Reality, in concrete terms

Expo Real 2012: Crisis as a chance - Comments on financing and trade show

This year, the joint stand "World of Hospitality" already became an attractive meeting point for the industry. / photo: Loske

Munich (October 12, 2012). Rarely were things addressed so clearly, projects offered so specifically, and financing such a prevalent topic of discussion as at this year's Expo Real in Munich. The final realisation that nobody is able to rely on the classical banks any longer finally lays the ground for the search for alternative (private) financing and the fine-tuning of our own ideas and concepts. Real estate and hotel experts are rolling up their sleeves. This is also the case with insiders of the hotel industry, who discussed the industry's current focal points in a permanently full auditorium during the hotel conference "Hospitality Industry Dialogue" last Monday. The realisation that crisis might be a chance was a recurring theme in many individual discussions at the joint stand of "World of Hospitality". The stand, which doubled in size compared to the previous year, drew a lot of attention again and became a magnet for all hotel-affine trade show visitors during two very busy days. There were 38,000 participants at this year's Expo Real – 1,000 more than in 2011.

There were many visitors in Hall C2 – they came either to visit the hotel conference "Special Real Estate Forum" or the joint stand "World of Hospitality". As the two were opposite one another, it was opportune for exchanging information and conducting business talks. The co-exhibitors unanimously agreed that they profited from the joint presence of all 14 stand partners. With about 170 square metres, "World of Hospitality" could no longer be ignored, and the stand's three open sides made it easy to engage in conversation. In the cooperative competition of hotel groups, consultants and service providers a highly interesting industry exchange took place. The conclusion of the 15th Expo Real with the second joint appearance of the hotel industry at the trade show is positive.

	Smiling after 5 minutes of plain talkting at the joint stand: Accor and Treugast Consulting talked about franchising. Left: moderator Susanne Stauss and Thomas Edelkamp (Accor), right Christian Giraud of Accor (back) and Philipp Bessler, Treugast.

hospitalityInside interviewed the co-exhibitors of "World of Hospitality" and the other hotel exhibitors at the trade show – Motel One, B&B, hotelknowhow and PKF hotelexperts – about how they evaluate this year's trade show and how they asses the subject of financing. Their comments:

Martin Bowen, VP Development Continental Europe, InterContinental Hotels Group: "This year, the atmosphere was very positive. Compared to 2011, we had many interested investors and fewer suppliers as visitors. The enlarged World of Hospitality stand was much better than the year before. We had many good conversations with our guests and fellow exhibitors at the stand. I appreciate the emerging synergies very much. Especially with Siemens Financial Services, we found very interesting discussion partners regarding the subject of sustainability. On Monday, the discussion rounds at the Hospitality Industry Dialogue were very informative, especially concerning the subject of portfolio properties. Conversions have become a trend. On the side of the investors, mainly large funds, Anglo-Saxon pension funds and family offices are interested in hotels."

Peter Welp, Captive Development, Siemens Financial Services: "We participated at Expo Real for the first time; and our expectations were surpassed. For example, we were able to establish contacts with city developers and mayors, and they were very interested in our product. With our investment-oriented financing, we offer a product which is quite unusual for most interested parties."

Markus Beike, Managing Director Christie + Co: "Congratulations to the stand organisers. With the new space concept at this predestined location and the differentiated users, the hotel industry has set a very visible mark. Especially successful was the combination of trade show stand, industry dialogue and the industry subjects, which were discussed at the stand as well as at the networking event 'Bricks & Brains' in the evening of the first trade show day.

How do you realise and finance sustainable hotels? IHG developer Martin Bowen (l.) and Peter Welp of Siemens Financial Services explained it in 5 minutes to Maria Puetz-Willems.

Compared to last year, the atmosphere was slightly more subdued, but it was still more positive than in the crises years of 2008 and 2009. The reduced number of exhibiting financial institutions is clearly noticeable, which is surely due to the restrictive financing environment. The demand for hotel investments by cash buyers is especially striking; they are looking for a good deal in the strongest European economy, independently from banks."

Philipp Bessler, Director Consulting, Treugast Solutions Group (so far, the company had its own stand at the Expo Real, but decided to participate in the joint stand this year): "The atmosphere at the stand was good to very good. The stand's cluster effect was perfect. For the hotel industry, World of Hospitality is a real contact point.
The need for consultation has increased as it has become more difficult to obtain funds for project realisations. Investments with banks are still a great challenge; the equity capital rates required are some times between 40 and 50 percent. Private investors are definitely interested in the industry, especially in the budget and midscale sector with smaller investment volumes between five and ten million euros. We had many requests by local communities and economic promoters. This is a clear sign that project developments are being promoted and supported more intently from that side."

Michael Muecke, Managing Director & SVP Operations Ibis, Accor Hospitality Germany: "We are glad to be presenting here in the World of Hospitality, together with connected consultancies, competitors and communications experts. You could say that all 'stakeholders' of the industry meet here at one single spot.
Naturally, hotel financings have become more difficult through Basel III; we see reluctance at all locations, generally speaking. However, it is positive to note that the banks have acquired greater expertise concerning the hotel industry in the meantime. This also strengthens the brands as the banks are asking more intent questions, about distribution channels, but also about brand sympathies, among others. Accordingly, they estimate reductions or surcharges."

Martina Fidlschuster, Managing Director, Hotour Hotel Consulting: "Expo Real is once again a bit more of a working trade show: More sober, less excitable and less glittery, which is also good for the industry, however. In the talks, there was more quality and less quantity as well as a series of promising contacts.

	Interesting topics for trade show visitors: Spontaneously, they stopped in front of the stand to listen to 5 minutes of plain talking with Tina Froboese of bbg-Consulting and Holger Behrens, CEO of Rilano Hotels (left side, middle of the photo).

Great worry prepares all market participants for the subject of financing which leaves more questions than answers: The insurance companies that are getting into the financing business are, up to now, only seeking out the large loan tranches from 100 million Euro. Those banks that want to finance are able pick out the cherries for themselves, but at least they are remaining faithful to their customers and their home markets. Equity is trump and with this, the banks are demanding even a little bit more in the meantime.
A big compliment to hospitalityInside which has succeeded with a great deal of professionalism and the organisation of the joint stand in moving the asset-class "hotels" a bit more into the middle of the real estate industry."

Tina Froboese, Managing Director, bbg-Consulting: "This year, we were present at the World of Hospitality stand at the trade show for the first time and we had very good conversations. This is an outstanding setting in order to present a business. For sure, we will participate again."

Holger Behrens, Managing Director, Rilano Hotels: "The atmosphere was very positive at the trade show. In the investment sector, the situation is improving again. Unlike last year, investors are no longer hiding, and the audience consists of trade professionals. Unfortunately, hotel financing is still a red rag for banks. Parties interested in hotels are family offices – and the budget hotel industry is still in very high demand."

Tobias Oberdieck, Executive Assistant Management Board, Lindner Hotels & Resorts: "Because of its size and acceptance, this stand has become a great magnet for investors from the real estate and technology sector."

Willemijn Geels, Development Director, Louvre Hotels Group: "Louvre Hotels participated in World of Hospitality for the first time. It has been a great experience because people from many different industries meet at one point. The business atmosphere is very good this year. The people want to do business and we won many new contacts. Even though the economic situation is still difficult, people are determined to get on with things."

Hotelknowhow managing director Oliver Massabni talking business to a guest a the company's first own stand at Expo Real in hall C2, only a few metres away from World of Hospitality. / photos (4): map

Dr. Mathias Jung, Founder and Partner, Jung & Schleicher Rechtsanwaelte: "This stand attracts wide interest in the industry. I've heard of another large international operator who wants to join the stand the next year.
All in all, the investors' atmosphere at the trade show was positive, even if the banks' reluctance of financing hotels is still under discussion. But there are positive signs for an opening towards hotel financing."

Christian Windfuhr, CEO, Grand City Hotels: "This year, we had more and very promising contacts compared to 2011. The new large stand is a great improvement in terms of visual effects as well as the number of visitors.
At the moment, people are investing a little more again in hotel properties; however, investors clearly favour residential properties right now."

Matthias Hautli, Business Manager Kohl & Partner, Vienna: "The atmosphere at the trade show was very good, in my opinion. We had many requests for new projects, often at secondary locations as well. Expo Real is an important platform in order to keep in touch with customers and to gain new contacts. For us as a business with Austrian roots, the trade show offers the opportunity to continue expanding our German locations.
It is important for the hotel sector to be presented so prominently in the World of Hospitality. The high visitor rate and the presence of the industry's top decision makers are proof of this.

Banks are still reluctant concerning financing; however, institutional investors still see good chances for rates of return on hotel projects in contrast to other real estate sectors."

Horst Schaffer, Management Legal & Development, Motel One Group: "The trade show has been very dynamic concerning investors and operators for about four years now. For us, however, location, quality and rate are important. From our point of view, the atmosphere was very good at the trade show, and our 12 staff members discussed many project proposals in their conversations here."

Michael Widmann, Managing Director, PKF hotelexperts Vienna: "Expo Real is a good networking platform for us consultants. The contacts are mainly based on existing contacts; the number of direct inquiries by investors has decreased. The number of contacts has decreased but these contacts are more serious.
About the subject of financing: There is enough equity capital in Germany and Switzerland, but financing is still a bottleneck issue. However, other countries suffer even more: in some of the Eastern European countries no international banks are left that are willing to finance at all. Everybody has to become more creative." / sst, map

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