Union Investment.: With good sales and optimism: the hotel industry defies the crisis

With good sales and optimism: the hotel industry defies the crisis

The hospitality industry is functioning even in the crisis. Expectations for business remain high, as do expectations for rising turnover. The industry is only struggling with new projects. Investments will not gain momentum until the end of 2024 or 2025. Family offices and fund providers are then likely to set the tone. ESG remains on the agenda - but the industry is playing for time when it comes to measures. These are the findings of the latest Investment Barometer, the 10th survey conducted by HospitalityInside and Union Investment.

As in previous years, the Augsburg-based specialist publisher and the Hamburg-based property investment manager ran the survey from the end of September to the end of October in order to capture the mood at Expo Real Munich. The slump in project developments since the summer was the top topic at the property trade fair this time.

Both the discussions in the exhibition corridors and the responses showed that the hotel asset class has come to terms with the multiple crises, but above all lacks reliable framework conditions with a view to further development.

A balancing act between turnover and development.

Overall, the four long-term indices (Business, Expectation, Development and Operation Index) show a slight improvement on the previous year. Meanwhile, the divergence between expectations for turnover and project development shows the balancing act that is currently challenging the industry.

The Development Index continues to fall significantly behind the other three indices and documents the subdued mood in project development. In contrast, the Business Index, which measures the current situation in companies, rose by 3.4 per cent, while the Expectation Index for business expectations for the next six months even increased by 12 per cent. And the Operation Index for the industry's sales development is even back at pre-corona levels with an increase of 12.4 per cent.

Family offices and funds at the side of hoteliers.

After a weak year in terms of transactions in 2023, expectations for a trend reversal on the hotel investment markets are mixed. 34 per cent of survey participants believe that hotel investments in Germany will return by the end of 2024. For 40 per cent of respondents, the comeback is not expected until 2025. A quarter of the respondents were more pessimistic, expecting a sustained recovery in the German markets only in 2026 or later.

According to the hotel experts surveyed, family offices and the fund industry specialising in hotel investments are then likely to set the tone on the investment markets. Both investor groups are seen as having an equal impact on the market (42 per cent each), followed by institutional investors (37 per cent) and asset management companies (32 per cent). Sovereign wealth funds were far behind, with only 3 per cent of respondents citing them.

The current picture is characterised by the expectation that the implementation of ESG goals will be delayed under the current framework conditions. "The fact that the vast majority (almost 58 per cent) of survey participants expect ESG implementation to be delayed by three years due to increased energy and personnel costs shows how priorities have temporarily shifted," says Andreas Löcher, Head of Investment Management Operational at Union Investment. Only around 27 per cent expect a delay of five years. Only 15 per cent of respondents expect a delay of more than five years. "However, ESG remains on the agenda, which is ensured by the regulations alone, which require implementation by 2030," says Andreas Löcher.

Source: Union Investment