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Executives from over 80 countries kicked off the 22nd International Hotel Investment Forum in Berlin. With over 2,500 delegates they were eager to understand how the current hotel industry is fast becoming a mainstream investment vehicle.
Chris Day, Global Managing Director at Christie & Co., recalled last year’s conference when he discussed how far hotel investment had moved in the past 20 years. “Historically, hotel investment was driven either by owner-operators or owners looking to work with a branded hotel-management company,” he said, noting that in 2000, it was almost impossible to persuade institutional investors to consider hotel investment.
“How things have changed,” he quipped. Now, transaction trends over the past year confirm that hotels are now mainstream and yields are competing with other types of real estate.
With fixed-income assets giving significantly lower yields than 5 years ago, interest from capital markets will see some serious inflow and will only be a positive for the sector.
In talking about hotel investment coming of age, Day said, “International operators are pushing the boundaries of their portfolios to include lifestyle, boutique and hostels within their brands.” Serviced apartments and hostels are generating greater interest as investors seek leaner, more cost-effective business models.
Last year, Day said that he thought the hotel investment market was becoming mainstream. “This year, I close by saying that savvy investors already see the hotel market as mainstream,” he said at the end of the session. “Demand for quality assets in our market is continuing to grow. The hotel investment market has come of age.”