We’ll be building on many of the themes below over the next few months as we head into NYU IHIF in New York and then on to IHIF Asia in Hong Kong after the summer.
1. No panic… yet
IHIF EMEA took place amidst a teetering macroeconomic background. Donald Trump’s decision to implement tariffs on America’s trading partners has sent stock markets across the world into a tailspin. The prospects of a global economic slowdown have may have risen, but this has yet to filter down into the businesses of most of the companies attending Berlin.
That said, it’s clear that the outlook is very different to what it was only a few months ago and listening to people speak both on stage and off at the InterContinental it reminded me of those months in early 2020, where for very different reasons CEOs were in denial about what might happen in the short term
2. Europe as a winner
With the US doing a lot to alienate the rest of the world, Europe is emerging as a safer haven for both tourists and capital. Even if the is weakness in the US inbound market there is a confidence that returning visitors from the Middle east and Asia will help to keep things ticking over. And even if economic contagion spreads, there is evidence to suggest that the damage could be less severe than seen after the Global Financial Crisis, given the willingness of consumers to spend more on experiences.
3. Dry powder waits
It feels like we’ve been saying this since semi-regularly since late 2020, but there is so much money waiting to be deployed in the space. More opportunistic investors have been waiting a long time for a market correction on the back of Covid and the ensuing inflationary crisis. If top line growth moderates and there continues to be cost related challenges, those owners who have previously been reluctant to sell because of inflated price expectations, may now find their hands forced.
4. Listed company targets
One interesting knock-on impact of the stock market meltdown is that listed hospitality companies (REITs, brands etc) become much more attractive as takeover targets. Instead of having to pay a (potentially) inflated price for an asset might buyers instead look to pick up a bargain by hunting for those taking a beating on the public markets?
5. Supply challenges
New supply in the market remains below average and that doesn’t look like this is going to change anytime soon. Unsurprisingly, conversions remain the (only) game in town and Europe is less brand-dominated than the US giving the big chains the opportunity to take a greater share of these markets.
By Patrick Whyte
