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Interviewer: Karen in your recent report you suggested there was quite strong optimism in the hotel sector, is that still the case?
Karen Friebe: It is very much the case, yes. The market generally is seeing unprecedented levels of activity not just in London where people tend to have focused their interest in relation to trophy assets. We’re now seeing a huge increase even in regional hotel portfolios so yes there is a huge amount of optimism and indeed activity in the hotel market at the moment.
Interviewer: But there are new challenges, new kids on the block, Airbnb to name one and this sharing economy as it’s being called.
Karen Friebe: Yes, the concept of the sharing economy has been with us for a couple of years now. Interestingly last year when we conducted BLP’s first European hotels survey we found that many of our clients and contacts were not too concerned about Airbnb. This year we see a completely different picture where they definitely see the challenges that are being posed by the massive distribution platform that Airbnb can provide and our clients are saying we’d like to see a level playing field applied to Airbnb, House Trip, etc because they don’t have to comply with health and safety regulations. They don’t have to pay the same taxes that we do but very much so the sharing economy is in the forefront now of the hotel owner’s and operator’s minds.
Interviewer: And apart from pushing for changes in legislation, how else do you think the hotels should be responding to these challenges?
Karen Friebe: The sector needs to keep one step ahead now of Airbnb and other competitors. Over 90% of respondents to our survey felt that the hotel sector would see a huge investment in technology over the next 12-18 months and an investment in wi-fi – particularly free wi-fi – in fact many people apparently feel that free wi-fi is more important than a good night’s sleep to its hotel customers.
Interviewer: And Karen as an asset class how attractive is the hotel sector viewed?
Karen Friebe: It’s viewed increasingly favourably by investors who perceive it to be an attractive asset class. Having said that there are still investors who would rather put their money into more traditional types of asset class such as retail or offices but this year over 80% of our respondents felt that hotels were becoming an asset class of real interest to them.
Interviewer: Karen thank you.
Following the release of our European Hotel Market Survey 2015, Real Estate Partner and Hotels law specialist Karen Friebe, talks about the key findings of the survey and whether the hotel sector is optimistic about the coming year.
In the video, Karen also looks at how the sharing economy and sites like AirBnB are challenging the hotel sector and how hotel businesses should respond.
Finally, Karen touches on whether hotels are becoming an attractive asset class to investors when compared to more traditional types of commercial property.