EVENT EUROPEAN HOTEL INVESTMENT CONFERENCE EUROPEAN HOTEL INVESTMENT CONFERENCE EVENT
20TH EUROPEAN HOTEL INVESTMENT CONFERENCE CONTINUED...
Other factors – such as “borrowing” Schrager’s club Ryan Prince, Vice Chairman, Realstar Group said the the two Gulf Wars. His company now had the skillset
operator Rande Gerber – had also helped. He was budget sector was the best place to be at present: “I to survive. “We know where to take the expense out
less complimentary about the recent development of wouldn’t want to be in luxury hotels where costs are and how to stimulate revenue. These things are now
W: “It’s now a schizophrenic brand. The international harder to control.” coming into play.” His company had begun to look
ones are nicer than the domestic product.” It had Speaking on the Lending Panel (subtitled ‘Where seriously at ‘cost containment’ at the end of Summer
been conceived as a 3-4 star brand, not “a rival to Have All The Cowboys Gone?”) Bill Waite, Head of 2008, devoting an hour every Tuesday to the subject.
Four Seasons,” he said, arguing that investors would Hotel Financing for AIB Capital Markets, said he was By October, it was taking up two hours of their
not get a return on “$1m a key”. For his own part seeing a disconnect between perceived values on the weekly discussion, he said.
Sternlicht is coming back into the lifestyle sector with part of buyers and sellers. The market was trying to
‘One’ – a “niche eco-brand” with openings planned in get a feel for performance and remained nervous. SOVEREIGN WEALTH TO THE RESCUE?
Washington, Vancouver and Manhattan. But the hotel sector was still in structural growth, he There was plenty of gallows humour to lighten the
But the luxury sector is the main focus for Sternlicht said, despite the downturn, and he would lend to the mood. “If it carries on at this rate the only banks left
at present. One of the more positive pieces of budget sector. Speaking on the same panel Sandy will be the blood bank and the sperm bank,” joked
news to come out at the conference saw Sternlicht Gumm, Chief Operating Officer, Prestbury Investment Nick van Marken, before going on to describe the
confirm that Starwood Capital had struck a deal to Holdings Ltd, said they would look at all projects if situation as “an equal opportunity financial crisis”
sell a group of hotels from The Concorde Groupe to the price was right, but all other things being equal, from which no sector was immune. Referring to the
Sheikh Mohammed Bin Issa Al Jaber’s JJW Hotels. The budget was the best place to be. The challenge was lack of transactions ($20bn compared to $100bn
hotels represented “the bulk of the luxury properties” finding debt, and investors needed courage to write for the same period the previous year) van Marken
in Concorde but not the Crillon or Louvre hotels. big equity cheques in the current climate. Peter warned that sovereign wealth funds would not
Sternlicht expected the transaction to complete Anscomb sounded a note of caution, believing there necessarily come to the rescue, and if they did, they
in 2009 once union approval has been agreed. was a danger of oversupply in the budget sector. would only do deals on aggressive terms. “They’re no
“Hopefully they will do it before the world ends,” he pushover.” Nonetheless High Net Worth Individuals
joked. He said of Starwood Capital’s 2005 acquisition CONTROLLING COSTS and Sovereign Wealth Funds were more likely buyers
of Taittinger Group (and its subsidiary Societe There was some disagreement between speakers on than propco’s or private equity groups. In conclusion
de Louvre) “I knew how hard it was in Paris. Any the various panels as to how far operators should go van Marken believed trading would get worse before it
opportunity to get property [there], in the hardest in cutting costs – a question which found its focus in got better: “Covenants will be breached,” he said.
city to build in France, had to be worth taking,” Paris the issue of bathroom amenities, following Sir David Perhaps the most upbeat, and certainly the most
was a “brutal place to get things done...I was warned, Michels’ assertion that in times of recession “the blunt, assessment of the day was that offered by
and it’s worse.” The Baccarat brand, also a part of the soap always gets smaller.” Marty Kandrac, Managing Barbara Cassani, Executive Chairman of Jurys Inn
Taittinger deal, was a name that “instantly signifies Director of Blackstone’s Real Estate Group, suggested Group, who implored the “good time Charlies” to “quit
expensive” and the Crillon name would be used to swapping “Bvlgari toiletries for Neutrogena.” Peter whining and get back to business.” She argued, “If
rollout a group of international hotels, although Tyrie, Chief Executive of JJW Hotels & Resorts, on the you have a good model and you know how to make
renovation of the Crillon in Paris is on hold: “If you’re other hand, said: “You cannot downgrade soap – it’s money, you’ll be fine. Sit back and think about where
getting 91% occupancy and 850 euros a night, why integral to the brand and the customers will notice.” value lies. Not flipping – that’s fake value – but real
renovate?“ shrugged Sternlicht. The line-up of “Smooth Operators” on the final value.” As Sir David Michels said in his introduction,
Overall though he was a firm believer in investing panel of the day was challenged by moderator Frank things might be bad but to his knowledge “not
in bricks and mortar. “Design is your product,” said Croston, Managing Director, Hamilton Hotel Partners, one 100+ bed hotel has ever closed its doors”.
Sternlicht. “If I could only spend money on one thing as to what strategies were in place prior to the The ownership and branding may change but the
it would be architecture and design.” downturn. “What about cost control?” he asked Kirk hotels themselves do not go out of business. Having
Kinsell, President EMEA for InterContinental Hotels said that, “RevPAR has not changed in 40+ years,”
BUDGET A BETTER BET? Group. “Customers are looking at value, not price,” according to Michels. “The only way to make money
Other speakers saw the budget sector as the safest countered Kinsell. Simon Turner, President of Global from the hotel business is through buying and selling.”
bet in the current uncertain climate. Speaking on a Development for Starwood Hotels & Resorts, believed
panel entitled “Investors: Holding Out For A Hero,” lessons had been learnt in the aftermath of 9/11 and
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096 MARCH / APRIL 2009 EVENT VISIT WWW.SLEEPERMAGAZINE.COM FOR MORE COVERAGE OF HOTEL INDUSTRY EVENTS VISIT WWW.SLEEPERMAGAZINE.COM FOR MORE COVERAGE OF HOTEL INDUSTRY EVENTS EVENT MARCH / APRIL 2009 097
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