The hotel sector has matured as an asset class, moving ever-closer to the mainstream as the combination of income and capital appreciation gains more attention in the search for meaningful returns.
As it does, so those alternative accommodation types – the hostels, serviced apartments, even holiday parks – are attracting those for whom a little extra risk has its attraction in terms of extra reward. In part this is driven by where we are in the cycle and the search for income. But it is also a response to the innovation that is disrupting the more traditional sectors and a number of key long-term trends such as demographics and urbanisation.
The alternative accommodation sector itself has been growing in stature and credibility, with brands helping to provide scale and a spate of merger and acquisitions bringing with them a wave of consolidation.
While investors are presented with a new range of options, traditional hotels are facing the challenge of new beds for their customers to rest their heads in, no least from the sharing economy, and they must consider how best to address the competition: do they focus on their existing areas of expertise, or join the fray themselves?
This report is vital reading for hospitality professionals and investors, for it proves that while the new alternatives initially appear to be vastly different, they actually overlap one another and have many factors in common.