Optimism abounds at Deloitte conference

George Sell By George Sell
Uploaded 16 November 2017

BHN reports from the 2017 Deloitte European Hotel Investment Conference in London.

A year ago, the Deloitte conference got underway in a rather dazed sense of disbelief as word began to filter through from the US that Donald Trump had just won the presidential election - American delegates and speakers found themselves the centre of attention, and their opinions very much in demand.

This year, at the 19th staging of the conference, the focus was very much back on its intended target - the European hotel market, and the mood in the room was overwhelmingly positive.

Andreas Scriven, head of UK hospitality and leisure at Deloitte, kicked the event off by revealing that a poll of all the delegates attending said that more than half of all respondents thought that the UK hotel market is at the peak of the investment cycle. But from there it was almost uninterrupted good news all the way.

Scriven pointed out that European transaction volume was up by six per cent in H1 2017, and that the hotel sector is only 15 per cent consolidated - that is, the top three players control 15 per cent of the inventory. Relative to other sectors it is a fragmented industry and it would take another 'mega merger' to significantly affect this.

The outlook remains generally positive, said Scriven, for hospitality and tourism. One startling fact he mentioned was that only four per cent of Chinese citizens currently have a passport - image the impact on global tourism when that figure rises to 10 or 15.

Roger Bootle of Capital Economics then took to the stage for another of his tour de force perfomances. Part economist, part stand-up comic, Bootle had the audience in stitches on several occasions. His prediction last year, that Trump's election would not have a major detrimental impact on the US economy has been borne out. "The US founding fathers put foundations in place to make sure that no one person could cause too much chaos," said Bootle, "although as far sighted as they were, I'm not sure if even they could have imagined a creature as fantastical as Mr Trump."

Bootle pointed out that emerging economies have shown much stronger growth than the established economies over the last year, and that since 2008 Chinese growth has been equal to the entire GDP of France and Germany.

His other conclusions included that the US looks reasonably robust, the Eurozone is doing well - for now, the UK should soon experience strong growth of net exports and should weather Brexit well, and that more interest rate rises are on the horizon.

Robin Rossmann of STR then rasied the positivity levels even higher with some truly remarkable stats. In 2017 to date, Europe's REVPAR growth of 6.5 per cent is ahead of all other regions apart from North Africa, which itself has been skewed because of the floating of the Egyptian pound a year ago.

European occupancy and ADR growth are both now well ahead of 2008 levels - the former peak - despite subsequent headwinds including recession, terror attacks and the impact of Airbnb. Since 2008 the markets that have shown the most REVPAR growth are Dublin (+57 per cent), Lisbon (+51 per cent) and Copenhagen (+39 per cent), said Rossmann, adding that Mediterranean resort markets have also seen huge growth over the last six years.

The one negative he introduced was that the UK market's boost from the weakness of Sterling is now 'used up', particularly in London - and that we should expect slower REVPAR growth next year and increased cost pressure.

But European fundamentals are strong, stressed Rossmann - European tourism has strong long-term structural growth drivers, and supply growth remains muted in all but certain gateway cities.

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