The 16th International Hotel Investment Forum (IHIF) opened on Monday to a delegation of 1,924 from 71 countries across the globe, 16% from the Americas, 75% from Europe and MEA and 9% from Asia/Pacific. The conference was opened by Kerry Gumas, Chief Executive Officer, Questex Media Group LLC and Jonathan Worsley, Chairman, Bench Events and Board Director, STR Global. In addition to the increased delegates, 191 speakers are programmed to present during the three-day event.
Worsley referenced the recent acquisition of the Principal Hayley Group by private investment firm Starwood Capital Group and the strategic alliance recently formed between Wyndham Hotel Group and Grand City Hotels to brand 43 hotels under globally recognised Wyndham Hotel Group brand names as positive signs for the industry. Worsley also called for attending companies to submit recent deals and news to the conference organisers for release over the forthcoming days.
Worsley then welcomed to the stage Dr Thierry Malleret, Managing Partner, The Monthly Barometer to lead the opening presentations on the global economic outlook. Malleret stated that the world is changing radically and likened the pace of change to “driving a car at 100 kilometre per hour into fog without being able to find the brakes”. However, he encouraged us all to look for the opportunities which were often present in dangerous environments and to react fast to these opportunities. He identified four forces that are shaping today and tomorrow’s world: Interdependence, Complexity, Velocity and Transparency. He also referenced the recent Italian elections saying that the elections were “the dog that didn’t bark last year but is barking this year”. On the rapidly expanding global population, Malleret stated that by 2015 the number of children under 5 will decrease by 49 million but the number of over 60 years old will increase to 1.2 billion. These figures are for the population within the UN. Having attended the recent The World Economic Forum in Davos, Malleret observed that the majority of attending CEO’s felt that the economic crisis is behind us. Malleret also noted that the biggest concern for this year was currency wars.
Taking to the stage after Malleret was David Fenton, Senior Economist, RBS who delivered an insightful and thought provoking economic overview with insight into the effects on the hotel sector. Fenton started by stating that the global economy has been in crisis for almost six years. This started in 2007 with the subprime meltdown turning quickly into the banking crisis of 2008. Into 2010 and the sovereign debt crisis comes to the fore which moves into a political crisis from 2011 to date. Fenton noted that “truly scary and market shifting moments have become all too common place”. He referenced the recent downgrading of the UK’s AAA credit rating by Moody’s last week and the minimal reaction from the business community and reactions from the global markets. Fenton believes that the next crisis stage is likely to be a social crisis and quoted an article recently published in the New York Times which told of the 45% increase in suicide rates and half the population of under 25 year olds who are unemployed in Greece. Fenton believes that it is effects like these, which are a result of what began as the subprime mortgage crisis of 2007, which will lead us into the next stage of crisis: social.
Fenton fears what he calls the elephant in the room for both the US and UK; fiscal consolidation. Fenton commented on the recent multimillion collection of spending cut that will begin in the US on Friday and stretch over the next ten years, known as the sequester. The cuts were designed back in 2011 as a doomsday device that was so unpalatable to both Democrats and Republicans that they would have to come together and agree a compromise to cut the deficit. This agreement remains undecided and the sequester is due to come into force this coming Friday. Fenton fears this dysfunctional system is coming our way and is going to hurt the UK over the next 10 years. Fenton identified four main components of UK austerity: tax increases, investment cuts, benefit cuts and day to day public sector spending cuts. Whilst we have started to implement some tax increases and investment cuts, the majority of the UK’s fiscal austerity is dominated by spending cuts which have barely begun. Fenton believes we are realistically only a third of the way through the UK’s fiscal consolidation plan. He is nervous of the reliance the UK economy has on exports, largely to the Eurozone which is clearly in trouble. On a positive note, Fenton is optimistic that the hotel sector has shown resilience to date and there is no reason for this to change. This economic uncertainty continues to benefit the global and international groups and the number of 2012 hotel openings by these groups supports this statement. He believes cost control remains important and warns caution around mergers and acquisitions. Fenton is unsure whether they are the best strategy for adding value and urged companies to focus on customer centric strategies to achieve this.
On Monday afternoon Leonardo Hotels held their press conference to discuss their recent acquisition of the Queens Moat House portfolio (Germany). The formal sessions for the opening day concluded with the presentation of the 2013 Young Leader Award to Carmen Hui. The award was presented by Andrea Belfanti, Deputy Executive Director of the ISHC who continue to support the IHIF Young Leader Award through co-sponsoring.