Following the combined impacts of the COVID-19 pandemic, the Ukraine war and the global economic situation, the tourism market has exhibited a faster-than-expected recovery. In the second quarter of 2023, global tourism returned almost to pre-COVID-19 levels. This year, however, the real estate transaction market has come to a virtual standstill.
“We are witnessing a sustained and robust level of investor interest, primarily due to the industry’s status as a global growth sector, boasting impressive annual growth rates. However, in the present market, only a select few are positioned to acquire hotels. Furthermore, megatrends such as ESG, digitalisation, personalisation and personnel shortages will continue to pose significant challenges in the hotel and tourism industry in the future. In our mrp hotels Expert Paper, we have delved into when the transaction bottleneck will be resolved as well as how the industry continues to address the aforementioned megatrends”, says Martin Schaffer, Managing Partner at mrp hotels.
In the recently published mrp hotels Expert Paper, twelve industry participants and experts were asked for their input surrounding current developments within the real estate sector. These industry experts include Christian Gaiser (Numa Group), Monika Rosen (Austrian-American Society), Satya Anand (Marriott International), Jan Tissera (Amadeus Hospitality), Yossi Eliyahoo (The Entourage Group), Franz-Stefan Gady (IISS), Christian von Essen (Heja Framtiden Stockholm), Burak Ünver (SMARTments Business), Chris-Norman Sauer (Premier Inn), Norbert Kettner (Vienna Tourism), Daniel Schneider (Monoplan), Peter Ebertz (Art Invest).
Key findings of the mrp hotels Expert Paper 2023
1. Market Development
Experts forecast annual growth of the tourism industry by 5.8 percent by 2032, as well as a doubling of the global passenger aircraft fleet. These developments alongside stable guest demand, especially from the so-called “Airbnb generation,” are generating global investor interest in hotel real estate.
Personalisation of the guest experience is increasingly becoming synonymous with the hotel industry through smart management of sensitive customer data. There has been an observed increase in guest satisfaction thanks to investments made in digitalisation. According to the report, AI and digitalisation will continue to play an important role in the future. It will however not replace personal guest interactions. Behind the scenes, process automation has also been observed to increase efficiency in all areas and has thus assisted in the reduction of long-term operating costs.
3. Transaction Market
Hotel transactions have come to a virtual standstill due to high-interest rates and expensive mezzanine capital. To become active again, investors need price stability and acceptable returns. In addition, hotel funds show a need for higher diversification of product categories. Conversely, operators must grapple with the fact that their rents are rising faster than GOPs.
Institutional investors and financiers are acting as drivers in the implementation of ESG measures in hotel real estate. ESG-compliant hotel investments however remain scarce. Owners and operators often face the challenge of implementing ESG measures at the expense of returns. In addition, industry-wide standards are needed to create a benchmark for comparison needed to reliably measure sustainability.
“Recent years have shown that the hotel and tourism industry is capable of withstanding a plethora of challenges. The Corona pandemic plunged the hotel industry into an unprecedented crisis, with the Ukraine war and following economic developments not favouring industry growth. Nevertheless, the industry is now on a stable upward course. However, the ability to flexibly adapt to market trends and developments will continue to be crucial for success”, sums up Cathrine Szolar, VP of Advisory at mrp hotels.