Uncertainty, connectivity and currency wars to shape hotel investment market for years to come

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BoutiqueHotelNews.com was present to report on the latest news, deals and innovations.

This year's theme was 'The Art of Innovation - Meet the Grand Masters of hotel investment' and there were certainly lots of heavy hitters from the sector present.                         

After a short welcome and conference overview by Jonathan Worsley, chairman of Bench Events and Kerry Gumas, chief executive officer of Questex Media Group, the stage was set for Dr Thierry Malleret, managing partner of The Monthly Barometer.  Dr Malleret's keynote entitled 'Uncertainty, Connectivity and the Changing Economic Landscape' presented his views on the future of the worldwide economy and its potential effect on the hospitality sector.

In summary, he felt the world economy will continue lurching from one crisis to another, with the uncertainty we've become accustomed to continuing to affect sentiment and confidence in the hotel market for years to come. He viewed uncertainty within the hotel investment sector would naturally produce heightened political and geographic dangers, but these dangers will present opportunities. As such, Malleret instilled the importance of hotel investors being well prepared and flexible to react fast to take full advantage.

Malleret went on to define his four factors affecting the 21st century, namely: interdependence; complexity; velocity and transparency. These in turn bring risks, issues and concerns which all lead to effects. Complex systems and the absence of physical links deliver more unpredictability to the world, which of course includes the hotel market. The more complex the systems, the more problems occur. This amplifies the uncertainty and it's hard to spot the weakest link. He continued: "Technology, 'the child of the Internet' has driven a cultural immediacy that the consumer and business have quickly become accustomed to," citing just-in-time manufacturing, speed dating and fast food as examples. "A product's shelf life, and the general lifecycle of industry continues to reduce sharply and unpredictably."

Malleret moved on to highlight:

• Transparency - the 'child of social media' with the 'everybody, everywhere at any time' socio-culture having the ability to contribute to exposing the weaknesses of leaders and Government.

• Characteristics of today's work - with risks and adverse shocks being contagious eg. Fukushima, they travel and spread very fast. Small causes can produce major effects with changes happening dramatically, not gradually.

• 'Today's world' - systematic connectivity is the name of the game.

• Means, risk and effect - for example, climate change leads to a food crisis which leads to the Arab Spring. No risk can ever remain in category eg. our society presents economic and environmental risk and if "The dog didn't bark last year, it does now" - eg. Italian election.

Malleret then asked the audience to think about the future and differentiation, in that:

• Trends are certain

• Risks are quantifiable eg. Price and trade insurance market

• Uncertainties are non-quantifiable

• Hyper connectivity makes us confused and creates disequilibrium.

• Complexity overwhelms the capabilities of today's decision makers.

• Demographical change has created a 'double whammy' effect:

• Fast expanding global population means a growing ageing population in most of the world

• Contrary to common wisdom, emerging economies are at a disadvantage in that they will become 'old' before 'rich'. The new generation will be subjected to no healthcare, pensions or support.

Bringing it back to the current state of the world, Malleret told us the consensus of views from economists is:

• We are experiencing a 'sigh of relief' and a disconcerting amount of optimism amongst CEOs so far in early 2013.

• Pace of upswing will remain weak

• US, Euro, China growth will disappoint

• 'Tail risks' sharply reduced by banks

• Emerging markets will outperform developed countries (careful of non-quantifiable risks - political etc..).

He closed by predicting 2013's biggest de-stabilising factor will be global currency wars.



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