As the world’s leading hospitality advisors, JLL’s forte lies in helping people discover hotel opportunities, find hidden gems for hotel investments and providing support throughout a property lifecycle.
Hotelier India caught up with Xander Nijnens, Senior Managing Director, Head of Advisory & Asset Management Hotels & Hospitality, Asia-Pacific, JLL, during his brief visit to India. Xander, who has more than 15 years of experience in hotel advisory, investment, asset management and operations across the globe, had some valuable insights to share about hospitality trends in Asia Pacific, and India, in particular…
Excerpts from the interview…
From JLL’s perspective, what does the hospitality scene currently look like in Asia and India, in particular?
It’s a particularly exciting time in the hospitality sector at the moment. The scene is vibrant all over. Much of Asia is roaring back in terms of demand and tourist arrivals. Of course, India’s in quite a similar zone too – with really strong performance coming through from hotels, which are luxury and domestic-driven. So while tourism and hospitality are in a good space, a lot of people in the real estate sector are looking at hotels again, because they can see that, from a growth perspective, it’s a really interesting place to be. The mood is very positive.
During the pandemic, there was a slowdown in new supply and lack of CapEx going into existing properties. So with that having cleared, and with there being a strong demand growth, more people are excited about investing in the hotel sector. I’d say a lot of hotel owners are currently in a place where they’ve got existing assets that need investments. That has resulted in quite a lot of new projects coming to fruition.
Which are the segments in the industry that are doing well and have the potential to keep soaring?
In the past two years, Luxury and Lifestyle, both segments performing well during the pandemic, have seen strong traction across the region. Luxury has proved particularly resilient, whilst Lifestyle as a segment often provides higher returns and brings revenue stream diversification. We see this continuing to grow strongly, even with the ‘Lifestyle’ term and concepts being stretched in every direction. Conversions have also been a strong source of growth in the past several years, with operators keenly plugging their development pipeline gap with existing products, and with numerous new collection and conversion-friendly brands coming to the market.
H1 2023 witnessed the signings of the first Waldorf Astoria and Radisson Collection in India which will be located in Jaipur and Hyderabad respectively. The Raffles Udaipur which opened in 2021 was also the first of its kind in India. Several brands are also looking to capitalise on the India market by expanding their midscale offerings given that this is India’s largest and fastest growing segment. Of the total signings recorded in India H1 2023, almost 60% of the total keys are located in tier 2 cities and over 85% of the total are located across emerging markets. While conversions and brownfield projects dominated the pipeline from CY 2020 to 2022, H1 2023 has recorded over 55% of the upcoming keys under Greenfield developments, as last witnessed only in pre-pandemic years.
Hospitality players are getting into branded residences. Can you please share your insight on this growing phenomenon?
Globally, branded residences have been a real estate development success story and more and more hospitality players have come into the segment. Most of the large operators, especially those in the luxury segment, have set up dedicated teams to support investors and developers in the segment. The premise is that carrying a premium brand on a residential development can increase the sales price, improve sales velocity, and diversify the buyer pool.
This holds true in many luxury urban and resort markets, and we are seeing this pick up significantly in Asia. Thailand has been the leading market in Asia to date on branded residences, which started with the Amanpuri in Phuket in 1988 and has seen many more projects. Many branded residential projects subsequently took place in the regional capital cities in Southeast Asia, and we are seeing more demand now in North Asia coming through. Beyond luxury, there are also more branded developments in the lifestyle segment, and increasingly lower down the chain scale and with non-hospitality brands. Whilst there is certainly good potential for branded residences, it is critical to work through the costs and benefits to ensure that it stacks up your focus market as it comes with fairly high fees and potentially higher development costs.
In India, the recent past has witnessed a strong increase in interest from hotel developers/ investors looking to include branded residential components to their mixed-use developments in metro markets as well as in key resort destinations as second homes. This is particularly significant in the luxury segment, where the synergies between the hotels and residences can improve the overall experience for both, guests and residents. From the investor’s perspective, sales proceeds from the residential portion of the project ease cash flows whereas the owner benefits from a professionally managed, income-generating asset.
Environment Social Governance is the new buzzword in the corporate world, and the hospitality industry is not far behind… As an advisor, how important you think it is for the success of a hotel to be ESG-ready in today’s times?
The last few years have seen ESG rocket up the agenda and priorities for many hotel owners and operators, with Europe very much leading the globe on ESG principals. Adoption of ESG best practice in Asia has been mixed, and the region is behind the globe. Most hotel sector players are getting to grips with which standards to adopt, which guidelines to follow, what consumption data to track, and what targets to set.
Our inaugural Hotel Operators’ Sentiment Survey unveils that 65% of the hotels have a carbon emission reduction plan and a higher proportion is observed for higher-end segments. This is a good starting point, yet regulation and public sector support is lagging in many markets, and we expect changes to come through more strongly. Ultimately every hotel asset needs to have a clear pathway to becoming more efficient to enhance its performance and value. Sustainability, as a driver of guest preferences, is also coming through increasingly, both at an individual level as well as through corporate contracting. We expect progressive operators and owners to invest more substantially in reducing consumption and increasing asset performance, as sustainability and climate change become ever more topical
One of the ESG aspects most unique to India is its emphasis on social inclusion and upskilling people across various demographics. While sustainability is the need of the hour and all responsible corporate houses as well as hotel brands are leaving no stone unturned to responsibly conduct their businesses, hotel organisations in India are also channelising significant efforts into uplifting and contributing to their surrounding communities as well as strengthening their efforts towards excellence in governance.
What is the vision you have for India in the coming years?
We’ve been in India for a long time. It’s a market which is increasingly on every global investor’s radar. We have a presence here with some really great institutional and private clients, and that helps us tell the India hospitality story to global investors. But in terms of where we are, I think it’s always been the hallmark of our business to have very strong, small, credible and focused teams supporting the hotel sector. In Jaideep Dang, MD, Hotels & Hospitality, JLL India, we have a great leader, who fundamentally understands the sector well, and is able to partner as an advisor with most prominent investors and operators here.
We’d love to be able to offer additional support, whether that’s around sustained ability or asset management, or perhaps more capital markets, debts, brokerage etc. We’re excited to be able to spend more time here.
