Dutch hotels attract more than just tourists - Savills

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Dutch hotels attract more than just tourists - Savills
Q1 2018

                     Dutch hotels
                        attract more
                      than just tourists

Spotlight | Hotels
The Netherlands
                                     spotlight
                                           Savills World Research
                                                   savills.nl/research
Dutch hotels attract more than just tourists - Savills
Spotlight | Hotels | The Netherlands                                                                                                                                                                                                                                                                      Savills World Research | Q1 2018

                                                                                                                                                                                                                                                                         The Netherlands ranks as
                                                                                                                                                                                 compressing                                        higher
                                                                                                                                                                                                                                                                         the fifth largest Eurozone
                                                                                                                                                                                   Yields                                      Occupancy                                 economy with one of the
                                                                                                                                                                                                                                                                         lowest unemployment rates
                                                                                                                                                                                                                                                                         and a GDP capita of above
                                                                                                                                                                                                                                                                         € 41,000.
                                                                                                                                                                                  contracting                                       record

                                                                                                                                                                                Overnight                                      Investment                                With its highly stable
                                                                                                                                                                                 Stays                                           Volume
                                                                                                                                                                                                                                                                         economy, the Netherlands
                                                                                                                                                                                                                                                                         is one of Europe’s most

    introduction
                                                                                                                                                                                                                                                                         sought-after investment
                                                                                                                                                                               new developments                                   increasing                             markets.
                                                                                                                                                                                  Supply                                      Room Rates

Economy and Tourism                                                                                                                                     Supply, Room Rates, Occupancy and RevPARs
                                                                                                                                                                                                                                              GRAPH: HOTEL SUPPLY KEEPS INCREASING

Tourism in the                                     coming from other European countries,
                                                   especially Germany, the UK and Belgium.
                                                                                                        have their headquarters in Amsterdam such
                                                                                                        as Philips, Heineken and AkzoNobel and          Not only is the
                                                                                                                                                                                                                                             (SOURCE: CBS, FORECAST BY SAVILLS BASED ON DEVELOPMENTS)

Netherlands is at an
                                                   These numbers are forecasted to grow even            tech giants Uber and Amazon. Furthermore,
                                                                                                                                                        number of hotel
                                                                                                                                                                                                                                             350.000                                                                           3.750
                                                   more due to the economic upswing, but also           the European Medicine Agency (EMA)
                                                   due to the fast expanding middle class in            recently announced they will relocate from                                                                                           300.000                                                                           3.700

all-time high.                                     countries such as China, India and Brazil.           London to Amsterdam in 2019. This institute     guests increasing,                                                                   250.000                                                                           3.650
                                                   For this group, travelling becomes more and          attracts approximately 30,000 visitors a year

This also can be seen in the hotel market
                                                   more within reach.                                   and will therefore have a positive impact on
                                                                                                        the hotel market in Amsterdam.
                                                                                                                                                        the number of                                                                        200.000                                                                           3.600

                                                                                                                                                        hotels in the
                                                                                                                                                                                                                                             150.000                                                                           3.550
which, in 2017, benefitted from 28.5 million        Amsterdam is by far the most popular
hotel guests - a new record and up 10%             destination in the Netherlands, accounting           Rotterdam is the second most popular                                                                                                 100.000                                                                           3.500
compared to 2016. The overnight stays
increased by almost 9%, a hotel guest
                                                   for almost half of the foreign visitors. This is
                                                   partly due to the cultural amenities the city
                                                                                                        destination within the Netherlands, while
                                                                                                        smaller cities such as Utrecht and Maastricht   Netherlands is                                                                        50.000                                                                           3.450
stays for on average 1.7 nights in Dutch
hotels. Nearly half of the guests came from
                                                   has to offer, such as the world-famous canals
                                                   and museums, and the appeal to business
                                                                                                        saw the highest proportional increase in
                                                                                                        hotel guests last year with +36% and +26%       increasing as well.                                                                       0
                                                                                                                                                                                                                                                              2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
                                                                                                                                                                                                                                                                                                                               3.400

abroad, with the largest volume of guests          travellers thanks to large companies who             year-on-year growth respectively.
                                                                                                                                                                                                                                                       NUMBER OF ROOMS         NUMBER OF BEDS              NUMBER OF ACCOMMODATIONS

                                                                                                                                                        At the start of 2017 there were about 3,625
                                                                                                                                                        hotels (+1.1% compared to 2016), with a total
    GRAPH: OVERNIGHT STAYS (SOURCE: CBS; SAVILLS FORECAST)                                                                                              of approximately 123,500 bedrooms (+2.1%)                                              GRAPH: LARGE DEMAND CAUSES RISING ROOM RATES (SOURCE: HOSTA 2017)
                                                                                                                                                        providing 269,000 beds (+3.0%).
    The number of hotel visitors and overnight stays in the Netherlands is increasing to new records                                                                                                                                           €120                                                                            76%

                                                                                                                                                        These numbers also indicate that new                                                                                                                                   74%
                                                                                                                                                                                                                                               €100
                                                                                                                                                        developments are becoming larger on the                                                                                                                                72%
     60.000.000                                                                                                                                         whole. This growth of facilities is lower than                                                                                                                         70%
                                                                                                                                                                                                                                                €80
                                                                                                                                                        the growth of tourists and overnight stays                                                                                                                             68%
     50.000.000
                                                                                                                                                        which resulted in higher room rates and                                                 €60                                                                            66%
                                                                                                                             DOMESTIC OVERNIGHT         occupancy, as shown in the graph below.                                                                                                                                64%
     40.000.000                                                                                                              STAYS
                                                                                                                                                                                                                                                €40
                                                                                                                                                                                                                                                                                                                               62%
                                                                                                                                                        In Amsterdam, room rates and the revenue
     30.000.000                                                                                                                                                                                                                                                                                                                60%
                                                                                                                             INTERNATIONAL              per available room (RevPAR) are the highest                                             €20
                                                                                                                             OVERNIGHT STAYS                                                                                                                                                                                   58%
     20.000.000
                                                                                                                                                        and are forecasted to increase further to €139
                                                                                                                                                        and €110 this year respectively. This keeps                                               0                                                                            56%
                                                                                                                             HOTEL GUESTS               Amsterdam in the top 10 of cities in Europe                                                           2009   2010   2011   2012    2013    2014     2015     2016
     10.000.000
                                                                                                                                                        with the highest average room rates.
                                                                                                                                                                                                                                                       AVERAGE ROOM RATE                  RevPAR                   ROOM OCCUPANCY
             0
                      2012        2013          2014         2015         2016         2017           2018

1                                                                                                                                                       1
                                                                                                                                                            Source: CBS                                                                                                                                                                 2
                                                                                                                                                        2
                                                                                                                                                            Source: PWC, Standing out from the crowd - European cities hotel forecast for 2017 and 2018
Dutch hotels attract more than just tourists - Savills
Spotlight | Hotels | The Netherlands                                                                                                                                                                                                                                                                                                                    Savills World Research | Q1 2018

             TABLE: LARGEST HOTEL DEVELOPMENTS IN AMSTERDAM                                                                                                                                                      GRAPH: HOTEL INVESTMENT VOLUME WENT SKY-HIGH                                                   GRAPH: CHINESE AND GERMAN INVESTORS WERE THE MOST
                                                                                                                                                                                                                                                                                                                ACTIVE PLAYERS ON THE DUTCH HOTEL MARKET IN 2017
             HOTEL                                                       NO. OF ROOMS                                                        CLASS                                               OPENING

             AMSTERDAM CITY HARBOUR HOTEL                                245                                                                 UPSCALE CLASS                                       2018
             VEN - PARK INN BY RADISSO                                   476                                                                 UPSCALE CLASS                                       2018
             OLYMPIC HOTEL                                               309                                                                 UPSCALE CLASS                                       2018           €2000M

             LEONARDO AMSTEL HOTEL                                       490                                                                 UPSCALE CLASS                                       2018
             POSTILION                                                   252                                                                 UPPER MIDSCALE CLASS                                2018           €1800M

             QO CROWNE PLAZA                                             288                                                                 UPSCALE CLASS                                       2018
             RENAISSANCE HOTEL AMSTERDAM SCHIPHOL                        250                                                                 UPPER MIDSCALE CLASS                                2018           €1600M

             HOLIDAY INN EXPRESS                                         439                                                                 MIDSCALE CLASS                                      2019
             NHOW HOTEL                                                  650                                                                 UPSCALE CLASS                                       2019           €1400M

             VAN DER VALK EXCLUSIER ZUIDAS                               240                                                                 UPPER UPSCALE CLASS                                 2020
             LANDMARK HOTEL OOSTENBURG                                   300                                                                 UPSCALE CLASS                                       2020           €1200M

             MELIA                                                       328                                                                 UPSCALE CLASS                                       2020
             MARITIM HOTEL                                               579                                                                 UPSCALE CLASS                                       2020           €1000M

             TABLE: MAJOR HOTEL DEVELOPMENTS IN THE REST OF THE NETHERLANDS                                                                                                                                      €800M

             HOTEL                                 CITY                  NO. OF ROOMS                                                        CLASS                                               OPENING
                                                                                                                                                                                                                 €600M      AVERAGE
             CROWN PLAZA + HAMPTOM BY HILTON       UTRECHT               328                                                                 UPSCALE CLASS / MIDSSCALE CLASS                     2018
             INDIGO ROYAL PALACE                   THE HAGUE             63                                                                  UPSCALE CLASS                                       2018
                                                                                                                                                                                                                 €400M
             PLAZA HOTEL                           ALMERE                158                                                                 UPSCALE CLASS                                       2018
             VAN DER VALK                          APELDOORN             151                                                                 UPPER MIDSCALE CLASS                                2018
                                                                                                                                                                                                                 €200M
             HOLIDAY INN                           EINDHOVEN             180                                                                 UPSCALE CLASS                                       2019
                                                                                                                                                                                                                                                                                                                                UNITED STATES OF AMERICA                CHINA
             MOVENPICK HOTEL DEN HAAG              THE HAGUE             72                                                                  UPPER MIDSCALE CLASS                                2019
                                                                                                                                                                                                                        0                                                                                                       UNITED KINGDOM                          GERMANY
             VEN                                   ROTTERDAM             N/A                                                                 LUXURY CLASS                                        N/A
                                                                                                                                                                                                                               2010   2011   2012   2013       2014   2015    2016   2017                                       SINGAPORE
             AMRATH                                UTRECHT               250                                                                 UPSCALE CLASS                                       2020
                                                                                                                                                                                                                                                                                                                                FRANCE                                  THE NETHERLANDS
             VAN DER VALK                          DEN HOORN             140                                                                 UPPER MIDSCALE CLASS                                2020
             SAX BUILDING                          ROTTERDAM             150                                                                 N/A                                                 2022

Developments                                                                                                                                                                                               Hotel Investments

In order to keep up with this                                                                           will be less substantial, since the municipality introduced a ‘hotel
                                                                                                        stop’ in January 2017.                                                                             Traditionally only specialised hotel                                                         It is noteworthy that one third of all investments came from German
                                                                                                                                                                                                                                                                                                        investors while the share of Dutch investors was relatively low.

growing demand for hotel                                                                                This means that as of that date, no new permits for hotel                                          investors were active in the sector.                                                         One of the reasons for this is that Dutch investors are more used to
                                                                                                                                                                                                                                                                                                        making investments based on the property value instead of cash

accommodation an increase in                                                                            developments will be issued in certain areas, including the largest part
                                                                                                        of the city centre. In other areas such as the South Axis, the West Axis                           Due to the search for yields, and the diversification possibilities,
                                                                                                                                                                                                                                                                                                        flow, which gave foreign investors a head start in recent years. Also
                                                                                                                                                                                                                                                                                                        noteworthy is the increasing activity of investors from Asia, and

developments has been recorded.                                                                         and parts of East and Southeast, developments are allowed if they
                                                                                                        meet certain criteria and add something “special” to the area, like an
                                                                                                                                                                                                           investors without a history in the hotel sector are now looking at
                                                                                                                                                                                                           investment opportunities as well.
                                                                                                                                                                                                                                                                                                        especially China.

                                                                                                        innovative concept.                                                                                                                                                                             About a quarter of 2017 investment volume was from Asian investors,
Most developments are taking place in the Amsterdam area, where                                                                                                                                            These are important reasons why hotel investments reached a record                           including the largest deal in 2017, the purchase of DoubleTree by
approximately 4,000 rooms will enter the market in 2018, representing                                   In addition to the developments in Amsterdam, Savills has identified                                in 2017 with about €1.8bn invested; a remarkable increase of 200%                            Hilton Amsterdam Central Station for €350m by Chinese investor
an increase of 13% of total supply.                                                                     more than 1,400 hotel rooms across the country which will be                                       compared to the previous year. Almost three quarters of the total                            Anbang Group. This increase in Asian investments is also being seen in
                                                                                                        entering the market by 2020. In the tables above the largest hotel                                 investment took place in Amsterdam, underlining investors belief that                        other markets such as the UK. The table below details other large hotel
In the period 2019-2020 another 3,000 rooms are expected to be                                          developments in Amsterdam and the rest of the country are listed.                                  this city will remain a key tourist and business destination.                                investments in the Netherlands.
added, which will bring the total supply of hotel rooms in Amsterdam                                    Quite noticeable is that almost all developments are for upscale,
to almost 40,000. The number of new hotel developments thereafter                                       4-stars hotels.

    MAP: LARGEST HOTEL DEVELOPMENTS IN AMSTERDAM
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                                                                                                                                                                                                                TABLE: LARGEST HOTEL INVESTMENTS 2017
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                                                                                                                                                                                                                HOTEL                                   CITY            ROOMS        CLASS                        PURCHASE PRICE      PURCHASER                VENDOR
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                                                                                                                                                                                                               DOUBLETREE BY HILTON AMSTERDAM           AMSTERDAM       557          UPSCALE CLASS                €350M               ANBANG GROUP             BLACKSTONE
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                                                                                                                                                                                                               HOTEL W AMSTERDAM                        AMSTERDAM       238          LUXURY CLASS                 €260M               DEKA                     STAG EUROPE
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                                                                                                                                                                                                               QUEEN BILDERBERG                         PORTFOLIO       1,633        UPSCALE CLASS                €205M               FIRST SPONSOR GROUP      GOLDMAN SACHS/KKR
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                                                                                                                                                                                                               NH BARBIZON PALACE                       AMSTERDAM       268          UPPER UPSCALE CLASS          €155.5M             DEKA                     NH HOTELS
                                                                                                                     ·
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                                                                                                                                                                                                               NHOW HOTEL                               AMSTERDAM       650          UPSCALE CLASS                €150M               AXA IM                   COD/BEING DEVELOPMENT
                                                                                                                                 EF
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                                                                                                                                                                                                               CONGRES HOTEL OVERHOEKS                  AMSTERDAM       579          UPSCALE CLASS                €125M               IES IMMOBILIEN           ABN AMRO BANK
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                                                                                                                                                                                                               HYATT PLACE AMSTERDAM AIRPORT            HOOFDDORP       330                                       €53.8M              AVIGNON CAPITALIEN       HILLGATE INVESTMENTS
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                                                                                                                                                                                                               HILTON                                   ROTTERDAM       254          UPPER UPSCALE CLASS          €50M (2018)         FIRST SPONSOR GROUP      N/A
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                                                                                                                                                                                                               OLYMPIC HOTEL                            AMSTERDAM       309          UPPER MIDSCALE CLASS         €46M                ALEX CHANG, KUNSHANG     CHRIS LUKEN
                                                                               AM

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                                                                                                                                                                                                               HOTEL NH AMSTERDAM ZUID                  AMSTERDAM       213          UPSCALE CLASS                €45M                AVIGNON CAPITAL          RJB
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                                                                                                                                                                                                               CROWNE PLAZA & HAMPTON BY HILTON         UTRECHT         328          UPSCALE CLASS / MIDSCALE     €26.4M              FIRST SPONSOR GROUP      KLEPIERRE
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Spotlight | Hotels | The Netherlands                                                                                                                                                                                                                         Savills World Research | Q1 2018

         GRAPH: THE YIELD GAP IS DECREASING

         6%

         5%

         7%

         6%

         5%

                                                                                                                           PRIME HOTEL
         4%

         3%
                                                                                                                           YIELD GAP
         2%

         1%
                                                                                                                           BOND YIELDS NL (10YR)
         0%
                          2013                  2014                     2015                    2016                2017 Q4

Yields                                                                                                                                                     Outlook

Due to the fact that the hotel investment
market is so specialised and perceived to
                                                       yield of hotels is high, this gap is decreasing
                                                       as indicated in the graph above. Because
                                                                                                          markets, are more accepting of these ‘low’
                                                                                                          yields. This is one of the principle reasons
                                                                                                                                                           Due to the growing number of visitors and the limited growth of hotel
                                                                                                                                                           developments, Savills expects that room occupancy and rates will keep
                                                                                                                                                                                                                                         “The increase in the number of hotel
be more risky than commercial investments,             demand for hotel investments is higher than        why hotel investment has been dominated          increasing in the years to come. This is positive for hotel turnover, which   rooms in Amsterdam is considerable,
typically only investors with extensive
knowledge of the sector are active in the
                                                       current supply, gross initial yields for prime
                                                       locations like the city centre of Amsterdam
                                                                                                          by international investors over recent years.    makes the hotel sector very appealing.
                                                                                                                                                                                                                                         however the increase in the number
market.                                                fell considerably over the past 12 months          Due to the low supply of hotel investment        In the search for yield we see a growing interest in the hotel market by      of tourists is increasing even faster,
Notwithstanding that, we are increasingly
                                                       and currently stand at 4.25%.                      opportunities in prime Amsterdam locations,
                                                                                                          investors are increasingly looking towards
                                                                                                                                                           investors who may never have invested in the hotel market previously.
                                                                                                                                                           Due to this growing demand we expect that yields will compress
                                                                                                                                                                                                                                         which strengthens hotel investment
seeing new investors enter the market                  For national investors this is quite a sharp       other markets causing yield compression in       even further. This in turn will make the option of sale-and-lease-back        fundamentals.”
seeking to diversify the product and income            yield compared to other asset classes.             these locations as well. Prime gross yields in   increasingly interesting for hotel operators who own the property. For
mix within their portfolio. And, whilst when           However, international investors who are           Utrecht for example have sharpened to 6.0%       these reasons we expect a substantial investment volume in 2018, again
compared to bond yields the gross initial              comparing yields across several global             from 8.0% in 2014.                               dominated by international investors.                                                                   - Bas Wilberts

              Hotel market                                                            use, while The Student Hotel is a great example of the blurring of                                                                                       3 Tips for Investors
                                                                                      lines between the hotel and student housing sector.

              Trends                                                                  Online marketplaces for lodging like Airbnb are already familiar;
                                                                                      with Airbnb boasting a market share of approximately 11% of
                                                                                                                                                                                                                                               1.    Value hotels on cash flow and
                                                                                                                                                                                                                                                     operator, not on the value of the
                                                                                      all overnight stays in Amsterdam and around 7% in other cities                                                                                                 bricks-and-mortar
              There is a universal expansion in travel accommodation types            like The Hague and Rotterdam. In order to manage nuisance and
              available to consumers, driven largely by the tastes and demand         liveability in some areas, municipalities have put restrictions on
                                                                                                                                                                                                                                               2.    Food & bevarages deserve
              of ‘millennials’. An example is the increase in boutique hotels         Airbnb. As of 2019, house owners in Amsterdam are allowed to
                                                                                                                                                                                                                                                     a separate assessment
              (like Generator and Vondel Hotels).                                     rent their house for a maximum of 30 days (60 days currently).

              Another trend is blurring hospitality with other uses, allowing         This is already the case in Amstelveen, a neighbouring
                                                                                                                                                                                                                                               3.    Hotels on secondary locations
              operators to better monetise communal space and add vibrancy            municipality of Amsterdam. In Rotterdam and Utrecht there are                                                                                                  are becoming more stable due
              that can add to the guest experience. Short stay apartments (like       initiatives to introduce a maximum of 60 days. This, of course, is                                                                                             to the spread of tourism. This
              Zoku and Element) are an example of blurring with residential           positive for the hotel sector as well.                                                                                                                         offers opportunities.

5                                                                                                                                                                                                                                                                                          6
Spotlight | Hotels | The Netherlands

                                                                                                        Focus on Amsterdam
                                                                                                        Most developments are taking place in the Amsterdam area,
                                                                                                        where approximately 4,000 rooms will enter the market in
                                                                                                        2018. In the period 2019-2020 another 3,000 rooms are
                                                                                                        expected to be added.

                                                                                                        Large volume developments
                                                                                                        New hotel developments are becoming larger, which makes
                                                                                                        these developments interesting for investors who are used to
                                                                                                        large investment volumes.

                                                                                                        Record high investments
                                                                                                        Hotel investments reached a record in 2017 with about €1.8bn
                                                                                                        invested; a remarkable increase of 200% compared to the
                                                                                                        previous year.

                                                                                                        Foreign interest
                                                                                                        German and Asian investors are most active on the Dutch
                                                                                                        hotel market. Only a small share of the investment volume
                                                                                                        was from Dutch investors.

    key
                                                                                                        Expanding portfolios
                                                                                                        New investors are entering the market, seeking to diversify the
                                                                                                        product and income mix within their portfolio.

    findings
                                                                                                        Interesting Yield
                                                                                                        Gross initial yield for prime locations fell considerably over the
                                                                                                        past 12 months and currently stand at 4.25%

      Want to know more?                                                                                            Meet our team at Savills
      call us at +31 (0) 20 301 2000                                                                                                         Property starts with people

      Bas Wilberts                         Marco Peetsma                        Robert stapleton                     Adriaan Tervoort                     Jordy Kleemans
      Head of Alternative                  Associate                            Director                             Director                             Head of Research &
      Investments                          Alternative Investments              Savills Hotels                       Savills Valuations                   Consultancy
      b.wilberts@savills.nl                m.peetsma@savills.nl                 rstapleton@savills.com               a.tervoort@savills.nl                jordy.kleemans@savills.nl
      +31 (0) 20 301 2011                  +31 (0) 20 301 2034                  +44 (0) 20 7409 8029                 +31 (0) 20 301 2020                  +31 (0) 20 301 2000

      Savills plc Savills is a leading global real estate service provider listed on the London Stock Exchange. The company established in 1855, has a rich heritage with unrivalled growth.
      It is a company that leads rather than follows, and now has over 700 offices and associates throughout the Americas, Europe, Asia Pacific, Africa and the Middle East.

      This report is for general informative purposes only. It may not be published, reproduced or quoted in part or in whole, nor may it be used as a basis for any contract, prospectus,
      agreement or other document without prior consent. Whilst every effort has been made to ensure its accuracy, Savills accepts no liability whatsoever for any direct or consequential
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