Between 29 September and 1 October 2024, senior representatives from across the UK hospitality industry will head to Manchester for the Annual Hospitality Conference (AHC).
This year’s speakers include renowned investor Luke Johnson, political commentator Robert Shrimsley as well as senior representatives from Whitbread, Starwood Capital and Pandox.
Not only will you hear from leading hotel investment executives, but the multiple networking opportunities mean you’ll be able to capitalise on the return to dealmaking we are seeing this year.
You can book your ticket here.
Over the last few years the lending market in the UK, has undergone a revolution with the rise of private credit and challenger banks.
We recently caught up with Emma Young, head of loan syndication at AIB UK, to discuss what has changed.
Young will be speaking on a panel entitled: 'Beyond Traditional Lending: Evolution of the UK Debt Market' (Tuesday, October 1, 2024 11:30 AM to 12:15 PM)
Hospitality Investor: How has the market for hotel lending evolved over the last decade since the Global Financial Crisis?
Emma Young: Competition in the sector to fund quality hotels in the UK has increased considerably. From a funding perspective, the recent interest rate environment has resulted in some altering of the capital structures with additional equity and / or junior loans being evident. However, it’s worth noting that AIB is not just led by LTV, we are very interested in LTV but it’s not the primary driver of the level of debt. Whilst crucially important, the main driver of hotel lending structures is the cashflow and leverage multiple will be linked to the amount of debt servicing the assets can comfortably support with appropriate headroom.
However probably the biggest change in the market since the financial crisis is how priorities around sustainability have evolved with AIB very much at the forefront of activity. We recently announced the expansion of our Climate Action Fund to €30bn by 2030, a move that is poised to triple our existing book. Our ambition is that 70% of all new lending will be green (or support those on the transition) by 2030.
Hospitality Investor: Are the traditional banks as active as they once were?
Emma Young: We have a dedicated hotel team what will originate and manage relationships and opportunities. The pandemic certainly slowed the pace of new lending, (which was the case across the market.) But post pandemic the recovery has been significant. AIB is well placed given its solid capital position, to enhance the balance sheet in hotels and we are actively looking for growth opportunities.
Furthermore, given our strategic focus to green the loan book, we are well placed to support hotel clients transition to a low carbon future.
Hospitality Investor: What are you looking at when a customer comes to you asking for a hospitality loan?
Emma Young: We are primarily focused on London and key UK gateway cities or those cities which have a strong performing hotel market.
We look for strong borrowers that have the right structure in place to manage their hotels with solid management and risk processes in place. Critical to us is that our hotels clients and owners are well invested, and that management have a continuous plan to reinvest as appropriate. We spend time with management to get a good understanding of the hotel revenues and how these benchmark against their competitor sets.
Hospitality Investor: What hospitality subsectors or sections of the market are you most interested in?
Emma Young: London is huge market and one that we are very keen on alongside Edinburgh and the gateway UK cities. We will look at a range of assets from full service to limited service and long stay. This year so far, we have participated in a number of portfolio deals but also single assets within those markets.
We are not only focused on branded well invested hotels but will are also keen to look at the independent hotels subsector.
Hospitality Investor: Finally, the theme of this year’s event is “Proven Paths, New Horizons”. What new opportunities do you see in the hospitality sector?
Emma Young: AIB UK sees meaningful opportunities to support customers to grow/invest into their portfolios and to grow the balance sheet in hotel finance with new clients.
With the shift in the office market and hybrid working likely to remain, the trend to convert office to hotel is likely to continue and with AIB’s position as a leader in sustainable finance, we are well placed to help borrowers in their green journey whether that is on acquisitions or capex investment to improve credentials , we will look to support.