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.
