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Hotels - Opportunities and Challenges

Hotels are one of the most exciting asset classes in property with annual global revenues well in excess of half a trillion dollars.  However, the business of running a hotel is now far more involved than just providing temporary lodgings and breakfasts for paying guest.  The opportunities and challenges facing the hotel industry are as varied as the type of hotels that exist.

The hotel industry is constantly evolving and adapting, finding new ways to improve revenue and profitability.  It was hoteliers that first realised the money to be made in providing afternoon teas at the weekend, a traditional "dead zone" in hospitality and now a highly lucrative way to sell sandwiches and cakes.

Hotels now seek to position themselves as destinations for anybody and not just those seeking a bed for the night.  Many hotels now incorporate restaurants operated by "celebrity" chefs with one (or more) Michelin stars such as Alain Ducassee at the Dorchester, Jason Atherton at the London EDITION, Marcus Wareing at the Berkeley or Heston Blumenthal at the Mandarin Oriental.

The hotel bar is no longer just a place to linger whilst waiting for your transfer but the place to be seen with your friends on a Friday night.  Firmdale Hotel Group, Hoxton Hotel Group and hotels such as The Mondrian all position their bar space in this way. 

Also, let's not forget the luxury spas and hair salons that are common place in many top hotels.  Spas at The Corinthia and The Beaumont are both highly rated for a place to treat yourself for some pampering.  Wellness is not always limited to an area of the hotel, with Equinox (originally a fitness brand) poised to open a "Fitness Hotel" in 2019 in New York and Intercontinental creating an entire hotel brand, EVEN, around health and wellbeing.  Not to be outdone by the fitness industry, the fashion industry is adding its flair to the hotel arena.  The Bulgari Hotel opened in London a few years ago and Cavalli is soon to open in Dubai joining the hotels in Paris branded by Lacroix.

Larger hotels will often have high end retail operations on their ground floors.  Jewellers are a particular favourite with Boodles at The Savoy being particularly noteworthy.

Of course, not all the innovations in the hotel industry are at the top end.  Many hotel chains are creating more informal and "trendy" spaces to target younger people such as Zabeel House by Jumeirah (soon to open in Shoreditch) and the Canopy brand by Hilton.

Notwithstanding all of the above innovation, for all the good that technology brings, it also brings significant challenges.  With a market capitalisation of over $30bn (around $10bn more than Hilton) but owning virtually no real estate, AirBnB has been one of the most disruptive forces in the hotel industry.  Combined with TripAdvisor reviews, price comparison websites and independent booking websites such as hotels.com it would be easy to see how the IT revolution has threatened the traditional hotel business.  But, of course, the hotels are fighting back.  Loyalty schemes and own brand apps, all available on mobile phones, are designed to instil brand loyalty in customers as well as providing vast amounts of data to assist in future marketing.

Understanding the hotel industry allows us to offer the right advice whether you own, operate or wish to buy, sell or build a hotel.  Our Hotels Group operates across departments providing a seamless service in property, construction, corporate, finance and tax. 

How to find us:
London Bankside

Bankside Office

240 Blackfriars Road
London
SE1 8NW
DX 53 Chancery Lane

Telephone: +44 (0)20 7629 7411
Fax: +44 (0)20 7629 2621
Email: bh@boodlehatfield.com

London Mayfair

Mayfair Office

6 Grosvenor Street
London
W1K 4PZ

Telephone: +44 (0)20 7629 7411
Fax: +44 (0)20 7629 2621
Email: bh@boodlehatfield.com

Oxford

Oxford Office

6 Worcester Street
Oxford
OX1 2BX

Telephone: +44 (0)20 7629 7411
Fax: +44 (0)20 7629 2621
Email: bh@boodlehatfield.com

Bankside Office

240 Blackfriars Road
London
SE1 8NW
DX 53 Chancery Lane

Telephone: +44 (0)20 7629 7411
Fax: +44 (0)20 7629 2621
Email: bh@boodlehatfield.com

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