You can’t make an informed decision without the data. This is especially true when it comes to hospitality investment. And if you want to talk about hotel data, you need STR, a one-stop shop for all matters related to hotel performance data. Marina invited Thomas Emanuel, Senior Director at STR, for the eighth episode of the IDEEA podcast to share a teaser of what attendees can expect from his session at IDEEA on day one.

Over 20 minutes, Thomas dived into the data, sharing insights into some markets’ performance compared to the 2019 data. One of the standout markets with positive performance was Italy. When asked about the forecast for the remainder of the year, Thomas believed it would stay bullish with the continued influence of inflation, revenge tourism and significant pre-booked leisure demand. Most of the performance has been driven by the domestic market, but it is hard to be confident that it will continue or grow as international markets return.

Thomas will be taking the stage at IDEEA to decode the data further. Still, these 20 mins on the IDEEA podcast can be seen as the primer to the final coat of paint he draws at IDEEA to provide attendees with a complete picture of whether hotels in Southeast Europe are set for bright times ahead or if the pent-up demand will fizzle out like a Tik-Tok dance trend.

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TRANSCRIPT

Intro: Welcome to the IDEEA Podcast, a channel for the IDEEA Hospitality Investment Forum, which is an annual gathering for the Hospitality Investment Community in Eastern Europe. Tune in to insightful conversations between the IDEEA team and hospitality investment leaders and innovators across Europe. And now let's dive right into today's episode.

Marina Franolic: Hi everyone! Welcome to IDEEA Podcast. Today, it's my great pleasure to welcome Tom Emanuel, Senior Director from STR. We've been working with STR for many, many years now, and STR has been very supportive. Thank you so much, Tom. It's a pleasure to have you here once again.

Thomas Emanuel: Good to be here, and Lovely to see you.

Marina Franolic: Tom, you're based in London, correct?

Thomas Emanuel: I am. Yes, I'm in London today.

Marina Franolic: So we've just talked a little bit, tell me, your travel arrangements now for the second part of the year, are crazy, just like it was pre-COVID?

Thomas Emanuel: 100%. It kicks off next week for me, conference, conference, conference, which is great. It's great to see the industry getting back together, it's great to obviously be able to do it. There are no restrictions, I haven't got to take tests or fill out forms or anything. So yeah, I'm looking forward to it. It's going to be a busy few months until Christmas. It'll be Christmas before we know it. But yeah, it's nice to get back to normal, and as you say, if I think back to 17,18, 19, it feels exactly like it did then just airport - hotel - conference, airport - hotel - conference.

Marina Franolic: Just before we started recording this, I started writing a LinkedIn posts, and I wanted to announce you and I was looking at the market performance outlook presentation that you always do. And you're going to do the same in Athens on September 26th and 27th at IDEEA. And I realized that the audience is always so keen to hear what you have to say. It is just amazing how data is important and how much we actually like to hear what is going on, what is happening with not only our market, but the competitive market. So let me start with a question. Hotel business has been really volatile in the past 24 months. What are the locations in Europe where you saw the fastest and slowest return rate in terms of ADR and occupants’ rate, of course, in comparison to 2019?

Thomas Emanuel: Yeah, I mean, to answer that, I think it's important to sort of set the scene a little bit in terms of obviously where we're coming from. And as you rightly say, incredibly volatile. We all know what's happened, we've never seen anything like that before for our industry. But 2022 is the year really we're getting back, let's be honest. And I think what we've seen, we've seen some continuations of patterns from 2021 in some ways. So certainly leisure markets have continued to do well, they continue to drive a lot of the demand, as has domestic business, so going into more regional markets that may be international hubs. We have to remember as well, when we look at the data and we think about where we are sort of July year to date, coming into August as well, we've got to remember when we use 2019 comparables, that actually the first couple of months of the year was still poor. It seems like a long time ago now to us all because we're back out there, we're traveling, we're meeting people, but we were basically in lockdown, because the Omicron Barium was raging, January and February were still incredibly challenging for the hotel industry across Europe. So we've seen as that has lessened, as restrictions have lifted, we've seen the return of city demand and corporate demand, less so group demand that's taken a little bit longer to come back. But going back to what I was just saying we're certainly going to see a return of that more strongly in the latter half of the year as all of these conferences and events are returning to the market generally. So I think it's been a good last few months. The summer was very strong for the industry across Europe as a whole. And we're confident for the rest of this year, I think we've still got -- we've kind of removed ourselves from the COVID cloud and now we've got the cost-of-living cloud that we're going to have to be attacked as an industry. And that's obviously something that we're going to be looking at. But in terms of who's recovered more quickly, if we just sort of start on it on a country wide level, I think a lot of those trends that I mentioned are feeding into to what you would expect to see. So actually when we look across Europe and compared to 2019, if you look at the occupancy, if you look at the top performers, you can kind of put it into two, three main buckets, I would say. Those that have got a very strong domestic demand base did well. So the UK, for example, it's got a strong domestic demand base, but then we can go far to the east. And we can see markets like Armenia, Kazakhstan have actually performed relatively or very well in comparison, because again, a lot of that is domestic demand. Also those that have predominantly been driven by leisure demand. So Turkey has led a lot of European leaderboards over the course of the year, Cypress also doing well. But not just the main, if you'd like to Iceland, again, compared to 2019, it's doing very well. And then those that lifted their restrictions earlier obviously had a faster recovery. So UK, Ireland lifted things a bit quicker than much of continental Europe. So if we look year to date, markets like Austria and the Netherlands, which were a bit slower to lift the restrictions, they recovered a bit later. So their data looks a bit softer. But as we moved more towards that the present day, again, those markets are doing relatively well. And I think the other area, which is still a bit of a differentiator for some markets, thinking about countries like the Czech Republic, or Hungary or Germany, the reliance is on groups. So as they recover, we will see those numbers get better as well. So that's kind of occupancy. If we move to have a look at rate well, I think all of us know that have been looking at data and looking at the market rate has been skyrocketing in many cases.

Marina Franolic: Yeah, significantly increased.

Thomas Emanuel: Significantly above. Of course, partially, that's driven by inflation, as you would expect, but it's also being driven by demand people's needs and wants to get back out into the market after years of being locked down. And less restriction to pricing, less resistance to pricing, I should say. So we've seen rates up across the board back up above '19 levels, but some standout markets. Certainly I think we're in the Mediterranean, which I think is, fantastic. As we look forward to the idea conference, of course, Greece, Italy, Portugal, Croatia, you know your home country, also France doing pretty well from a rate perspective, but across the continent is looking good. But those are some sort of star markets. And I think actually Italy, I didn't mention on occupancy perspective. But if we look at a lot of Italian markets as well, they've done very well this year. So Italy has been have been a strong performer.

m: I actually think it's going to be very interesting to compare numbers now and at the end of the year. As you said, Germany, Hungary, that depends on this MICE market or the group market, it will be now that events are really coming back. And as you said, it's travel to events in September, October, you can just see the lineup in Europe; it's going to be very interesting to see the difference.

Thomas Emanuel: Absolutely. And we were pretty bullish about the rest of this year. I think a lot of that leisure demand had been kind of pre-booked, it's been in the works. I know a lot of my friends have taken holidays that they booked in 2020 and they've actually been able to take it this year, you know, they've had to postpone, postpone, postpone. And I think as well, from a corporate perspective we've been away from our clients, we've been away from our contacts; we want to get we want to see people again; we want to network and the conferences are coming back online. So yeah, touch wood we should be in pretty, pretty good autumn.

Marina Franolic: I'm so really happy to be in Greece this year. Tom, you mentioned a couple of countries. But do you see any cities within Europe that actually went rocket high that exceeded all of the expectations?

Thomas Emanuel: I think the saying rocket high and exceeded all expectations is a bit too bullish. If I look at sort of our cities, and I kind of rank them from top to bottom actually, what we're seeing that the top is actually a lot of towns, as opposed to cities. When I say that, obviously, what I'm implying is that it's those regional markets that are predominantly domestic driven. They're actually the ones that in comparison to 2019 had the strongest occupancy return anyway. But if we then take a step back and look at kind of the global gateways the key European markets that we talk about year in year out, I think there are some standouts. I think Istanbul has done phenomenally well. I mean, that's got a strong domestic market. It's got fantastic accessibility through Turkish airways, but other airlines as well. Two big airports, leisure business, MICE business, corporate demand, it ticks all the boxes; Istanbul has been very strong. As has Warsaw, another standout market from my perspective, occupancy wise it had an awful lot of new supply coming in over recent years, as the Polish capital has grown and attracted more demand. So Warsaw has done very well. And then actually Paris over recent months; obviously a top tourist destination in the summer, but has all those other demand drivers doing well. And then what we've seen coming back as well, London, Dublin, Edinburgh, referring to UK and Ireland generally being quite strong. So those are kind of some key ones. And then I think from a rate perspective, it's kind of much what I said previously. Paris, again, doing exceptionally well, growth on '19. And then other standouts, when I look at our sort of leaderboard, Athens, and then Florence and Rome as well, doing well. So again, market sort of looking at the region that the IDEEA conference is looking at have generally have performed pretty well from a rate perspective.

Marina Franolic: We always talk about hotel performance, but you do not only collect that data, you do actually much wider set of services. So can you just share with us a little bit of what type of data you offer, and I know that [inaudible 11:29] report is one of them, which is very interesting, because you can also measure your performance against another competitive destination. So tell us a little bit more about that.

Thomas Emanuel: So I think at STR we like to see ourselves and I think we do see ourselves as a one stop shop really, when it comes to hotel data to understanding the market, we are there. And obviously, I think everybody is very familiar with the top line performance that we bring to the market. So we look at occupancy rate, rev par, and then we break that down by daily, weekly, monthly data, you can look at that by different classes as well, how they're performing, as well as down to sort of a competitor set level. So you can get very granular information. But it doesn't just stop there, as you rightly say. So we also track profitability data on a monthly basis, on an annual basis. And our profitability sample of hotels is growing month over month. Segmentation as well, so we can understand group transient and contracted business, we have robust data there. We forecast of course, often I finished my presentations of what we think is going to happen, doing that both on a custom basis, but also on a market level working in conjunction with our friends at tourism economics on that. In addition though, it doesn't just stop there. One thing that we've really been pushing over recent years, and I think it's been so pivotal, as we've come into, and subsequently out of the pandemic is business on the books, so we can look at what occupancy is on the books, those spikes for events, what have regularly been weekend spikes, because of the leisure-demand driving business and so forth. So business on the books is another real focus point for us. And of course, as well, many of the industry will be used to hearing us talk about supply. We have our database. I think it's certainly the most robust database globally looking at existing and future supply. So we can look at the pipeline, we know what's coming into the market, which is obviously ever so important to understand investment trends, and then also anticipate how that's going to impact performance. That's sort of, I would say our core. But then we've also started doing some consumer sentiment surveys, which have been fascinating to see consumer sentiment evolve over recent years, recent months as we've obviously been in uncharted territories. And then something else, which maybe people are less familiar with. But STR was acquired by the Costar group back in October of 2019. And they look at commercial real estate across all asset classes. So not just hospitality, which is obviously the piece of the pie that STR fulfills, but across key global markets, UK, Canada and the US but expanding internationally as well. We've also got this path so we can look at retail, we can look at industrial, we can look at offices as well. So different asset classes. So that's really the future we're going to be looking at one amazing platform with all of our data integrated. That's what we're working on, we're working towards, and it's an exciting, exciting future within the Costar group for STR. So lots of data.

Marina Franolic: It's really interesting because if you talk to many of the to developers and investors now and also the operators, you can see how offices together with hotels are merging in some way. And maybe Zoku is the best example, where you have, as they say, it's during the night it's a hotel, during the day it's an office building almost. You can actually utilize the room as a two-way space. So I think it's going to be very useful actually to have the data from all these asset classes that maybe in future will be some kind of mixed use.

Thomas Emanuel: Absolutely. I think that that's, that's going to be pivotal. And there are other benefits as well to the hospitality industry when we're looking at this kind of thing. If you're thinking about your demand drivers, and you're looking at offices, who's in those offices, who's likely to have visitors taking rooms, are you likely to be able to sell your CNB space? Can you host FMB events? Who's in your neighborhood? What does the demographics look like? What else is happening? What are the demand drivers? What are other developments? All of that is going to be housed within this platform, which I think is going to be incredibly beneficial for our industry. And as you say, with more and more mixed-use projects coming and more different ways of looking at the hospitality industry that we've seen with brands evolving, and co-living, co-working, and so forth.

Marina Franolic: It's all coming together.

Thomas Emanuel: Exactly, exactly. And I'm excited STR is going to be at the forefront of being able to deliver that data and that analysis.

Marina Franolic: Tom, you will be delivering one of the keynotes at IDEE in Athens. I know you already shared some details about the region, and I see more and more brands coming in the entire region. So that means that your data is going to be even better because mostly the brands I know are definitely the companies you work with. Is there anything specific anything very interesting that you will present to us? And you don't necessarily need to share now, because then you won't have the surprise to share at the event, but maybe you can just share a little teaser.

Thomas Emanuel: Well, I hope everything that I present will be interesting for you. And I would just add in there, yes, we do work with all the brands, but we do it with a large number of independent hotels and locally run and manage properties as well. You know, I'll be providing the standard stuff that you'd expect from STR, but it will be the very latest status. So we'll be able to really look at how was the summer, which is so important for many markets across the region that IDEAA looks at, and look at that from a city perspective, and as well from a resort perspective as well. And then, I've said we're pretty bullish about the coming months, but we'll bring some data to the party about that, our forecasts are business on the books as well. And I think what I'll be looking to do is, you know, marry that up with the consumer sentiment data as well. I think that's something we found really quite powerful talking to our traveler panelists, as we call them who provide all of this insight, and then showing actually how that is relating to what materializes for the hotels and for the operators. So we'll be bringing all of that to the conference. Certainly that state of the market, we'll probably drill down in Athens a little bit, obviously, our host city, which has done very, very well of late and hopefully help set the scene for a lot of the conversations and discussion that we will have throughout the couple of days.

Marina Franolic: Exactly. And I think everyone will be very keen to listen to the interpretation. But the forecast part is going to be very interesting, because everyone is seeing now the summer has been really amazing in the region, but then the utility price is going up. And the entire situation everyone is kind of a little bit -- I wouldn't say scared, but just waiting to see what will happen. So I think your insights will be very useful.

Thomas Emanuel: I hope so. And I think as I said earlier, we were very conscious that that is really the next big challenge for our industry. Sky high inflation and cost of living energy crisis, energy prices, and so forth. What's that going to do to disposable income for businesses as well as individuals, so very much front and center for us as well, as we as we look to move forward.

Marina Franolic: Tom, it was really nice to have you here. I wouldn't go any further because I think you'll say everything in Athens. So we're just waiting and hear there. It's thank you again for supporting and being part of [inaudible 19:44] and IDEEA for all these years. And I'm really looking forward to seeing you in just 25 days.

Thomas Emanuel: 25 days is that -- Okay. Well, I look forward to seeing you too Marina. It's been a while so yeah, look forward to catching up and looking forward to the conference and seeing every one as well, I'm sure it'll be a great few days.

Marina Franolic: Thank you. Have a great day.

Thomas Emanuel: Thanks, You too. Bye bye.

Marina Franolic: Bye Bye.

Outro: Thank you for listening to the IDEEA Podcast, the channel for the IDEEA Hospitality Investment Forum. You can find a full transcript of this conversation in the Content Library on ideaa-forum.com. With other reports and insights. We look forward to welcoming you and your colleagues in person at IDEEA in Athens, Greece on the 26th through 27th of September 2022. If you haven't registered yet, please go to ideaa-forum.com to purchase your pass today and save before ticket prices increase. Please feel free to email us with any questions at hello@thebench.com.

Until the next episode, stay safe and keep well. Bye-bye for now.