Specialist
Former VP at InterContinental Hotels Group plc
Agenda
- Trends and developments in the European luxury hotel market
- Occupancy trends and leisure demand vs business and group travel
- Recovery scenarios, highlighting luxury and upmarket's strengths vs other segments
- Medium-to-long-term outlook and impact of pandemic-driven industry shifts
Questions
1.
What key trends have been playing out across the European hotel industry amid the pandemic? What has surprised you the most over the past 12 months? What should investors track or be aware of?
2.
Have any of the bigger branded players tried to repurpose their sites? I’ve noticed some of the independent hotels have tried.
3.
How reliant on international travel are luxury hotels vs mid-scale and budget hotels? It seems to be quite an important aspect.
4.
What are luxury hotels doing to pivot the business given that there’s not enough local demand? Are they trying to pivot or are they limping along with lower occupancies? What strategy do you think they might use?
5.
Could you clarify occupancy figures? If 2019 occupancy was around 78%, what was the occupancy figure for Q1 2021 and where does it sit now?
6.
What occupancy range would you say a hotel in the luxury segment would have to operate at to break even, given the Q2 2021 climate and the way rates are holding relatively firm?
7.
Could you elaborate on the regional landscape for luxury hotels throughout Europe and the UK? Where is the greatest concentration of luxury hotels? Is it more city centre vs secondary cities? What’s your outlook for reopenings? You alluded to a bigger rebound potentially in areas with sunshine and hot temperatures.
8.
What’s your outlook for business travel returning and the implications on the luxury hotel segment rebounding? Obviously, business is such an important aspect alongside international leisure travel. Do you think pre-coronavirus levels of business travel will return in 2023 or 2024?
9.
Do you think luxury is more defensible vs mid-scale on the business travel side? If a portion of business travel is lost, would you expect the luxury segment to hold up quite well? Would mid-scale markets suffer a bit more comparatively?
10.
How do you expect the market’s size and competitive landscape to change? As you said, it’s really tough for business corporate to switch to a leisure offering, given the time it takes to build up the consumer perception. Do you expect some luxury hotels to drop out of the market given the current situation?
11.
Could you expand on zero-based budgeting? Hotels often don’t zero-base budget but presumably the pandemic has forced it. Do you think this is likely to restructure the cost base or budgets for hotels? Do you think this has been a good exercise for them?
12.
What are the considerations around commercial costs? How are hotels approaching expenditure on sales and marketing? Has this activity continued and are costs applied in the same way as they were pre-pandemic? What’s your outlook here?
13.
Could we optimistically assume or hope that the cost line becomes leaner in two or three years, coming out of the pandemic?
14.
Do you think government assistance has been enough during the pandemic? Do you think the end of furlough schemes and programmes will be a big catalyst for players to exit the market? Might there be a bit of a shake up or do you think the luxury is a bit more defended?
15.
Do you think Brexit has caused any labour issues for the UK luxury hotels, especially if key personnel have moved back to Europe or had to leave the country? There’s been impact on the budget segment as well as on pubs and restaurants. Is it a risk for the luxury hotel segment?
16.
Which key luxury players do you think are better-positioned as we exit the pandemic and reopen? Who is likely to gather the returning consumer and returning traveller? Who might be more weighted on the business, city centre, luxury hotel segment?
17.
Are key assets becoming heavily distressed or reaching non-performance status and going up for sale? Are there any common shortfalls across assets which might have driven them to this situation? Feel free to broaden your answer past the luxury segment.
18.
What’s your longer-term outlook? What major risks or factors might hinder the luxury hotel market as we exit coronavirus over the next 24 months? Do you think the market is in good health for longer-term growth?
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