Alta blog

Alta Thoughts (April 2023)

By Rakesh Patel

Having travelled through Europe over the last month, it is obvious there has been a sharp increase in hotel room rates, well beyond the pace of inflation. In some places like Barcelona, Brussels and Rome, rates have risen more than 30% over 2022 (in the Easter period).

Data from STR also shows that Europe ADRs in 2022 were above 2019 levels, demonstrating that room rates are the driver of the hotel recovery, rather than occupancy. Hoteliers confirm that this is mostly due to rising supply and labour costs, coinciding with strong demand.

This recent data confirms that hotel investment continues to be an inflation hedge — here are some comments from Blackstone.

Below are a few of our recent thoughts posted on LinkedIn. As always, good to hear your feedback and exchange ideas. You can follow us directly on LinkedIn and go to our website.


Reverse Engineering Longevity

If you want to extend your life by 10–12 years, here are some of the common elements for the five highest life expectancy regions of Barbagia Sardinia, Ikaria Greece, Nicoya Costa Rica, Loma Linda California, Okinawa Japan.

Move naturally but don’t work out; Have purpose; Sense of belonging; Family first; Wine is fine; Plants more than meat; Downshift for stress; The 80% full eating rule.

Scientists may argue that the scientific basis for Blue Zones longevity research is unfounded. They maybe correct. Nevertheless, it remains fascinating that these regions have the highest proportion of people who reach 100 years old.


Tempting visitors to find their chi

Thailand has an opportunity and a challenge to build on its credentials as a leading medical and wellness tourist destination. The Tourism Authority of Thailand (TAT) recognises the upside, stating that tourists in this segment spend 35% more than the average tourist.

The country has some advantages. There is an abundance of local wisdom, natural resources and authentic wellness product. In addition, the medical sector offering is recognised as being good quality, and 40–70% cheaper than in other destinations, according to Bangkok Dusit Medical Services (BDMS), the parent of Bangkok Hospital.

One of the biggest challenges is sourcing appropriately skilled employees, whether it be doctors, nurses or alternative therapists. The government can take the lead here, by developing more education/training facilities and specialised courses, to increase the employable talent pool.


The Financial Impact of Healthy Buildings

As investors, we focus on risk-adjusted returns. With the critical trend towards a more sustainable future, analysing financial returns with an ESG “risk” lens is becoming increasingly important. This research from MIT helps to make part of the return case for the real estate sector.

The research uses public databases from Fitwel and WELL for 10 major US cities, and finds that healthy building effective rents transact 4.4–7.7% more per square foot than their nearby non-certified peers. Importantly the research isolates factors, so results are independent of green building certification, age, lease duration, etc. The analysis of variables explains 65–70% of the variation in the effective rents, so the results are statistically significant.

A healthy building is defined by the World Health Organization (WHO) as a space that “supports the physical, psychological, and social health and well-being of people”. The research concludes that healthy buildings are seen as an asset that correlates with employee or tenant well-being and productivity. To take this research further from an investment perspective, there is also a need to examine the marginal cost involved in creating a healthy building versus the marginal rental revenue increase.