RBH Hospitality Management hosted its hotel owner partners for its 2023 conference at the ArcelorMittal Orbit last week, hearing top industry experts share crucial insights into the successes, challenges and forecasts of the hotel landscape in the UK and beyond.

The conference kicked off with an overview from RBH’s CEO David Hart, looking at the management company’s portfolio’s performance in 2023 in comparison to 2019, which saw a positive increase in RevPAR by +22%, in Gross Operating Profit by +13% and in Net Operating Profit by +16%.

One of the key areas highlighted for development in 2024 was looking at initiatives to improve and streamline housekeeping operations in hotels. The most prevalent conversation among prospective hotel partners demonstrated a need for support with current unsustainable financing.

The hotel market

HotStats’ COO, Michael Grove, delivered a data-fuelled session discussing the potential move towards dynamic pricing for F&B in hotels to address the challenge of profitability. He highlighted the ever-growing impact that successful conference and banqueting business can have on a hotel’s performance, citing Manchester (+52%) and Birmingham (+46%) as showing the biggest growth in the UK for C&B revenue per sqm when comparing 2023 to 2022.

A comparison of expenses per available room in UK hotels showed a 110% increase in utilities compared to 2019 which is 32% higher than the average increase across Europe. Despite a diminishing average F&B profit margin in UK hotels, this sits at around 4.4% higher than the European average, while countries like UAE show a much higher profit margin.

Capital markets

Kerr Young, Senior VP of JLL Hotels & Hospitality Group talked through the relative decline in hotel transactions at a comparatively slower rate than retail, office and industrial/logistics. He disclosed the shift in investment types for hotels away from private equity and with a rise in owner operators, and predicted an improved sentiment for investments in the coming months as the current repricing cycle draws to a conclusion.

Kerr also touched upon ESG through an investor lens and suggested that while it’s not currently heavily influencing transactions, sustainability measures impact lender deals for refinancing and changes to regulations like CSRD will require hotels to take action in the next year.

Real estate landscape

Guest speaker Loic Xue from RBH partner Covivio Hotels, delved into the real estate landscape across Europe, demonstrating the resilience of major city locations post-pandemic, including Paris, Milan and Berlin.

ESG continued to be a hot topic as Covivio aims for a carbon reduction trajectory of 40% by 2030. 93% of their portfolio is currently certified green and they are on track to achieve 100% by 2025.

Valuation and yields

The penultimate session invited experienced valuations expert Tim Stoyle, Savills, to share his projections for the valuations of commercial property based on the patterns of the past five years. Savills value between 600 and 700 hotels each year, with Tim explaining that the process has become a lot more complex. Owners are requiring a much greater range of opinions, more frequently, and with an increased analysis of operators’ bottom line.

“The indicative projection of hotel yields and debt looks favourable when benchmarked against other asset classes”, says Tim. He warned of further challenges ahead and shared top tips for owners to protect and enhance the value of their assets by converting underutilised space to have income-producing uses, adding alternative revenue streams, maximising development potential, appointing specialist hotel managers and upping the efforts to control energy efficiency.

Energy saving initiatives

The conference concluded with RBH’s Chief Technical Officer Gregor MacNaughton and Finance Director Stuart Houston sharing the impact of some of the management company’s most significant initiatives over the past year.

Among them, Gregor showcased an extensive partnership that’s been in the making for many months to install room energy management systems in hotels with sensors that are fitted in each room. A pilot scheme suggested a 40% reduction in consumption with the right technology, and an estimated ROI after 15 months of operation.

The theme throughout the day was that bold and brave investments will benefit the long-term success of hotels running a profitable operation and remaining sustainable for the future.