Generally speaking residential yields are much lower than hotel yields, the happen to offer lower risk profile, there's more customers, there's higher occupancy, and generally speaking residential also tends to correlate with house price inflation, which is different than the hotel business so resi values tend to go with house price values, and so as an investor you look at both the cash flow and the value side of things. Whereas in the hotel it tends to be that the cash flow is directly correlated all the time with the value. And so, yields tend to be lower, but capital appreciation can be higher, in resi than in hotel.

Africa is more than a great opportunity, it's the biggest market to come. Just to keep in mind, a few numbers; first, 1.5 billion inhabitants by 2050, it will be bigger than uh, China or bigger than India. In the continent of Africa fits more or less all the whole world; uh China fit in Africa, India, Europe, US, and Brazil, just to give you the size of Africa. And today, if you take the market, only 5%- 5.3% of the sub-Sahara Africa, just to give you uh, the, the- the mass market that we are developing, uh, branded hotels, 5%, versus 44 in, in Europe, and 70 in the US. Then, to show you the massive opportunity we have, all together, bigger than chain original player like Mangalis Hotel Group, or small independent hotels, to support the growth of Africa.

The perception of Africa is always different. If you are well connecting with Africa, this is our case, because our ownership is Africa; we are belonging to a company, we are based in, in Ivory Coast in Senegal for the past decade, and we know all the issues of Africa that we need, and we know we need to understand how we work in Africa, which is, I agree, totally different than in Russia or Western Europe or in even in the US. And as far you know all the issues and how to deal with, it's more easy to work with than, you know, and Africa, probably there is more administration, more bureaucracy than in Europe, but the way of doing business is more the same, the wish of doing business is the same, and the acceleration of doing business is clear, then all in all, at the end, it's not to say complex to do business in Africa. It take more times, according some countries, logistics is an issue, logistics to bring the stuff from Europe or from Asia, it's an issue to build, it's an issue, but with the new technique of the approach and the new logistics that we deploy, it's more easy to in Africa, and the time frame from day one, the construction and delivery to operate, the time has reduced by two, at least for past 5 years, and even with take modular construction we proposed a construction for 10 to 11 month, which is track record in the industry.

Why do it? Because number one, if you don’t, somebody else will. And we’re already seeing the first hotel chain that's tied up with a retailer coming together to go in there. They’re going to bring their retail marketing ideas over. Secondly, it provides an ability to monetise the wireless. So you could put great wireless in, so you've taken away the worry about having to have great wireless and it being a complaint point, but you've done it in a way that it pays for itself by increasing the spend of your customer when they're on site with you by personalised their visit.

Real estate funds can be a part of the development process for hospitality projects. In this TV show Andrew Pratt explains what Patrizia is all about.

Real estate funds and commercial investment businesses

Patrizia was set up in the mid 1980s, basically as a residential property company investing in residential property in Germany. Went through an IPO in 2005, now has over fourteen billion euros worth of assets, mainly in central Europe, fifty residential and commercial, we have thirty funds in Germany, we're the second biggest house builder in Germany as well now, the market in Germany's changing from being a, er, rental market to home ownership. Similar model to the UK. We act for a hundred pension funds across Europe - well across the world, actually. The strategy for Patrizia was to replicate that model, in the UK. Came into the UK, about - just under two years ago now we've been setting up both residential and conversion, commercial investment businesses.

Hospitality TV will continue to feature shows about real estate funds and development. Why not take a look at who else has been featured in the Hospitality250.

I've set the first student fund up in the UK in 2000, and if anyone said to us at that time that that was going to be a massive alternative asset class the way its grown, I mean you wouldn't have believed them. It's amazing the way that one has developed, and one of the main reasons it did develop was Nick Porta at Unite did a lot of R&D on what the customer wanted, so he made sure that the size of the unit was the right size for the student, that the services that the student got was exactly what they wanted and Unite have been incredibly successful as a result. And then now we're seeing some of these, interestingly hostel type operations, I mean they have existed, but of course now they're a bit flashier, 'cause they're actually what some of the student accommodation blocks, you take Edinburgh for instance, you know they have a reduced weekly tenancy, say forty two weeks in the year, the rest, they they, pack a single unit room, that they put six beds in. And they operate it on a hostel basis. Because one of the interesting thing with host - with hostels is, you can have a hostel without having a bar. Actually, as it happens, the bar is an important ancillary income source for the operator, whereas in the student accommodation you daren't have one! It doesn't go over particularly well, so, I mean every, every sector has a nuance. Private rented sector can be colossal in terms of the investment opportunities as compared to student housing. And actually as compared to hotels. You know, youngsters now, can't afford to buy their own houses, because the deposit that's required is enormous the mortgage market reviewer has made it difficult to get a mortgage, so actually the provision of rented housing in the UK is a massive need, whether it be affordable, whether it be mid-market, you know, for youngsters just leaving university it's got incredible opportunities and it will become within the next five years a major asset class, as hotels are.

The serviced apartments hospitality sector is gaining more prominence in the industry. In this TV show Marcel Lindt discusses Frasers service apartments.

An expanding hospitality sector

So Frasers is a leading operator of serviced apartments, we have about ninety properties and about fourteen thousand units under operation and in the pipeline at the moment, we are from Singapore originally, and so we have a very strong presence in Asia, but we also have a good presence in Europe, and in the Middle East. More recently we have also started to look at Africa as a region to grow. So, I would say the main difference to a hotel is, that you get larger rooms, you have a separate living area, you have a separate kitchenette, sometimes even a full blown kitchen, we often have a separate bedroom, essentially we've giving more space to the traveller. On the other hand, you have less, open spaces, so you have less public areas, typically. So, we are - we tend to be in areas where there's lots of restaurants around, so we feel we don't need to have a lot of F&B offering in our properties. Same with conference and banqueting, you probably find is more in a hotel, for us that’s more sort of, you know, we have a small meeting rooms for - for smaller events, but we are not doing big conferences, like the one here now at the moment.

Hospitality TV will continue to feature shows about serviced apartments and other hospitality sectors. Why not take a look at who else has been featured in the Hospitality250.

I think the main reason you'd invest in a hostel concept is there's a real shortage of this type of accommodation - it's a niche that hasn't been well catered for. So, while maybe twenty per cent of world travellers are youth travellers, only five per cent of accommodation is designed for youth purposes, so there's a real shortage and the other reason you'd do it is actually the economics are very good, you'll see on a sort of revenue generation index spaces that we will clearly out perform a typical three or four star hotel and the reason for that is simple, we have quite high bed densities, typically there are four beds in each, room, so you've basically got, on a smallish size room with it's en-suite bathroom, four people, consuming, food and drink, er, paying for the bed, and that creates a very, a very powerful, revenue generation per square meter.

In terms of profitability, hostels rank very high, because already the revenue generation is very strong given the bed density, and because our costs are actually much lower - typically for instance we've just opened up our Paris hostel with nine hundred and sixteen beds, and that's staffed by forty five people, so the ratio of staff to guests is incredibly good and on that basis actually our profit per bed and per square meter will certainly be well up in the hotel space. It's not at five star levels, but it's very comparable to many three or four star hotels. The staffing levels are, obviously, materially lower, because what we're doing is providing much more basic services - the focus is very much on the ground floor, the social spaces where we have our event coordinators, our bar staff, and all the, all the reception staff, this is a 24/7 operation. And then upstairs the housekeeping's much more limited, there are no televisions, there are, just beds, er, and therefore the cleaning is much more basic, but it's functional and very purpose driven.

Hotel owners will all have some common challenges. HOFTEL aims to help hotel owners work together as Simon Allison explains in this video.

Hotel owners unite

Well we are a hotel owner's alliance, so - why? Essentially because if you look at the structure of the industry, I mean most people know, a lot of the hotel real estate is managed by third parties, by other people, and if it isn't managed by third parties it's branded by third parties. And most of those are bigger and more global and certainly more experienced at negotiating contracts than the owners. So, ten years ago, I decided with a group of other owning companies to get together and form an alliance, almost like a hotel owner's trade union. And our objective is to leverage the combined power of owning companies around the world.  

Hospitality TV will continue to feature shows about hotel owners and real estate. Why not take a look at who else has been featured in the Hospitality250.