Monday, 8 April 2013

A changing landscape for hotels and venues?

A quick dip into recently published news and opinion from the meetings sector seems to indicate that things are changing.  The very good Grass Roots Meetings Industry Report 2013 by Alan Newton hints at a swing in the balance of power away from the meetings buyers and towards suppliers although Alan emphasises that at the moment this is a US led trend.

So what might be behind this trend and can we see any evidence that it might be seen in the UK? 

Looking first at the demand side of the trend, Alan reports that “our clients in the UK, USA and Asia are all showing a modest increase in meetings activity and slightly higher budgets than a year ago.  The mood is quietly positive,’

But what is happening on the supply side?

It will not have escaped followers of the hotel transactions news that a couple of deals have recently been done by UK banks that had found themselves holding hotel assets as a result of their lending binge and the subsequent repossessions following the recession and crash in hotel values.  Big losses have been sucked up and canny private equity and venture capital investors have bought at what might prove to be the bottom of the market. Principal Hayley and Malmaison have both been ‘moved on’ and rumours surround other brands such as DeVere Venues.  As the market commentator Hotel Analyst puts it on page 117 of Sleeper Magazine; “Are we finally at the point where deals start in earnest? The short answer is no. But it seems highly likely that there will be more movement than we have seen for some time.”

This then begs the question what will this smart money do with hotel and venue assets picked up cheap from the banks? Some are now under-invested following their stint under bank ownership but it seems likely their new owners will be far more careful about pouring more new money in without some very careful analysis.  It’s possible that one or two of the worst performing hotels and venues may be moved on or re-developed for other uses.

So what about new supply?  Melvin Gold's UK Hotel Construction Data report says that although there has been a gradual uptick in new hotel openings since the low point of 2010 this has been dominated by the budget sector so it seems fair to assume that the overall supply of meetings hotels and venues is adapting to a lower level of demand.

Availability and rate are very strongly influenced by supply/demand in the meetings sector so maybe there are signs that the landscape is changing.

It will be up to hotel and venue operators to ensure that any hardening of the market doesn’t lead to greed and profiteering and bring our industry into disrepute.  As Alan Newton puts it ‘interesting patterns have started to develop.......(these) may be considered more alarming if they are not managed professionally.’

Although at Sundial Group we have only experienced slight season changes in demand so far I am proud that our high number of long standing and loyal clients can trust us to take the long view and protect our reputation for fair pricing and value for money should these trends indeed tip the balance of power away from the buyer.

1 comment:

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