Hotel investments better than almost any other real-estate class: James Chappell

James Chappell was a delegate at TOPHOTELWORLDTOUR London 2020. Photo by Rahul Venkit.

While the details of Brexit and its impact on the hospitality industry is as yet unclear, the hotel investment community still has a lot of optimism in the UK market, says James Chappell, Global Business Director of Horwath HTL.

James Chappell is the Global Business Director of Horwath HTL, the world’s oldest and largest hospitality consulting brand and is responsible for 50 offices in 39 countries around the world.

Originally from the world of advertising, James started in the hotel business in the best possible way, by accident, and has never left. James did a three-year management trainee course at the famous boutique hotel Lydmar in Stockholm before leaving to join consulting firm Overlook Hospitality Management with a brief to develop new products for the industry.

One of these became The Bench, which revolutionised the way performance data was collected and used in hotels. James was Managing Director of The Bench for five years before becoming Managing Director of STR Global, the company formed by the merger of The Bench, Deloitte’s HotelBenchmark and Smith Travel Research.

James Chappell spoke exclusively to TOPHOTELNEWS on Brexit’s potential impact on hotel investment and why he recommends a strong buy on UK PLC. This pre-Covid interview was conducted on the sidelines of TOPHOTELWORLDTOUR London 2020, which took place on February 6 at the Conrad St James.

Main advice to hotel clients about Brexit and the hotel industry?

Chappell: Well, it’s a difficult situation because we know Brexit’s happening, but nobody knows what exactly it is. There are lots of ideas about our future relationship. I suspect — and I hope — that what we will end up with something looking remarkably similar to what we have now from a trade point of view, certainly because the EU is our biggest trading partner and it would be foolish to pretend otherwise.
Whereas we won’t know the details really for another 12 months at least, and assuming that they’re aren’t any really nasty shocks, I think the hotel investment community still has a lot of optimism in the UK market. So, I think when talking to our clients, we are cautiously optimistic bearing in mind that we are probably coming towards the end of a cycle anyway.

Low interest rates present hotel development opportunities, but…

Chappell: At the moment, interest rates are incredibly low. Hotels are clearly a good opportunity because they’re much more institutionally accepted now than they were 10 years ago. The returns are better than almost any other real estate class. The problem is that you have a lot of people all looking for the same stuff. And so, on the one hand, you would think that that would be potentially pushing values up to an unrealistic level. And I think it’s done that to a certain extent. But I think what it also means is a lot of frustrated capital out there who might eventually decide that they’re going to look into other industries. So I think there’s a risk there as well.

UK PLC — buy, hold or sell?

Chappell: I think it’s a strong buy. I think there are key opportunities for UK PLC. If you’re an investor and you’re looking at markets for growth such as the US and Western Europe, they’re so mature. They’re so saturated, there’s no room for growth, really. So, there’s very low-yield institutional investments to be made or very risky investments to be made.

I think in the medium term, if Brexit is positioned correctly, it’s a massive opportunity because it releases us from the structures of the European union. There are many fantastic things about the European Union in terms of what they’ve done. But from an ability to manage and grow your own economy — terrible. Terrible because you’re constrained by everybody else. If we are able to keep Europe on side to a certain extent, not making our main training partner angry, although of course that’s inevitable. But at the same time, opening ourselves up to do deals with other countries. If we get that right, and we’re talking about three to five to 10 years, then I think it starts to look really interesting. So I’m optimistic.

Thoughts on TOPHOTELWORLDTOUR

Chappell: Horwarth HTL are big supporters of TOPHOTELWORLDTOUR. We are big fans and I like the format very much. You’ve got knowledge and you’ve got B2B — everybody sits down and just talks to one another. I think this is a nice hybrid of these two elements.

James Chappell was a delegate at TOPHOTELWORLDTOUR London 2020. To attend, address or sponsor our boutique hospitality networking events around the world, contact the TOPHOTELPROJECTS team.