Gabriel Escarrer - Vice President & CEO, Meliá Hotels International

INVESTOR APPETITE FOR THE “NEW AGE OF TOURISM”

The hotel industry is operating within a context of unprecedented difficulty, in which traditional brands have to rethink their future and their product development to remain competitive.  The future of tourism will undoubtedly be more digital (in the customer journey, in operational processes and in the customer experience in the hotel), more concerned with health and safety, and more aware of their social surroundings and their environment. The “new age of tourism” will also bring an imperative need to become more competitive, with the big winners in the world of hospitality being those companies that are more agile in their marketing and operations and able to offer products that are more clearly differentiated.

With all the prudence that the current situation requires, it is also true that we are finally seeing positive prospects for the second half of 2021, both in the Caribbean and in Europe and the Mediterranean, concentrated in resort hotels for the time being (as the city hotel industry is suffering a much more “structural” crisis that could need up to two years to recover). The reservations we already have on our books indicate a certain stabilisation and a positive outlook for the summer, although still a very long way from the excellent season we had in 2019.

This incipient economic recovery and the suffering of many companies after almost 18 months of constant cash losses will combine with pressure from fund managers looking to invest the high liquidity currently available in the market to create the ideal situation, as most experts predict, for extraordinary investment activity in the second half of 2021, as investors fight to position themselves in hotel assets. Venture Capital Groups and major wealth funds will therefore continue to be active investors in hotel assets in 2021.

 

In terms of the nature of the assets and transactions, we know that current investors will have a very clear preference for resort hotels, a segment in which MHI boasts both leadership and expertise. Any investments must also take into account the environmental, social and good governance (ESG) principles that present a great opportunity for hospitality companies to be one of the leaders of change as we move towards the United Nations 2030 Agenda. Regarding business models, we predict a clear preference for “Sale & Lease Back” or “Sale & Management” transactions, and also a trend towards “manchising”, a hybrid formula somewhere between management and franchising.

In all these models, investors will require the best hotel management companies, with strong digital and distribution capabilities and attractive and well-recognised brands. It will be essential for companies to have a digital platform through which they can market products and communicate on a one-to-one level with customers, similar to the melia.com platform that we have been developing for many years in order to add value for our hotel partners. In addition to our core brands, we have also developed a “soft brand” in which 4-star hotels with good service and product quality can form part of our big family under the “Affiliated by Meliá” programme without having to lose any of the personality and essence they have developed over the years.

 

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