘lean luxury’ philosophy. Ruby currently operates seven hotels and has another 10 under construction or in planning.

ECE CEO Alexander Otto says: “ECE Group is already among the three largest hotel developers in the DACH [Germany, Austria and Switzerland] region. By getting access to the operational expertise of Ruby Hotels and combining it with our existing competences in developing hotels, we will gain an excellent position to further strengthen our hotel-investment activities.”

For Ruby CEO Michael Struck, the partnership provides his group with access to ECE Group’s pan-European network and development expertise.

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ECE’s Alexander Otto

Ruby Hotels’ Michael Struck

“Based on the flexible room-design concepts and the mixeduse approach of the building design, we see major opportunities in the extension or conversion of inner-city retail space,” he adds.

For example, ECE has already signed Ruby to create a hotel

out of unused office space at its Ko Galerie site in Dusseldorf.

ECE is also planning a congress hotel and a long-stay concept for Marriott in Hamburg’s HafenCity district.

So what of the year ahead?

According to Charles Human, managing director at broker and

investment advisor HVS Hodges Ward Elliott, those who are already invested in the hotel sector may be reluctant to sell, depressing investment turnover.

“As hotel ownership has shifted towards longer term, institutional investors in recent years, the lack of available stock for sale is likely to be even more visible in 2020,” he predicts. “This in turn will exacerbate the mismatch between the amount of capital looking for investment opportunities and the number of suitable investment opportunities, which may result in the 2020 transaction volume being below that of 2019, with yields potentially falling even further.”

CONFERENCES & EVENTS AT MIPIM Hotels changing the face of cities through experience 12 March, 15.15-16.00 BEIGE ROOM (Palais 3)

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MIPIM PREVIEW • 15 • Hospitality & Tourism

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Set on a 200 hectares private freehold island, the development includes eight luxury 5-star resorts, 500+ villas and branded residences, a championship 18-hole golf course, world-class marina and retail destination.

Whilst being located in the midst of Indonesia’s marine biodiversity there will also feature a cancer medicine development centre with enriched rehab facilities.

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Sustainability – Social Impact – Innovation www.by-m.com The Marina City, Sweden By-M Set to be one of the leading sustainable and exciting developments in Scandinavia and the whole Northern hemisphere, the Marina city based on 250 hectares site has the following: 5000+ homes, world-leading development of AI and high-performance computing, smart infrastructure, enriched rehab and a world-class destination with heated blue lagoons, deep water harbour and a warm water marina in the most beautiful part of the Swedish Archipelago.

Working with

Please visit our stand on Level 3 to find out more about our real estate sales, investment opportunities and partnership programs. contact@by-m.com

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MKG CONSULTING & MIPIM WILL REVEAL THE RESULTS OF THEIR INVESTMENT HOSPITALITY REPORT DURING THE EVENT.

TUESDAY 10 MARCH, 3PM. Brands’ penetration rate of global hotel supply 7.5M

by continent 2019

6M

32,2%

4.5M

51,3%

3M

43,8%

23% 74,3%

1.5M

Branded rooms Penet. Rate (%)

20,2%

Non branded rooms

Central & South America

Hotel room supply by country 2019

>3 000 000 rooms >500 000 rooms >250 000 rooms >100 000 rooms <50 000 rooms

Evolution of hotel room supply 2009-2019 by continent 8M North America Central & South America Europe Africa & Middle East Asia & Oceania

6M 4M 2M 0 2009

MKG Consulting / OK_Destinations Observatory – 2019

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

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Revenue per Available Room in leading European cities 2019 (€ excluding taxes) 179€ 131€

122€ 123€

EU. TOP

15

103€ 104€

123€

131€

131€

131€ 135€

131€ 137€

131€ 146€

131€ 148€

187€ 131€

151€ 131€

104€

CITIES

RevPAR, or revenue per available room, is a performance metric in the hotel industry that is calculated by dividing a hotel’s total guestroom revenue by the rooms available. Alternatively, RevPAR can be calculated by multiplying the occupancy rate by the average daily rate.

Growth in occupancy and average daily rate in European cities 2018-2019

12 10 8 6 4 2 0 -2 -4 -6

Growth in Occupancy Rate Growth in Average Daily Rate

MKG Consulting / OK_Destinations Observatory – 2019

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INNOVATION & TECH AT

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EXHIBITION AND DEMO ZONE Visit the MIPIM Innovation Forum to network with the leaders of the whole value chain • 1 000 sqm exhibition area • 7 500+ unique visitors • 30% of CEOs visit the MIPIM Innovation Forum

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new formats

Accor’s greet concept

Brands flex their offer The much-discussed ‘Airbnb effect’ has forced traditional hotels to up their game to win back travellers seduced by lower costs and a more ‘authentic’ experience. Chris Bown looks at the new hotel formats — from edgy hostels through niche-tapping brands to quirky ‘collections’ — that are enticing visitors back into the foyer

T

RAVELLERS have never had more choice. With innovators such as Airbnb opening their eyes to accommodation alternatives of many sorts, the world has become a much more exciting space.

And traditional hotels are having to fight back. In an age of flexibility and variety, the traditional promise of a standard hotel room no longer suits many guests. Sure, the business traveller may still appreciate a hotel’s brand promise but, for families and weekenders, other options are looking more attractive, whether that’s an aparthotel room with a mini kitchen or a city-centre apartment with extra

space for the kids.

There have been a variety of responses from the major hotel groups to this changing landscape. One response has been to launch more new brands, each aiming to tap into a niche in the market and answer a consumer need that has been poorly met.

In 2014, for example, Hilton launched Canopy, an upper-upscale lifestyle brand embedded in local neighbourhoods, and Curio – A Collection, aimed at travellers seeking “local discovery and authentic experiences”.

Tapestry Collection by Hilton followed in 2017 and Motto

By Hilton in 2018. The latter is an affordable lifestyle offering that caters for groups with

hostel-style spaces, as well as individual rooms. In early 2020, Hilton added another lifestyle brand — Tempo — to the mix.

Elsewhere, InterContinental has launched Atwell, an all-suite brand, while Marriott is growing its Moxy brand, aiming at a younger crowd.

Explaining Motto to a conference audience last year, Patrick Fitzgibbon, Hilton’s senior vice-president for development, EMEA, said the brand had been three years in development.

“Something hotels have not done well for years is accommodate groups quickly and simply,” he admitted. Motto, he added, aims to change that with its flexible layouts within a modular

MIPIM PREVIEW • 21 • Hospitality & Tourism

structure, which allow rooms to be linked. It has also reinvented the traditional connecting door between rooms.

Patrick Fitzgibbon:

“Something hotels have not done well for years is accommodate groups quickly and simply” As ever, any new concept needs to appeal to both hotel investors and guests. As Fitzgibbon pointed out: “If you can put these in the right place, you can yield right.”

A Motto, he added, is expected to cost around £80,000 per key, even in city-centre locations.

new formats

Linked rooms in Motto by Hilton

Accor, meanwhile, has added a softer flexible brand called greet to its porfolio and is growing the presence of its edgier brands 25hours, Jo&Joe and Mama Shelter. These are focused on delivering an experience on the ground floor in the form of exciting food and beverage, and entertainment. Mama Shelter, for example, delivers 56% of its revenues from F&B, while premium brand 25hours is centred around a ‘social hub’ that aims to deliver a destination for locals as well as hotel guests. Jo&Joe, in common with Hilton’s Motto, is a hybrid hotel/hostel offering, allowing groups to stay together in larger communal rooms.

Alongside the big players, new market entrants continue to arrive, demonstrating that innovation often comes from smaller upstarts. Typical of these is German brand Ruby Hotels, which

STAND COLLECTED WHEN is a hotel brand not a brand? When it’s a ‘collection’.

Collection brands allow the major hotel groups to add variety and flexibility to their portfolios by offering a marketing platform to independent hotels, without demanding they redecorate their properties

launched in 2013 with a ‘lean luxury’ concept. Backed by Austrian investors Soravia Group, a private-equity fund, entrepreneur Michael Hehn and a German family company, Ruby has eight hotels open and a strong pipeline of projects in development in key European cities.

The hostel market has also come of age, shifting from a purely value-oriented offer to backpackers to a trendy option that suits groups travelling together. As a result, key hostel brands have attracted early-stage investors and are growing stronger as they develop European networks.

The advantage for guests is the choice of accommodation on offer, from cheap rooms with shared bathroom facilities through en-suite hotel-style rooms to the larger dormitory-style rooms favoured by groups visiting a city together.

Hostel operators also realised early on that their offer must include attractive shared spaces, with generously proportioned lounge areas.

Generator was one early brand in the hostel space. It now has properties in 13 cities across Europe and has also launched into the US market. In 2017, Queensgate Investments paid €450m for the business, taking it on from early-stage investors Patron Capital and Invesco Real Estate. In mid-2019, Generator spent a reported $400m buying US brand Freehand Hotels, giving it further traction across America.

More recently, UK-listed hostels group Safestay has been building momentum, acquiring operating sites around Europe. Since October 2018, the group has doubled in size. At the end of 2019, it acquired hostels in Warsaw, Prague and Bratislava from Dreamgroup Management, tak-

in specific corporate colours or meet strict design standards. For guests, the promise of variety backed by the chance to earn or spend loyalty-programme points is popular. And for hotel owners, being part of a brand marketing machine typically increases visits from regular, higher spending corporate guests.

The collection format is

now a decade old, but is accelerating in significance as hotel guests look for something that is locally connected and less corporate in style. Marriott launched its Autograph collection brand in 2010 and, with the acquisition of hotel group Starwood, took on its Tribute brand. It also has an arm’s-length collection named Design Ho-

MIPIM PREVIEW • 22 • Hospitality & Tourism

ing its network to 21 properties.

Safestay chairman Larry Lipman says his company’s growth is backed by strong consumer demand. “Our operational success confirms that the Safestay model is the right one for our guests,” he says. “Our focus is now firmly on expanding our network and making Safestay one of the largest hostel operators in Europe.”

Also growing in prominence is hybrid hotel-hostel operator Meininger. The European group cut its teeth delivering accommodation for school and college groups, with large properties mixing floors of dormitory space with floors of hotel rooms.

Meininger has 28 properties in European cities, with a pipeline of 15 more, including its first US property. At press time, in early 2020, Meininger was poised to accelerate its growth in the hands of new investors. tels. Hilton launched Curio – A Collection in 2014, following it up with Tapestry Collection three years later. In 2016, Hyatt entered the space with its Unbound Collection brand. More recently Accor launched greet, a sustainable tourism offer that combines environmental considerations with a socially-responsible approach.

MIXED-USED FORMATS

Cycas’ Moxy and Residence Inn in Amsterdam were developed in a former docklands area

All in the mix Hotels are increasingly seen as a vital component in mixeduse projects, as owners seek to leverage hospitality to attract residential and office occupiers. Chris Bown reports

W

ITH increasing urbanisation, city planners and investors are turning more and more towards larger, masterplanned projects to deliver vibrant neighbourhoods. Bringing together a mix of different uses and building types can enrich an environment and bring new life to an area around the clock.

Today, the idea of an office district that is dead and empty at evenings and weekends is viewed as a missed opportunity.

Likewise, investors in out-oftown retail developments now look to bring in restaurants and other leisure elements to increase the appeal of the destination. And, more than ever, a hotel is on the list as a key component of many mixed-use projects.

Alongside accommodation, hotels deliver meeting spaces, and food and drink amenities. And

at the same time, local restaurants, bars and retail can benefit from visits by hotel guests. For investors, there is the attraction of an income based around a different type of use — and hotels provide daily feedback on how they are performing in the form of occupancy reports.

Hotels can also act as a pump primer, allowing a developer to pre-sell this element of a project, making financing easier.

For investors, the mix of uses in a project is increasingly viewed

Cycas’ Matt Luscombe: “Not just about rooms. It’s about amenities too”

as a defensive play. Patrizia Immobilien, for example, paid €100m in 2018 for the Forum Landsberger Allee in Berlin — a project containing an 870-bed Generator Hostel and a 155room Park Plaza hotel, alongside offices, retail and parking.

At the time of the deal, Patrizia’s head of commercial acquisitions, Daniel Dreyer, said: “The asset, with its diverse user mix of offices, practices, hotels, hostels and retail, is a very attractive proposition for private investors looking to invest in one of Germany’s most liquid cities.”

Hotel management group Cycas Hospitality is often involved at the early stages of hotel development. Cycas CEO Matt Luscombe says a hotel can often be “really important for developers — and not just the rooms. It’s about the amenities too.”

Cycas has experience of acting

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as a trailblazer in urban regeneration in Amsterdam, where its Moxy and Residence Inn hotels were developed in a former docklands area that is earmarked for office redevelopment. “The hotel often has to open early in order to be part of the offer,” Luscombe says. He adds that, in this case, a slow start was factored into the rental agreement, with a lease based around a percentage of revenue.

Tapping into mixed-use projects can also draw on the benefit of their transport connections. Cycas launched a Holiday Inn and Staybridge Suites in Stratford, London ahead of the 2012 Olympic Games. There, the hotels sit above the major Westfield shopping-centre and rail interchange. “It’s got a breathtaking set of connections,” Luscombe says, adding that hotel guests are spoilt for choice in terms of eating out or going shopping just a few floors below their room.

MIXED-USED FORMATS According to Luscombe, hotels have also become a key element in urban regeneration: “One of the big drivers is the decline in brick-and-mortar retail,” he says. As shoppers migrate to online, hotels and residential are bringing life back into town centres. “There are some absolutely stellar spots appearing,” Luscombe adds. “We’ve looked at several this year.”

managing director of developer of IES Immobilien. Completion is planned in 2022.

Matt Luscombe:

‘One of the big drivers is the decline in brick-andmortar retail. There are some absolutely stellar spots appearing” One project inn which Cycas is playing a central role is a development in Slough, to the west of London. “It’s the council’s land and they were desperate to have a hotel there as an amenity, alongside a residential component on the site,” Luscombe says. A twinned development will see a hotel branded with Marriott’s playful Moxy brand, alongside serviced apartments under the Residence Inn brand, designed for longer stays. “I think the hotel will do very

UBM is developing a 700-room hotel in Vienna’s LeopoldQuartier

well,” he adds. “It’s a double win for the council.”

For leading European developer UBM, hotels form a key element of many projects. “The risk-return profile of hotels is unbeatable for investors in the current market environment,” says Andreas Zangenfeind, UBM Development’s head of transactions.

Andreas Zangenfeind:

The risk-return profile of hotels is unbeatable for investors in the current market environment”

Union Investment’s Y-Towers mixed-use complex in Amsterdam includes a 33-floor hotel tower — the tallest in the city

Among UBM’s mixed-use projects are the LeopoldQuartier in Vienna, where a 700-room hotel will be developed alongside 700 affordable open-market apartments and serviced business accommodation. In Mainz, UBM is nearing completion on a 216room Super 8-branded hotel, with adjacent Waterkant apartment development. The hotel was forward-sold to an investor in January 2019, realising €24m a year ahead of completion in a deal brokered by Colliers International. Hotel operator GS Star had already committed to a 20-year lease on the completed building.

Among those keen to acquire hotels in mixed-use developments is German powerhouse Union Investment. With hotels currently much in demand, Union frequently acquires properties for its funds under management, ahead of completion. A typical recent off-plan purchase was Union’s €460m acquisition in autumn 2019 of Y-Towers in Amsterdam. The project includes a 33-floor hotel tower — the tallest in the city — and a second residential tower containing 174 flats and a serviced-apartment scheme.

“The sale of our share in the project to Union Investment means that work on realising the Y-Towers development can now proceed,” says David Hofmann,

MIPIM PREVIEW • 24 • Hospitality & Tourism

Often, the flexibility that hotels offer in terms of layout means that historic buildings can be re-used in a far more effective way than if they were to be converted into offices or residential.

Grand interiors can be repurposed as publicly accessible entrance lobbies, meeting spaces and ballrooms. In Copenhagen, for example, developer and investor Hines is redeveloping an urban site to include prime retail space, plus a 243-room hotel to be operated by brand 25hours.

“Projects such as this, where we were able to celebrate the ancestry of the true heart of historic Copenhagen while also creating investment value in the fund’s strategy, are the most satisfying to follow to fruition,” says Paul White, Hines Europe’s managing director, investment.

Austria’s Signa Group is one major European developer invested in mixed-use projects. In 2017, the group, which owns a number of retail brands, acquired Viennese property developer BAI Bautrager Austria Immobilien. In autumn 2017, Signa won an architectural competition to develop the KaDeWe project in Vienna, which includes retail, restaurants and a hotel. The competition jury praised the design by architects OMA for its “hybrid usage”.

Signa is also working with partners including vehicle manufacturer VW in Wolfsburg, Germany, where a major mixed-use development will revitalise the town centre. Hotels will feature once more in a combination of retail, leisure and residential development, which will be planned over the next two to three years.

CONFERENCES & EVENTS AT MIPIM

How hotels are integrating mixed use buildings 12 March, 12.15-13.00 BEIGE ROOM (Palais 3)

INNOVATION IN HOSPITALITY

Technology is not just reshaping the hospitality industry by personalising service and delivering operational efficiencies — it’s crucial to its future as a competitive, relevant and sustainable sector, writes David Sands

H

OTEL investment across Europe is on the rise on the back of higher demand for operational and alternative property, and investors clearly expect continued growth in this area. Yet competition in the hotel sector has never been so intense as startups, new chains and the likes of Airbnb offer customers a bewildering range of choices. With the pace of technological disruption likely to increase, is the sector the safe bet that investors think it is?

“For a large portion of the hospitality sector, profits are either stagnating or declining,” says Carine Bonnejean, managing director, hotels, at hospitality consultancy Christie & Co. “Clearly tech has a massive role to play in finding ways of making hotels more competitive. When we are doing due diligence for clients, we see that tech is moving higher up their agenda.”

Carine Bonnejean:

“Tech has a massive role to play in finding ways of making hotels more competitive”

Getting personal Check-in stations at citizenM’s Bowery in New York City

MIPIM PREVIEW • 25 • Hospitality & Tourism

Hotel developer and operator citizenM, which has 19 operational hotels and 20 under construction in prime locations in major global cities, claims to achieve higher profitability per square metre than any other hotel group. Meindert Jan Tjoeng, the group’s managing director of EU development and investment, says: “Property tech reduces our operating costs.

Instead of standing in line to check in at a desk, guests use a check-in kiosk to log in and create their own room key. This doesn’t mean there are no staff at check in — the tech frees up staff.” Tjoeng adds that citizenM sees its staff as “ambassadors”,

INNOVATION IN HOSPITALITY there to “provide a higher level of service to guests”.

As citizenM hotels are located in expensive super-prime locations, Tjoeng says the company’s business model must be as efficient as possible in order to offer “affordable luxury” to its guests.

Meanwhile, tech systems ensure that all IT is fully interconnected, so it can be controlled by management from any computer in the world. Each citizenM room has an iPad, allowing guests to customise their room experience by controlling temperature, lighting, curtains, TV and more. In turn, managers based in an off-site central location can use the IT systems to check malfunctions in rooms.

“This decreases our maintenance costs as rooms have already been checked and any issues fixed before the guest arrives,” Tjoeng adds. Such preventative maintenance reduces operating costs — as does, for example, the ability to remotely close the curtains of rooms exposed to the sun in summer to control energy costs.

Using BIM (building information systems) in the development of its hotels enables citizenM to view 3D images of properties as they take shape, which helps identify future maintenance issues and provides information about real estate overheads. This not only makes for more efficiency in the development process, but also reduces investment risk, lowers timelines and irons out errors in the design process that would otherwise need to be fixed during construction.

Another tech pioneer is The Student Hotel, which operates in the Netherlands and Belgium.

Frank Uffen is shareholder and board advisor at The Student Hotel group. “Tech for us is an enabler,” he says. “We connect the online and offline ex-

periences of our guests. Our guest population tends to be way more diverse than a regular hotel and we can have guests staying for up to one year in one location.”

Frank Uffen:

“Tech for us is an enabler. We connect the online and offline experiences of our guests” Uffen adds: “With our demographic being mostly young professionals, students and youngat-heart travellers, for whom tech is second nature, we have created a community-based loyalty across our guest base. We are not about discounts, but events and programming and opportunities that are relevant...

IT is increasingly relevant to us as we grow to new destinations and add more services and products.”

For example, technology allows The Student Hotel’s management to identify the spaces that are being under-used and re-activate them by, for example, introducing a coffee shop to a large lobby. Data on how wifi is being used in the hotels can also be fed into the design process of new properties.

According to Uffen, video technology and social media are increasingly being used to differentiate hotel brands and give potential guests a taste of the hotel as an inducement to book.

Smaller hotels and chains can really make themselves stand out in this way, he adds, citing The Standard as an example.

The global boutique brand’s latest hotel in London’s King’s Cross has become a destination for food and entertainment as well as an overnight stay. “Food and hotel bars are huge,” Uffen adds. “At The Standard, you

Christie & Co’s Carine Bonnejean: “Tech is moving higher up the agenda”

probably wouldn’t have an idea of how many people are hanging out there and how many are staying.”

Harry Fielder, managing director of hotel marketing agency Umi Digital, says the coming innovation battleground in the sector “will be over channel, not necessarily over in-property tech” such as the smart checkin. Fielder adds: “Search engines like booking.com and Expedia are a quick fix for hoteliers, albeit at a 20% fee per booking — so much so that many have neglected their own direct-booking channel, particularly those hotels that are being run with the mindset of the property as an asset as opposed to by an owner or general manager.”

Booking.com has “completely commoditised the hospitality process”, Fielder says. “It doesn’t even give hotels the guest’s email address. Therefore, there is so much room for improvement in hotels’ use of direct booking channels as a marketing tool. On a booking engine, the guest only sees the price and has no experience of the hotel or its staff.

The direct channel allows ho-

MIPIM PREVIEW • 26 • Hospitality & Tourism

tels to create and communicate their own innovative packages, branding and styling. And more importantly, they retain the customers’ data for up-selling and creating loyalty.”

Fielder points out that there is new competition to direct channels in the form of Google’s emerging ability to provide hotel rooms as well as flights.

This will enable users to create a complete travel package without ever leaving the Google infrastructure, let alone visiting a hotel’s own channel.

Meanwhile, Christie & Co’s Bonnejean observes that too many hotel companies place people in charge of tech who are not expert in IT but have just been promoted on the back of an interest in it. “You have to invest in the right people to drive this initiative,” she says.

“It’s not just about embracing tech branding and booking — you also have to think about operational tech day to day.”

CONFERENCES & EVENTS AT MIPIM Innovation in hospitality 11 March, 16.30-17.15 BEIGE ROOM (Palais 3)

NEW HOSPITALITY FORMATS

Co-living the dream

The Collective’s latest co-living development at 292 North 8th Street in Brooklyn, New York City

Keeping millennials happy while keeping up with technology and the growing emphasis on health and wellbeing is impacting on industries across the board — and the hospitality sector is no exception. Steve Killick looks at the new co-living and coworking formats that are revolutionising the hotels market

I

N WHAT must be one of the cheekiest letters sent over the last year, Munich-based architect Benedikt Hartl, co-founder of Opposite Office, has written to suggest that what would deliver a seismic boost to the popularity for UK’s beleaguered Royals would be to convert Buckingham Palace into shared housing for 50,000 people.

“With its 775 rooms and 79 bathrooms, the population density is not representative of the rest of London, and Buckingham Palace is waiting for repurposing,” Hartl’s letter read. He also observed that this would be a slick PR move in terms of “improving the social standing of Buckingham Palace”. And the Royal family could still make use of the remaining space.

While the Palace has so far remained silent on Her Majesty’s reaction to the proposal, there is no doubt that, in major European centres such as Berlin, Amster-

dam and London, shared accommodation — or co-living, as it is known — is seen as the perfect way to deliver affordable homes.

The downside is that, in many instances, the accommodation on offer is substandard, with bedrooms little more than boxes.

This allows developers to maximise profits by jamming as many people as possible into a block, knowing that, for many young people, this is the only affordable alternative to living at home.

However, the more creative of the co-living operators are borrowing from the most successful of contemporary hotels in an effort to provide bars, restaurants, cinemas, libraries, spas and gyms, alongside stylish areas in which to work and relax.

Outlets such as The Collective, which was launched in Europe and is growing fast in the US, aims at the younger end of the market by tuning into the aspirations of millennials.

Founded in London in 2010

by CEO Reza Merchant, The Collective has grown from offering small house shares to raising nearly $1bn to fund its international growth and bring to life its vision of making co-living an option for people all over the world.

The Collective opened its first European site at Old Oak in London in 2016 and 2019 saw the launch of its first US site at Paper Factory in Long Island

The Collective’s Reza Merchant: “bringing people together around ideas and experiences”

MIPIM PREVIEW • 27 • Hospitality & Tourism

City, New York. Its latest co-living development — 292 North 8th Street in Brooklyn — is its sixth acquisition in the US and its fourth in New York City.

The 224-unit building will span 10,000 sq m and will accommodate a community of 321 members. In partnership with local universities, 97 rooms are being designed for students, with the remaining 127 studios geared for nightly and monthly stays.

“In keeping with The Collective’s mission of fostering cultural exchange, learning and human connection, we believe that North 8th will be the first project of its kind for New York City,” Merchant says. “It will bring a community of all ages together in one holistic environment, designed to promote an intergenerational exchange of knowledge through shared amenities and dynamic programming.”

NEW HOSPITALITY FORMATS Reza Merchant:

“North 8th will bring a community of all ages together in one holistic environment, designed to promote an intergenerational exchange of knowledge” All residents of 292 North 8th Street will have access to a student lounge and classroom spaces, street-facing food and beverage options, an outdoor courtyard, a fitness and wellness level with a sun terrace, and a programme of seminars, lectures and think tanks. In The Collective’s signature style, the general public will also be welcome to take advantage of both the space and its programmes.

“It wasn’t until we completed The Collective Old Oak in West London that we really saw the power of bringing people together around ideas and experiences in thoughtfully designed communal space,” Merchant adds.

Taking the best that hotels can offer, and bolting on flexibility and a stylish and relaxed image also inspired 30-year-old Robert Godwin to create what he describes as the first “hometel” targeting all ages and offering accommodation from one night to one year.

Godwin really liked what he saw in hotels such as The Hoxton, Ace and Soho House, but wanted something that sat between the Airbnb market and a hotel.

He also wanted it “to be cool and also somewhere that guests could relate to; somewhere where they could feel that they lived, rather than stayed at temporarily”. He adds: “We wanted them to connect with the brand and the removal of usual hotel norms.”

In response, Godwin created room2 as part of the Lamington

Robert Godwin’s room2 “hometels” offer accommodation from one night to one year

Group, of which he is managing director. Lamington already owned 70 serviced apartments in London, the first of which opened in Hammersmith, West London in 2016. It has 16 rooms with kitchenettes, with the larger rooms featuring a dishwasher.

Other facilities include a communal herb garden, healthyfood vending machines and yoga mats. At its opening, Godwin said: “We have created a place where residents can work and play in beautiful surroundings.”

Robert Godwin:

“We have created a place where residents can work and play in beautiful surroundings” Unusually, given the scramble for accommodation in London, Edinburgh and Manchester, Godwin opened the second room2, offering 70 rooms, in Southampton, on England’s south coast.

The brand, which is now set to roll out in Manchester and Liverpool, plans to have 1,000 units in the next eight years.

Apartment hotels offering flexible working and living space with sensible check-in and -out times are one of the fastest growing sectors of the hotel market, with some 6,000 new units scheduled to open by 2021.

Unsurprisingly, Edinburgh — ranked in a recent survey by

Lamington Group’s room2

Lambert Smith Hampton as the hottest spot for hotels in the UK — will see the opening of luxury apart-hotel Roomzzz in Nuveen Real Estates’ £850m mixed-use St James development.

The company acquired arguably Edinburgh’s ugliest and leastloved building in the St James’s shopping centre and adjoining government offices back in 2006. It is now redeveloping the 2.8 ha site to deliver 79,000 sq m of retail space, 30 food and beverage outlets, a cinema, 152 apartments and a luxury 12-storey W Hotel. The scheme will be complete by the end of 2021.

“We do not see this as a shopping centre, as only one third of the space will be occupied by retail,” says Nuveen’s director of development, Martin Perry.

“What we have is mixed-use environment that will service not only the residents, but also be hugely attractive to the four million tourists that visit Edinburgh each year.”

Perry adds: “With high-end residential, as well as two luxury hotels, this is an aspirational scheme.

Indeed Lord Wolfson, Next’s chief executive, wanted his store to be associated with Marriott’s W brand for that very reason. He wants his customers to be aspirational.” Next will be occupying space alongside a 3,348 sq m Zara store and John Lewis.

Richard Talbot-Williams, sen-

MIPIM PREVIEW • 28 • Hospitality & Tourism

ior director of BNP Paribas Real Estate’s recently created hotel team, believes the development of new forms of hospitality will continue. “What we are seeing” he says, “is a lifestyle brand for the Instagram generation: accommodation with a more technological focus and higher standards of design at costs that suit the consumer. We are seeing the creation of larger open spaces — and what is a breakfast bar in the morning may well be transformed into a cocktail bar by night. It’s all about cutting-edge concepts, and being cool and affordable to a younger demographic.”

Richard Talbot-Williams:

“It’s all about cuttingedge concepts, and being cool and affordable to a younger demographic” Whether Benedikt Hartl will be able to convince Her Majesty the Queen remains to be seen.

CONFERENCES & EVENTS AT MIPIM

New forms of hospitality: focus on co-living 12 March, 10.00-10.45 BEIGE ROOM (Palais 3) New forms of hospitality: focus on co-working 12 March, 11.15-12.00 BEIGE ROOM (Palais 3)

PROFILE

IHG aiming high IHG is leveraging the power of its brands to drive global growth. Graham Parker spoke to Willemijn Geels, vicepresident development, Europe, and Henry Simpson, director development, France, about the group’s latest plans What do you see as the biggest challenges for expanding hotel formats at the moment?

WG: The growth potential in our industry is exciting. Growing populations and higher levels of disposable income, combined with lower travel costs and increasing demand for branded experiences, all bode well. One of the challenges the industry is facing is the increasing pressure on real estate. We are very well aware of owners’ return on investment requirements while at the same time providing our guests with the best possible experience.

We have a consistent portfolio of brands that fit for each need and are clearly identified by our guests. We are constantly updating and evolving our concepts to play on market trends, integrate value engineered solutions and create new guest experiences.

HS: This is exactly why we have created the voco brand in the upscale segment, responding to a clear request for lifestyle-oriented products which are relatively easy to implement, whether in existing hotels or new builds. We sense a real appetite for this brand, which is driving guest appreciation and owner returns. We have also witnessed an increase in guest and owner appetite for branded extended stay hotels and we can meet that demand with brands like Stay-

Henry Simpson, director development, France and Willemijn Geels, vice-president development, Europe

bridge Suites, Holiday Inn Suites, and Holiday Inn Express Suites.

What brands are you growing this year and are there any territories you find particularly attractive?

WG: We see real potential for us to grow all our brands and bring more unforgettable experiences to guests and travellers across Europe. Our strategy is to focus on countries and destinations with strong trav-

eller flows where our brands bring significant value to our owners through our global distribution. We know there is room for us to grow in France, as well as to diversify our growth strategy into Poland — where we now have 12 hotels open with 18 in the pipeline — Eastern Europe and in Mediterranean markets such as Portugal, Spain and Turkey. We’re doing this in three ways: by evolving our existing

MIPIM PREVIEW • 29 • Hospitality & Tourism

brands, building new brands, and acquiring brands.

Willemijn Geels:

“We see real potential for us to grow all our brands and bring more unforgettable experiences to guests and travellers across Europe”

PROFILE HS: The iconic InterContinental is a great example of how we’re developing our existing brands. We are bringing modern luxury to our heritage buildings through a multi-million-euro refurbishment programme across Europe, including the InterContinental Carlton Cannes, the InterContinental Paris – Le Grand and the InterContinental Berlin.

For the internationally known and loved Holiday Inn brand, we are completing the rollout of the Open Lobby concept, with a refreshed design to give it a more contemporary feel. We’ve been busy designing and renovating ‘Next Generation’ rooms in Holiday Inn Express hotels in line with the latest consumer insights.

In the upscale segment, we’ve just launched a new Crowne Plaza flagship in Paris which is the first in Europe to feature a brand-new ‘Plaza Workspace’ lobby concept, inspired by new trends around the changing world of business. The redesign responds to insights which revealed that 70% of employees in France wish that there were more opportunities for flexible work environments — in what we’ve come to know as ‘bleisure’— the blurred line between business and leisure. The Plaza Workspace has been designed to reflect those needs by offering newly designed co-working facilities, which are free for locals and guests alike, alongside a refreshed F&B concept.

WG: As mentioned earlier we’re also creating new brands. We’ve moved quickly to launch an innovative new upscale brand called voco. Consumer insights and an owner-centric approach have been at the heart of the way we have created voco, which brings a new brand identity while protecting local heritage, the need for flexibility and

the returns for our partners. voco already has six hotels open in Europe, over 14 in the pipeline across EMEAA [Europe, Middle East, Africa & Australasia] and many more signings to be announced soon.

And finally, we’re acquiring brands in the top tier of luxury. The luxury space is diversifying; from classical, traditional style, to contemporary, design-led brands, to responsible, eco-luxury tourism — there is a lot to go for.

That’s why we’ve evolved our portfolio to respond to these needs. Our leading boutique brand Kimpton is growing at pace. Since the acquisition in 2018, we evolved the brand to be able to launch it in Europe, first in Amsterdam and then across the UK with properties open in London, Edinburgh and Glasgow. We’re not stopping there either, with Kimpton hotels set to open soon in Manchester, Barcelona, Paris, Rotterdam and Frankfurt.

Last year we also acquired Six Senses, a luxury wellness and sustainability brand with outstanding properties around the world, including in Portugal’s Douro Valley. It also has a hugely attractive pipeline, with stunning hotels set to open in London and in France’s Loire Valley.

And in 2018, we acquired the Regent brand, which offers refined and elegant luxury in some of the most awe-inspiring destinations in the world. Since acquisition we have rejuvenated the brand and intend to develop its portfolio to more than 40 hotels in key global gateway city and resort locations.

The brand already has six hotels open in stunning locations such as Singapore, Montenegro and Beijing, and properties set to open in Hong Kong, Phu Quoc and Jakarta, and more to come soon.

There’s been an influx of capital into hotels from real estate investors who are new to the sector. What do you think are the key messages real estate players need to understand before investing in hotels?

HS: There are exciting developments in the French market, with growing interest from real estate investors who would have traditionally invested elsewhere in Europe. We’ve recently set up a brand-new dedicated head office for Southern Europe based in Paris. In doing so, we have invested in additional development and operational resources in the region, with local language skills and cultural understanding, to help expand our portfolio and provide the best support for our hotels and partners.

With a strong presence and long-standing experience in the French real estate market, we are in a good position to take investors on a journey through understanding contractual options, market actors and the risk vs opportunities of investing in a well-known branded hotel, supported by the power of the global IHG enterprise, in this well-established market.

Henry Simpson:

“Everything we do at IHG is guided by deep-rooted consumer insights and owner expectations” Is it proving more difficult to keep up with rapid changes in technology and consumer tastes? How do you keep hotel formats and properties fresh and up-to-date?

HS: Everything we do at IHG is guided by deep-rooted consumer insights and owner expectations. For example, we know that today’s guests expect technology to be integrated into many areas of the travel

MIPIM PREVIEW • 30 • Hospitality & Tourism

experience. Owners expect this level of technology innovation too. That’s why we rolled out IHG Concerto, a first-of-itskind cloud-based technology platform, which includes our industry-leading guest reservation system, offering owners reservation, revenue and property management solutions, all in one platform.

WG: We also know that ensuring we grow in a responsible way is equally important. In this age of connectivity, consumers — particularly younger generations — are increasingly aware of the impact of their purchases on the environment and local communities. At IHG we work hand in hand with our owners to make our hotels as sustainable as possible. To give just one example, we’re taking a stand against plastic waste. As well as removing plastic straws from our estate, last year we became the first global hotel company to commit all our brands to removing bathroom miniatures in favour of bulk-size products.

Having brands that belong to a company which takes this seriously is an important element of our global strategy. Our newest brand, voco, was built and launched with sustainability in mind. In addition to using bulk bathroom amenities, all of its hotels use aerated shower heads to reduce water and energy consumption, biodegradable takeaway coffee cups and bedding made from 100% recycled materials, to further reduce their environmental impact.

CONFERENCES & EVENTS AT MIPIM Meet Willemijn Geels at the session: Luxury and Ultraluxury Developmeny Challenges 11 March, 10.00 - 10.45 Meet Henry Simpson at the session: How hotels are integrating mixed use buildings 12 March, 12.15-13.00 BEIGE ROOM (PALAIS 3)

THE HOTEL OF THE FUTURE

Sustainable efforts

Accor’s Flying Nest concept is based on shipping containers that can be moved from place to place

There are a lot of questions hanging over the future of the hospitality sector — not least how hotels and tourism will be impacted by global warming, next-generation technology, moveable modules and changing social attitudes to travel. Graham Parker reports

G

UESTS’ expectations and attitudes are changing fast and technological innovation is opening up new ways of delivering hospitality. Yet one of the paradoxes of the hotel industry is that operators are tied to bricks and mortar, where making changes is costly and time consuming. How can operators and investors avoid being wrong-footed by these changes?

And what does the future have in store for the hotel?

Perhaps the most significant challenge is sustainability. A year ago, almost nobody had heard of ‘flight-shaming’, yet now air travel is frowned upon in some circles. Companies are coming under shareholder pressure to cut back on non-essential busi-

ness travel and activists have found a new stick with which to beat the corporate giants.

“Sustainability is a watchword in the tourism industry as a whole at the moment. Hotels are a less-obvious target than airlines, but they have certainly not escaped scrutiny,” warns Nick Wyatt, head of research and analysis for travel and tourism at data and analytics company GlobalData.

Nick Wyatt:

“Sustainability is a watchword in the tourism industry as a whole at the moment” PKF hotelexperts produced a study of the issue in collab-

oration with the Considerate Group and MIPIM UK, which cited two recent reports that encapsulate the size of the challenge facing the industry. Nature Climate Change found that the tourism industry is responsible for approximately 8% of global greenhouse-gas emissions, while the International Tourism Partnership calculated that the industry will need to reduce these emissions by 66% per room by 2030 and by 90% by 2050, in order to comply with agreed goals to limit global heating.

The authors of the PKF hotelexperts study, consultant Sarah Baumgartner and Adam Maclennan, managing director of the UK and Ireland, concluded: “The changes that have made the biggest impact on the environment in the past have tended

MIPIM PREVIEW • 31 • Hospitality & Tourism

to be forced on businesses by legislation, but public opinion is changing and guests increasingly care about their impact.

Hoteliers who do not adapt will realise that both the top and bottom lines of their business will be affected.”

GlobalData’s Wyatt points to some easy wins for hotels to improve their green credentials: Marriott and IHG are cutting out single-use plastics from their establishments and IHG’s Holiday Inn Express brand is rewarding guests who reduce their water use with extra loyalty points.

Equally, Accor has committed to reducing food waste by 30% and has formed a partnership with the app Too Good To Go, which puts consumers in contact with hotels that want to sell off their unsold food products

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THE HOTEL OF THE FUTURE

for a few euros. The system has already been rolled out in more than 500 hotels in Europe across the Novotel, Mercure, ibis, Pullman and MGallery by Sofitel brands.

The other area of hospitality in which big changes are happening is technology. “Hotels are now thinking as much about technology that can provide connectivity and convenience for their guests as they are about design and interior styling,” says Huw Montgomery, project manager in hospitality at JLL. “The ability for a guest to set the temperature of their room before they’ve entered it or to open their door without dropping their luggage is quickly becoming the mark of a thoughtful establishment.”

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Huw Montgomery:

“Hotels are now thinking as much about technology that can provide connectivity and convenience for their guests as they are about design and interior styling” Some might question where convenience ends and intrusiveness begins, but Montgomery reports that the 290-room FlyZoo Hotel in Hangzhou, China has introduced facial-recognition entry to lifts and rooms.

“Personalisation has gone beyond being important — it’s borderline essential,” says GlobalData’s Wyatt. “Guests don’t want to be

seen as just a number; they want a personal touch. Hotels must not lose sight of the fact that they are in the hospitality industry and personalising somebody’s stay is a great way to demonstrate their commitment to hospitality.

Wyatt points to Hilton’s Connected Room platform, which allows guests to control their stay from a mobile device, as an example of a hotel chain that is leveraging technology to personalise a guest’s stay. Meanwhile, Marriott has launched a platform that gives employees access to a 360-degree view of each individual guest by tracking their interaction both before and during their stay.

“Greater personalisation is increasingly demanded by guests, and hotels will continue to invest in technologies that help them better understand their guest’s needs,” Wyatt predicts.

MIPIM PREVIEW • 33 • Hospitality & Tourism

DMDmodular’s Ewelina WozniakSzpakiewicz

THE HOTEL OF THE FUTURE Accor also sees great potential in using technology to deliver a personal experience. At its Aparthotel Adagio in Bercy, Paris it has trialled a personal-voice assistant called Zac. Developed in collaboration with the Web School Factory and start-up Vivoka, Zac is a digital travel companion that provides multiple services. For example, it can control the curtains, lighting and sound system in the room, as well as connect a guest to reception or order a taxi.

And it is not just the in-room experience that is being transformed by technology: at its ibis sites, Accor is stripping out the reception desk that creates a distance between the team and the customer. In future, ibis guests will be welcomed by a member of the ‘Smile Team’, equipped with a tablet or smartphone.

Guests will then be invited to complete the check-in formalities comfortably while relaxing on a sofa or sipping a drink at the bar. The brand hopes to equip its entire network by 2022.

“Technology has changed what guests value in a hotel,” JLL’s Montgomery adds. “This is a unique time for operators to think more about how comfort, creativity and efficiency can be delivered in this digital age.”

Not only will the hotel of the future be operated differently, but it will almost certainly be built differently too. Hotels, which tend to have a large numbers of repeatable elements, are seen as ripe for modular construction.

Currently, the tallest modular hotel is citizenM’s Bowery in New York City, which is 75 metres high and has 21 storeys.

The hotel was constructed using 210 modular units, each housing two rooms. But Bowery will not hold the title for long: a couple of miles across town at 842 Sixth Avenue, Marriott’s 168-

DMDmodular’s units are slashing hotel build times

room AC Hotel New York NoMad is under construction and heading to 26 storeys.

All the modular elements that are being used in the construction of AC Marriott New York NoMad are developed by DMDmodular in the company’s factory in Skawina, Poland.

Modular construction has taken off rapidly in the US, partly because the country faces a shortage of skilled construction workers, and its domestic capacity for modular units has not been able to keep up with demand. As a result, it is now financially viable to build units in Europe and ship them across the Atlantic to the east coast of the US. Ewelina Wozniak-Szpakiewicz, CEO of DMDmodular, says the construction technique offers several advantages: “Modular construction opens the way for quicker development processes and this is primarily the reason why the market is booming. Recent modular projects have already established a solid track record of accelerating project timelines by 50%. So, if

you own rental apartments, hotels, restaurants or student accommodation, the sooner you are in business, the sooner your property is earning. If you are utilising modular construction in your project, you may well capture market demand ahead of your competitors.”

Ewelina WozniakSzpakiewicz:

“Modular construction opens the way for quicker development processes — and the sooner you are in business, the sooner your property is earning” And Wozniak-Szpakiewicz believes modular delivers more than just time savings: “Developing a hotel with modular technology also ensures that the quality of the building will meet the specific standards set by investors. This is especially important in the hotel industry.

MIPIM PREVIEW • 34 • Hospitality & Tourism

Using modules saves time and money as well as maintaining control over the traditional fitout process.”

Accor is taking the concept even further, launching modular hotels built out of shipping containers that can be moved from place to place. Its Flying Nest format, the brainchild of star French designer Ora Ito, has popped up on the ski slopes of Avoriaz, at the Evian Championship, at We Love Green festival in Paris and at the Le Mans 24 Hours.

“The layout of the islands, the patio and the large windows connecting the interior of each room to the outside all provide guests with a totally immersive accommodation option at the heart of the experience,” says Damien Perrot, global senior vice-president of design multibrands at Accor. And as well as an experience, the units provide everything that makes an Accor bedroom comfortable: air conditioning, luxury bedding and wi-fi.

In the future, your hotel might not even have an address.

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