The Challenges and Opportunities for Global Markets

The Egyptian hotel industry is experiencing a rebound, fueled in part by new rules that allow for 100% ownership of assets by international firms.

“It is possible to own properties 100%, and there are no restrictions for ROI, which was the main barrier,” Karl Lerner, founder and chairman of Cairo-based hotel consultancy Impact, said.

The rebound in Egypt is a story of resurgent demand among both international and domestic travelers, according to Ahmed Shalaby, founder, CEO and managing director of Cairo-based hotel and real estate management firm Tatweer Misr.

“Rates are back to the best years of 2009 and 2010,” he said. “Russians are part of that, but before their return, Egypt needed to discover to get new markets, such as China, even India, Eastern Europe and, of course, the Middle East. This was the main feeder market, and the base now is much bigger than before.”

Like many oil-driven markets in the U.S., Pittsburgh saw marked declines in 2015 and 2016 amid flagging demand and surging supply, but experts now say the city is in much firmer footing as it reinvented itself as a hub of education, technology, and arts and culture.

Downtown Pittsburgh in particular is enjoying a renaissance, said Nick Kellock, COO of Concord Hospitality Enterprises.

“We have seen continued new investment in Pittsburgh for several years, and this continues unabated,” he said. “Inward investment continues, while the city’s economy continues to diversify and grow across multiple sectors—software, biotech, education and health care to name a few of the more prominent.

“All of this creates travel and the need for hotel space. While we foresaw a period of slowdown in actual revenues, we also saw the longer-term opportunity to develop new hotels that meet the demands of today’s travelers.”

The hotel industry in former Soviet republic Uzbekistan is still in its relative infancy, but the nation is set to see $3 billion in tourism infrastructure investment by 2025, which includes the construction of 196 hotels. The overall supply for the country is set to double, according to Uzbekistan Deputy Minister of Finance Sunatullo Bekenov.

Tatiana Veller, head of hotels and hospitality, Russia and Commonwealth of Independent States, at JLL, said there is definitely room for more stable supply.

“Branded hotels are only present in the capital Tashkent,” she said. “There are five hotels, all in the 4- and 5-star segments. … Other cities, even well-known tourist attractions like Samarkand and Bukhara, are still waiting for flags and mainly offer locally managed (hotels) with varying degrees of quality and service levels.”

Melbourne and Sydney are leading a wave of supply across Australia. Matthew Burke, regional manager, Pacific, for HNN’s parent company STR, describes 2019 as “a record year for Australia in new openings.” A total of 8,000 rooms are slated to come online this year, up from the record set in 2016 of 7,093.

While supply growth is always a hurdle, Gus Moors, head of hotels and based in the Sydney office of business advisory Colliers International, noted Sydney is up to the standard many would like to see.

“There is a lack at the luxury end of the market for such a gateway city,” he said. “Considering Sydney’s occupancies have hovered in the mid to high 80% range for the best part of a decade suggests it has sufficient ability to take on more supply. That pipeline will emerge with 2,000 rooms under construction in and around the city.”

Austin seems to be one of those markets that continues to thrive even as developers continue to build. That’s a function of demand growth continuing even amid strong supply growth, with diverse demand drivers such as tech and arts and culture.

“Austin is booming. It’s continuing to garner attention for both business and leisure travel, and for good reason,” said Brian De Lowe, president and co-founder of Proper Hospitality, which is developing the Austin Proper Hotel & Residences.

Paris has maintained rates in the face of occupancy drops tied to ongoing Yellow Jacket Movement protests, and experts on the market believes it will similarly persevere through the fire at the cathedral of Notre-Dame de Paris that happened in April.

Philippe Gauguier, managing partner at In Extenso Tourisme Culture & Hôtellerie, said he expected to see travelers rally around the city.

“The publicity and community of the French people is very positive, and it will provide a positive image of the country,” Gauguier said,

Switzerland has apparently been the calm at the eye of the storm for Western Europe. With several key openings across the country, the nation’s major markets like Geneva and Zurich have seen enough demand growth to fuel occupancy, up 1.2% and 3.2% respectively.

“Zurich had the most successful performance of Switzerland’s big cities, which was surprising because a lot of new supply has entered that market in the last few years, especially in the mid-scale and economy segments,” said Christian Strieder, STR’s country manager for Germany, Austria and Switzerland.

After some tough years, Budapest, Hungary, is now firmly a place international investors want to be.

“All of a sudden, all the international brands want to be here because they see a growth in the market. The fact that Budapest was sort of overlooked for a five-year period also meant that we had a lot of available real estate in excellent locations and that prices were down, which has fueled interest from international investors,” Marius Gomola, managing director of Horwath HTL Hungary, said.

CBRE Hotels notes the Hungarian capital has 15 “three- to five-star” hotels in the planning stage.