Based on survey results, the panel is bullish (median 67.5%) on the prospect of the 2020 transaction market beating 2019's tally of $62 billion. Interestingly, nearly 1/3 of the panel is 100% confident of this! On the other hand, the panel's outlook on U.S. RevPar for 2020 (median at 50%) is gloomier with nearly 2/3 of the panel believing it less than 50% likely to exceed STR's forecast of 0.5% growth. 

Questions to panel experts: Why are you so bullish on hotel transactions but more conservative on RevPAR? If hotel operating performance stagnates, why will there be such continued interest in acquiring hotel properties? Should growth in hotel performance (i.e., RevPAR) not be a significant force driving hotel transactions and values? For the naysayers on transaction growth, why is this the case?

Kevork  Deldelian
Kevork Deldelian
Chief Executive Officer of Millennium Hotels & Resorts, Middle East and Africa

We're bullish about hotel transactions and look to grow our footprint in the region. With RevPar being one of the main KPIs for developers, and the challenges we've witnessed with ADR, we've had to review the way we run our hotels. While RevPar will always remain a priority, we also look to drive occupancy, especially from untapped markets, and this approach works. In Dubai for example, we haven't seen a major dip in occupancy while supply increased dramatically. Also, the supply and growth of hotel transactions are no longer dominated by luxury brands and upscale properties, we've seen an influx of new brands offering high-quality three and four-star products that appeal to new market segments for the region.

Where ADR stagnates, we have two options; we can offer room types that will attract new market segments, or we can look at the cost as the second most important element for developers. At Millennium we have transformed the way we operate by taking a fresh approach to the business without impacting quality and service. We've made major enhancements in people development which has driven efficiency, which in turn has enabled us to fully optimize our GOP threshold. By managing costs, we're able to deliver the right returns, which demonstrates that the industry remains attractive for hotel transactions and development.

Addressing the naysayers, this is coming from operators that are reluctant to change their approach to operating hotels and they will struggle to deliver the returns owners are now seeking.

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