Buy, sell or hold?

It seems to me that many hoteliers who have been watching events in the hotel sector over recent months will be wondering how it affects them.For those working for the major chains, or for franchisees or hotel owners operating under their brands, the impact of the financial restructuring of the industry will have become clear.

For the independent hotelier, however, the picture will be far less clear, but they should not believe that they are exempt. The 21st-century hotel industry has ever-clearer divisions between operators and brands, equity investors and owners, and banks and financiers.

In my view, the implications are widespread, and independent hoteliers ignore them at their peril. First question: is it time to exit? High prices have been paid in the sector as the trading environment improves. If you have a hotel which is suited to the needs of a chain purchaser, it might be time to get out. It is always hard to call the top, or bottom, of any market trend, but certainly it would be hard to criticise anyone who decided to exit during this period.

Second question: is it time to grow? Perhaps. There are tail ends of portfolios being sold off by many of the big players. These properties may be ideal for the entrepreneurial independent hotelier. After all, existing hotels might have enhanced value for collateral to bankers seeking lending opportunities in the sector. With loving care - and investment - such properties may well have upside trading prospects.

So that's buy and sell taken care of, but what about those who decide to hold? Most likely this will be the vast majority. But for hold, do not read stand still. The world is changing. The pressure will be on the big brands to perform or, more specifically, to outperform. The financial restructuring means they now have demanding taskmasters, and if outperformance means enhancing their market share, they may be attacking your business. Independents might, therefore, wish to hold their property but consider franchising, affiliation to consortia, or even an enhanced sales strategy via the internet.

This simplistic analysis of the options has an equally simple conclusion: standing still is not an option.