We have a Kodak moment in the hotel and hospitality industry: Ali Borhani
Ali Borhani was a delegate at TOPHOTELWORLDTOUR London 2020. Photo by Rahul Venkit
There is tremendous opportunity in repurposing and repositioning failing retail spaces as unique hotels and hospitality concepts, says Ali Borhani, Managing Director, 3Sixty Strategic Advisors.
Ali Borhani is the managing director of 3Sixty Strategic Advisors, a boutique advisory firm based in London and focused on introducing unconventional, creative solutions for repurposing, repositioning strategies for trophy real estate assets.
The emerging markets geo-economic and strategy expert spoke exclusively to TOPHOTELNEWS on the sidelines of TOPHOTELWORLDTOUR London 2020, which took place on February 6 at the Conrad St James, about hotel investment opportunities and pitfalls in the post-Brexit era.
Hotel investment is a long-term game
Borhani: I genuinely believe that we have a Kodak to digital moment in the hotel and hospitality industry. The incumbents are either late or oscillate between asset heavy, asset light models.
But the question is not just about asset ownership; it’s about the product’s soul and service innovation and shaping the market. Hotels and hospitality, when it comes to real estate, is an asset class that you look to invest in over 20, 25 or 30 years. You do not go into a hotel project and say: ‘I changed my mind.’ Some hospitality projects take half a decade to be approved and then in order to have your returns, you have to be very patient.
Your message for investors in the post-Brexit UK hotel industry?
Borhani: I genuinely believe there is a tremendous opportunity in repurposing and repositioning failing retail spaces. You cannot put the genie back in the bottle. The fact of the matter is that online shopping is growing rapidly. As a result, the question is: what are you going to do with 40,000 sq ft on a prime street in the middle of the city? Building unique hotel and hospitality concepts could provide the answer.
How will Brexit affect UK hotel investment and hospitality at large?
Borhani: While the question of Brexit is something that is officially done, technically, it has just started. The hotel and hospitality industry is at the front line of any blowback from this decision in terms of human capital and capital formation.
Competition is increasing. There will be extra effort from other capitals in Europe and people are reducing their jet fuel, carbon footprint. So the question is how to create a local domestic inter-circular tourism momentum between various parts of the United Kingdom and how to create an international strategic plan to bring more people to not only London but the United Kingdom at large.
What is the biggest pitfall for hotel investors?
Borhani: The pitfall is complacency. The pitfall is showboating and showmanship. Optimism is: you have a wonderful asset called London, a wonderful asset called the highlands in Scotland, Lakeside district, Bath, Manchester. So each of these have to have their own story. You cannot be one UK to all, and then develop a hotel and hospitality story only around London.
When you go to a shop to buy a suit, the shop is successful when it not only not sells you the suit but also a pair of socks, a tie, and ideally a belt as well. That is called unit per transaction. So if a passenger comes and spends two nights in London and leaves, they cannot make a dividend that is rather very limited to London. The question is how can we create a mechanism where any traveler comes, spends two nights in London, one night in Bath, one night in — I don’t know, Kent — and the story goes on.
Thoughts on TOPHOTELWORLDTOUR
Borhani: I think one of the most important elements in the hotel industry is dialogue and discussion. I congratulate you all for bringing us together, for providing an environment in which we can sit, brainstorm, exchange ideas, counter each other’s ideas, convince, agree to disagree, and disagree to agree in more ways than one.
Ali Borhani was a delegate at TOPHOTELWORLDTOUR London 2020. To attend, address or sponsor our boutique hospitality networking events around the world, contact the TOPHOTELPROJECTS team.