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HOTELS PAN EMEA
MARKET UPDATE
MARCH 2021 This side
will be
removed
in final PDF
version
HOTELS PAN EMEA MARKET UPDATE EUROPEAN LANDSCAPE
Contents Introduction
Hotel performance declined longer stays, also out performed including: location, business mix
01 PAN EMEA 08 POLAND across all European countries the traditional hotel market in & segmentation, condition,
in 2020 with recovery many locations, as their larger technological innovation,
generally not expected until self-contained units, often management, market position
02 CZECH REPUBLIC 09 PORTUGAL 2024 for the overall market. complete with a kitchenette, and supply pipeline. We also
The impact of the global allow guests to more effectively expect owners to become more
pandemic on the hospitality self isolate. Serviced apartments demanding of operators and this
03 FRANCE 10 SPAIN also have relatively low will expediate the evolution of
industry continues to be
severe. operational gearing. operating structures.
04 GERMANY 11 THE NETHERLANDS In the following report we Assuming that an effective The significant drop in hotel
look at the performance of vaccine is widely administered by investment in 2020 resulted from
key European markets, mid to late 2021 and accounting a lack of stock on the market and
05 HUNGARY THE NORDICS OVERVIEW considering the impact of the for the socio-economic a significant delta in buyer and
12 consequences of the virus, we seller pricing expectations.
i. FINLAND pandemic, the expected future
recovery and investor expect hotel revenues to broadly However, the sector remains of
06 IRELAND sentiment. recover to pre-pandemic levels strong interest for a range of
13 THE UK by 2024. The initial phase of investors and significant
Domestic leisure demand was recovery will be driven by additional capital was raised in
the key driver of hotel
07 ITALY domestic demand. Countries 2020 to target hotel
14 CONTACTS performance across Europe with typically strong domestic opportunities.
during the region’s partial leisure demand and less
reopening throughout the year. exposure to inbound travel
In general, provincial markets markets, particularly long-haul,
performed better than gateway are likely to see performance
and capital cities which typically bounce back sooner.
rely more on international and
business-related demand. Markets and hotels are unlikely Owen Pritchard
to recover in a uniform manner Chief Operating Officer,
Serviced apartments and and the speed of recovery will be
accommodation, targeting influenced by many factors, CBRE Hotels EMEA
HOTELS PAN EMEA MARKET UPDATE HOTELS PAN EMEA MARKET UPDATE
-1- -2-
HOTELS PAN EMEA MARKET UPDATE EUROPEAN LANDSCAPE
European Hotel Transaction Volumes, 2020 The hotels share of total towards the second half of the With over 100,000 new rooms
commercial real estate year as the gap in pricing planned for 2021, many countries
The UK Germany investment across EMEA has expectations narrows. in Europe have a material
€2.60bn €1.95bn increased from 2016 to 2019, development pipeline comprising
0.3 This is likely to be a result of
0.4
0.4
2.6
-60% y/y -60% y/y
driven by the strong market
performance and increasing
popularity of the asset class
sellers revising their position
based on further pressure on
hotels that are already in
construction.
0.6 Italy Spain working capital, funders taking a Given the challenging short-to-
among investors seeking to more aggressive position and medium term performance
€1.04bn €0.95bn
diversify their portfolios. greater clarity on recovery, which outlook and the reduction and
0.6 -69% y/y -60% y/y
We expect deal flow to pick-up will support with underwriting. increased cost of debt, capital
values are expected to remain
European Hotel Investment Volume Evolution lower in 2021 compared to
France CEE
€0.57bn 2019. However, the ‘discount’
€0.62bn
0.9 Share of Total will vary depending on the
-75% -65%
Commercial
RE Investment 6.3% 7.0% 7.4% 8.2% 3.4% physical and operational
y/y y/y Volume characteristics of an asset – fit-for-
1.9 purpose, limited-service hotels
1.0 Portugal Nordics 30 40% and aparthotels are predicted to
€0.45bnbn €0.41bn
Investment volume, EUR€
25 20% be the least volatile, backed by a
-41% -56% 20 0% higher resilience in top line
y/y change
y/y y/y revenues and lower operational
15 -20%
10 -40%
costs.
European Hotel Benelux │The Netherlands Additionally, it should be noted
Investment Volume €0.31bn│0.14€bn
5 -60%
that in many countries
€9.4bn 0 -80%
-66% y/y
-89% y/y│ -91% y/y
2016 2017 2018
Tourism Nights Recovery Index
2019 2020 government initiatives have
provided a degree of support to
the industry and as yet there has
Source: CBRE 2021
not been evidence of widespread
125
Recovery Index, 2019 = 100
distress.
100
Overall, in 2021 we expect
75 uneven operational performance
50 recovery; greater digitalisation
and automation; operating
25
structures adapting to the new
0 environment and an increase in
2019 2020F 2021F 2022F 2023F 2024F deal flow as a result of distress or
European Domestic Nights European Inbound Nights managed exits.
Worldwide Domestic Nights Worldwide Inbound Nights
HOTELS PAN EMEA MARKET UPDATE HOTELS PAN EMEA MARKET UPDATE
-3- -4-
HOTELS PAN EMEA MARKET UPDATE CZECH REPUBLIC CZECH REPUBLIC
“The hotel market is quite fragmented in the Czech Prague’s hotel market relies on a
Tourism Demand, Prague significant proportion of demand
Republic, with less activity in 2020. Domestic leisure
demand has been the key driver behind hotel via international travellers. In
20,000 20% 2020, the share of international
performance, especially in regional and mountain
17,500 10% arrivals dropped by 69%
locations. Provincial destinations benefitted from higher 0% compared to 2019. Total
Overnight stays, thousands
15,000
occupancy levels compared to business and MICE -10% overnight stays in Prague by both
oriented city hotels. Nevertheless, hotel performance was 12,500 -20% international and domestic
y/y change
significantly behind 2019 levels. With respect to the 10,000 -30% travellers accounted for 18.5
Prague hotel performance, international demand is 7,500 -40% million, however this decreased
expected to return to pre-pandemic levels in 2024. -50% significantly in 2020 by 75%.
5,000 Domestic travel is expected to
However, this will be subject to the availability of the -60%
2,500 -70% recover at a faster pace than
COVID-19 vaccine as it is expected to have a deep impact international demand, but will be
on hotel demand recovery. The pace of hotel recovery will Jakub Stanislav 0 -80%
unable to supplement the lack of
2015 2016 2017 2018 2019 2020
fluctuate based on hotel location, state of hotel Director, Czech Republic & guests from international source
CEE markets. The Prague hotel market
management, positioning, competitive mix and market Source: Czech Statistical Office, 2021
position.” Note: 2020 data to September is expected to bounce back to
2019 levels by 2024.
Key Hotel Transactions, 2020 Hotel Key Performance Indicators, Prague Prague hotel market
benefitted from continuous
PROJECT NAME CITY KEYS PRICE CONTRACT growth between the period
100 90%
2015 – 2019.
NH Carlo IV (Former Carlo IV ¤62,000,000 90 80%
Prague 152 Hybrid Lease This is reflected in the annual
Boscolo) (part of hotel portfolio) 80 70% RevPAR growth rates during the
ADR & RevPAR, EUR€
70
¤43,000,000 60% years 2015 – 2019 of 5.7% and
Penta Hotel Prague Prague 227 Lease 60 ADR growth of 4.4%, which was
Occupancy
(part of hotel portfolio) 50%
50 driven by increasing occupancy
40%
Panorama Hotel Prague Prague 441 ¤83,500,000 Lease 40 levels. Prague, being heavily
30
30% dependent on international
Ibis Prague Old Town Prague 292 Confidential Lease 20% arrivals, noted a -85,2% drop in
20
RevPAR and a –79.1% drop in
10 10%
Franchise occupancy in 2020.
InterContinental Hotel Prague Prague 372 ¤225,000,000
Agreement 0 0%
2015 2016 2017 2018 2019 2020
Source: CBRE, RCA, 2021
ADR RevPAR Occupancy
Source: STR, 2021
HOTELS PAN EMEA MARKET UPDATE HOTELS PAN EMEA MARKET UPDATE
-5- -6-
HOTELS PAN EMEA MARKET UPDATE PRAGUE CZECH REPUBLIC
Hotel market recovery could be Hotel Operational Lease Yield, Prague The Prague Pre-Covid hotel yields
Hotel Development Pipeline, Prague
negatively affected by the sat at record low in Q4 2019,
8
development pipeline as 1,600 particularly due to the high
projects that were already under investment activity which was
1,400 6
construction or with scheduled expected to attract further investor
opening in 2020 are planned to 1,200 demand.
4
be delivered in the next two 1,000 As for 2020, the yield for hotel
Bedrooms
years. This will increase the management contracts and
800 2
current Prague supply, possibly vacant possession increased. This
decrease price levels in the 600
0 was in part due to the limited
short-term and create additional 400 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 market evidence and the lack of
pressure on underperforming Prime Office Yield (%) Hotel Lease Yield (%) transactions on the market. The
200
hotels. It is expected that by yield for hotel management
2022 the Prague hotel supply 0
2021 2022 2023 2024
Hotel Vacant Possession Yield (%), Prague contracts currently sits at 6.25%
will have increased by 1,643 and increased by 100 bps
rooms, as postponed 8
Source: CBRE, STR 2021 compared to Q4 2019.
development projects such as
the Hyatt Andaz, W Hotel Hotel Investment Volumes, Prague 6
Prague, Novotel Geone Prague, 4
700 300%
and Marriott Celnice (extension)
250%
will be completed and open. 600
Investment volume, EUR€ m
2
200%
500
The Prague hotel investment 150% 0
y/y change
market recorded a steep 400 100% Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020
increase in investment 300 50%
volumes in 2019, accounting 0%
200
for almost EUR 600 million. -50%
100
Hotel Management Contract Yield (%), Prague
-100%
The increase was driven by the 8
0 -150%
sale of the InterContinental
2013
2014
2015
2016
2017
2018
2019
2020
Hotel Prague, Panorama Hotel 6
and the sale of Hotel Don
4
Giovanni. This trend was Source: CBRE, 2021
expected to continue with the 2
sale of Corinthia Hotel Prague, recorded within the Prague agreed before the pandemic.
which was stopped due to the market with the sale of Carlo IV 0
pandemic. The Investment Volumes Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020
and Penta Hotel Prague, both
dropped by 88% in 2020
There were 2 major transactions transactions were a part of two
separate portfolio sales and
Source: CBRE 2021
HOTELS PAN EMEA MARKET UPDATE HOTELS PAN EMEA MARKET UPDATE
-7- -8-
HOTELS PAN EMEA MARKET UPDATE FRANCE FRANCE
“Whilst statistics for 2019 show that France remained one France recorded an impressive
Tourism Demand, France 215 million overnight stays in
of the top tourism destinations, the country has not been
2019. This bounce back in 2016,
immune to the current international pandemic recession
250,000 10% after the terror attacks, illustrates
experienced since the first quarter of 2020. Indeed, the the strong resilience as well as the
0%
global economic downturn had a significant impact 200,000 very short recovery capability of
Overnight stays, thousands
during 2020, with the French hotel industry showing no -10% the French market – which
signs of rapid recovery from dramatic falls both recorded 150,000 -20% recorded a cumulated growth
y/y change
in Occupancy and ADR. exceeding 8.5% over this period.
-30%
The slowdown in activity has gone hand in hand with a 100,000 Overnight stays in 2020 declined
-40%
to 90 million, representing a
shift in France hotel investment trend versus 2019 -50% 58.1% decrease compared to the
investment figures. While this market outlook could have 50,000
previous year. The decline in
-60%
led to a steeper “wait-and-see” attitude, we were Bruno Juin international visitors has had the
- -70%
heartened to witness many positive instances of Head of Hotels, greatest impact in the Paris and
2015 2016 2017 2018 2019 2020
collaboration from cash-rich investor groups with little France & Belgium French Riviera regions, which are
need for leverage. Similarly, the withdrawal of some France % change to previous year traditionally reliant on a large
foreign investors has been particularly beneficial to French investors, notably unlisted proportion of foreign arrivals.
Source: INSEE
investment vehicles. 2020 marked a turning point
Hotel Key Performance Indicators, France in the French hotel market;
Key success factors for recent single asset sales in the French market have been
after years of growth.
identified as quality, location as well as asset performances over the longer term. Even
though recording the most acute drop in the French market, the Paris region remains 100 70% Average occupancy in France
one of the most popular locations for hotel investors. This is a result of two factors: 90 over the course of the year shrank
60%
firstly, high barriers to entry relating to the price and availability of the underlying real 80 to a surprisingly low rate of
32.5%, showing a 36.6%
ADR & RevPAR, EUR€
50%
estate and secondly, with Paris largely considered a less risky investment in terms of the 70
decrease compared to 2019
hotel operating environment in the long term.”
Occupancy
60 40%
50 figures. The Covid-19 outbreak
40 30% triggered the sharpest industry
30 20%
contraction in recent history.
20
10%
10
0 0%
2015 2016 2017 2018 2019 2020
ADR RevPAR Occupancy
Source: MKG, 2021
HOTELS PAN EMEA MARKET UPDATE HOTELS PAN EMEA MARKET UPDATE
-9- - 10 -
HOTELS PAN EMEA MARKET UPDATE FRANCE FRANCE
The upper upscale hotel market Development Pipeline by Region, France Hotel Yields (%), Paris “The strong attractiveness
was the most affected, essentially of the French market
12,000 8
because of its high dependency coupled with its renowned
on foreign demand. 10,000 6 resilience will certainly
The drop in occupancy was less
Bedrooms
8,000 continue to stimulate
pronounced within the budget 6,000
4 investor interest for the
and midscale market segments, months to come. The
4,000 2
albeit these markets were also current sales processes
impacted. Coastline leisure 2,000 prove that France remains
0
destinations managed to partially 0 Q4 2015 Q4 2016 Q4 2017 Q4 2018 Q4 2019 Q4 2020 on the top of investors’ wish
2021 2022 2023 2024 Unconfirmed
avoid the demand crisis, while Hotel Vacant Possession Yield (%) Hotel Lease Yield (%) lists, notably through
Hotel Management Agreement
mountain destinations were and Île-de-France Provence-Alpes-Côte d'Azur Auvergne-Rhône-Alpes Other Source: CBRE 2021
exceptional deals that are
continue to be strongly affected about to close. Undoubtfully
due to the government’s decision Source: CBRE 2021 The French capital will not suffer Hotel Investment in France investors will be looking for
to keep ski resorts closed. from the condition of oversupply dropped from approximately value-add opportunities,
Hotel Investment Volumes, France
mainly thanks to major events €2.5 billion in 2019 to €1.1 taking advantage of
“Despite the strong 3,000 120% taking place in future years. billion in 2020. improving operating
governmental stimulus 100%
plans, the lending 2,500 The Hotel real estate market In 2021, the investment market in performances and higher
Investment volume, EUR€ m
80%
has experienced a notable France is expected to benefit from yields.”
environment is unlikely to 2,000
60%
spread between seller and the governmental stimulus, which Bruno Juin, Head of Hotels,
y/y change
revert back to the 40%
buyer expectations resulting in
1,500 20% is anticipated to help initiate a France
favourable conditions of a significant drop in the
0% beneficial restructuring process of
previous years. 1,000 number of transactions during
-20% the industry before embarking
Conversely, the fall in hotel 2020.
500
-40% upon an upward trend in the
performances and the Thus, most owners with a low
-60% market cycle.
expected impact on pricing 0 -80%
pressure to sell have preferred to
postpone placing assets on the Pre-COVID, yields sat at a record
has encouraged numerous
market to avoid recording a low - particularly in Paris, which
investors who held back for
potential decrease in value. The benefits from the destination’s
a number of years from a Source: CBRE RCA, 2021
tighter lending conditions of
remains one of the most high-barriers to entry.
market that they considered Paris Focus banks, rising expectations in terms
attractive destinations in the Unsurprisingly in this market, the
overpriced but where long- Whilst Paris recorded an
world, as demonstrated by its of yields and the “wait-and-see”
term fundamentals remain astonishingly low level of hotel attitude adopted by owners are yields observed in 2019 have
strong historic resilience to
unchanged.” performance, the city still benefits only some reasons for the significantly risen for all assets
downturns compared to other
from a diversified economy and significant drop recorded in irrespective of the operational
Sami Mendil, Director less established urban
destinations. investment volume. structures.
HOTELS PAN EMEA MARKET UPDATE HOTELS PAN EMEA MARKET UPDATE
- 11 - - 12 -
HOTELS PAN EMEA MARKET UPDATE GERMANY GERMANY
“The COVID-19 crisis has had a dramatic effect on the In 2019, Germany saw overnight
Tourism Demand, Germany stays rising to 495.6m, an
German hotel market. Occupancies in some months last
year dropped to levels below 10%. With most hotel increase of 3.7% compared to
2018. Year-to-October 2020
operators running properties subject to fixed leases, the 600,000 10%
figures however were severely
crisis hit them first. While owners agreed to rent deferrals 05%
impacted by the COVID-19
last spring, they are now starting to reduce part of the 500,000 00% pandemic, which started hitting
Overnight stays, thousands
rent in light of the continued severe crisis. This partnership -05% the market from March 2020.
is nice to see. 400,000 -10% Overnight stays have dropped to
y/y change
-15% 286.6m, representing a year-on-
Once a large proportion of the population is vaccinated, year decrease of 33.7%.
300,000 -20%
we are certain people will start to quickly travel again.
-25% The German hotel market is
Most domestic investors are waiting for cash flows to rise 200,000 -30% dominated by domestic
before they look to buy hotels again. Some, however, see Olivia Kaussen -35% demand. In 2019, only 18% of
the situation as a good opportunity to secure top assets in Head of Hotels Germany 100,000 -40% overnight stays were
prime locations.” 2015 2016 2017 2018 2019 YTD YTD generated by international
Oct Oct guests.
2019 2020
Source: Destatis, 2021
As we expect domestic travel to
recover much more quickly than
Hotel Key Performance Indicators, Germany international and especially
Key Hotel Transactions, 2020 overseas travel, the German hotel
market is likely to recover more
PROJECT NAME CITY KEYS PRICE CONTRACT 120 80% quickly compared to countries
Nhow Hotel Berlin 304 Confidential Lease 70% that heavily rely on foreign tourist
100
arrivals.
60%
ADR & RevPAR, EUR€
Leonardo Royal Berlin 346 Confidential Lease 80 In 2020, occupancy levels saw a
Alexanderplatz 50%
dramatic decline from more than
Occupancy
Innside Dresden 180 Confidential Lease 60 40% 70.0% to around 32.0%, mainly
30%
caused by travel restrictions,
Motel One Karlsruhe 323 Confidential Lease 40 “lockdowns” and temporary
20% border closures. ADR decreased
Renaissance Hotel Dusseldorf 244 Confidential Vacant Possession 20
10% by around 13% to €89.43, down
from €103.06 in 2019. This
0 00%
Source: CBRE 2021 2015 2016 2017 2018 2019 2020 resulted in a RevPAR decrease of
more than 60.0%.
ADR RevPAR Occupancy
The German Top seven cities will
Source: STR, 2021
see a significant increase in
HOTELS PAN EMEA MARKET UPDATE HOTELS PAN EMEA MARKET UPDATE
- 13 - - 14 -
HOTELS PAN EMEA MARKET UPDATE GERMANY GERMANY
hotel supply. In total, 32.0k Hotel Development Pipeline, German Cities Hotel Operational Lease Yields, Germany Big 5 The abundance of domestic and
rooms are scheduled to be international capital put pressure
8 on prime yields for hotel real
added to these markets in the 25,000
estate up until Q2 2020. The gap
next three years, representing 6
20,000 between prime office and hotel
approximately 46.2% of total
yields narrowed to as low as 50
additional supply of hotel rooms 4
basis points. As a result of the
Bedrooms
15,000
to Germany overall. These COVID-19 crisis, this gap is now
10,000 2
rooms are partly under widening again with the prime
construction, and partly in the 0
yield for leased hotels having
5,000
planning phase. Whether or not Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 risen to 4.25%, an increase of 50
the latter will be built or if the 0 Prime Office Yield Berlin (%) Hotel Lease Yield (%) basis points.
developers might consider a 2021 2022 2023 2024 Unconfirmed
Yields are expected to rise
change of use remains to be Berlin Dusseldorf Frankfurt Hamburg Cologne Stuttgart Munich Hotel Vacant Possession Yields (%), Germany Big 5 further in less attractive
seen. 8
locations but will likely remain
Source: STR, 2021 low in the core sector.
“The large share of Hotel Investment Volumes, Germany 6 Tenants struggled to pay rent last
domestic tourism, paired year and 2021 will remain tough,
4
with a trend towards 6,000 100% especially during the first half of
ground-based, eco-friendly 80%
2
the year. This is putting pressure
Investment volume, EUR€ m
5,000
60% on the affected operators’
and decelerated travelling
4,000 40% 0 covenant strength. Some tenants
y/y % change
will benefit a comparably Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 will not survive without a capital
20%
quick recovery of the 3,000
injection. We also expect to see
0%
German hotel market once more M&A activity, a trend which
2,000 -20% Hotel Management Contract Yields (%), Germany
the accommodation ban is -40% already started in 2020.
lifted. This will also entail a 1,000 Big 5
-60% 8 Depending on the cost and
recovery of the hotel 0 -80% viability, we expect to see some
investment market. The 6 conversions to residential,
strong fundamentals remain student/senior living, care homes
4
and will continue to attract Source: CBRE, 2021 or even office use.
national and international in investor demand. A lot of top locations will continue to 2
capital.” international value add and attract conservative institutional
opportunistic buyers are seeking investors. 0
Helena Rickmers, Senior Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020
Consultant to enter the market and are The German hotel investment
already looking for opportunities. market dropped by a
This year is likely to see a change At the same time, core assets in staggering 60% in 2020. Source: CBRE 2021
HOTELS PAN EMEA MARKET UPDATE HOTELS PAN EMEA MARKET UPDATE
- 15 - - 16 -
HOTELS PAN EMEA MARKET UPDATE HUNGARY HUNGARY
“2020 has certainly been a tough year for the Hungarian Tourism demand saw a sharp
Tourism Demand, Hungary decline in 2020 due to reduced
Hotel Market with a Yearly RevPAR below €20.
international mobility and the
Transaction volumes fell by 40% vs 2019, however, due to 25,000 20% strict travel restrictions that were
the travel restrictions, the domestic market exceeded 10% in place for a large part of the
2019 levels during the summer months. 20,000 year, particularly in Hungary.
0%
Overnight stays, thousands)
Nonetheless, the Hungarian market has strong resilience Overnight stays in hotels fell by
-10% ca. 57% y/y.
due to the balanced mix of corporate and leisure guests,
y/y change
15,000
-20% Naturally, the main KPIs reflected
as well as demand from individuals and groups. We
expect to experience a fast recovery and Budapest in -30% the weaker guest volumes. Hotel
10,000
occupancy fell to an average of
particular should be one of the cities in the CEE region to -40%
21% in 2020, from 79% in 2019.
see an early recovery. 5,000 -50%
Despite the pandemic headwinds,
The leisure segment will rebound quicker than corporate Laurent Lassier -60% pricing was not revised drastically
Head of Hotels Hungary as ADR corrected from EUR 91 to
demand, which is not expected to pick up until 0 -70%
September. Moving forward, we estimate that one third of 2015 2016 2017 2018 2019 2020 EUR 81 in a year. However,
RevPAR also saw a sharp drop
corporate travellers will prefer digital solutions over Guest Nights y/y % change
from EUR 72 to EUR 17.
travelling abroad.” Source: Hungarian Central Statistics Office, 2021
The hotel sector has historically
Hotel Performance KPIs, Budapest attracted a relatively small portion
of CRE investment in Hungary,
but 2019 and early 2020 saw a
Key Hotel Transactions, 2020 92 90% clear uptick that raised hope for
90 80% further improvement. However,
PROJECT NAME CITY KEYS PRICE CONTRACT only one major hotel deal closed
88 70%
after the pandemic outbreak
D.A. portfolio (NY Palace & Budapest 323 €90M 86 60%
(Varde portfolio) and institutional
Occupancy
ADR, EUR€
Residences) 84 50% sentiment remains cautious.
Barceló Hotel Budapest 179 €45M Lease 82 40%
80 30%
M-Square Hotel Budapest 71 €17M
78 20%
Palatinus Hotel Pécs 100 €4M
76 10%
74 0%
Development Site Budapest TBA €20M 2019 2020
Source: CBRE 2021
ADR Occupancy
Source: STR, 2021
HOTELS PAN EMEA MARKET UPDATE HOTELS PAN EMEA MARKET UPDATE
- 17 - - 18 -HOTELS PAN EMEA MARKET UPDATE HUNGARY HUNGARY
Hotel Supply Evolution, Hungary Hotel Operational Lease Yield (%), Budapest Hotel yields remain well above
the levels registered before
“During this challenging 8
3,000 250 the COVID-19 outbreak.
period, hoteliers are striving
Average size of new hotel (bedrooms)
to develop and transform 2,500 6 Initially, yield levels were raised
200
Supply growth (bedrooms)
by 75bps in Q1 2020, reflecting
their business models,
2,000 4 the severe and immediate impact
becoming more flexible in 150 on the sector. Then, amidst the
their offers, using even 1,500
2 second local travel and mobility
more new digital 100 restriction wave in Q4 2020,
1,000
technologies in order to 0 another 25bps increase was
50 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 noted.
definitely attract a local 500
clientele.” The prime yield for assets with
0 0
Laurent Lassier, Head of 2010 2012 2014 2016 2018 2020 F2022 Hotel Vacant Possession Yield (%), Budapest lease contracts stands at ca.
6.25%, one percentage point
Hotels Hungary Budapest Rest of HU Average # of rooms
8 above its pre-COVID-19 level.
Source: CBRE 2021
Meanwhile, prime vacant
Several hotel developments have 6 possessions can be priced at an
been put on hold in light of the Hotel Investment Volumes, Hungary assumption of ca. 7.25% and
recent uncertainty. Some that 4
management contracts at ca.
were scheduled to open in 2020 300
7.50%.
decided to pause fit-out works, 2
250 Any recovery in hotel
Investment volume, EUR€ m
resulting in the annual
0 performance and investment is
completion volume remaining 200 2019 Q4 2020 Q1 2020 Q2 2020 Q3 2020 Q4
well below our earlier forecast. likely to be slow and gradual
The pipeline for 2021 appears 150 from Q2 2021. The market in
high and unlikely to materialise – Hungary, and Budapest in
Hotel Management Contract Yield (%), Budapest
a significant portion of this year’s 100 particular, is expected to see one
volume is again expected to be 8 of the quickest occupancy
50
delayed into 2022, but exact rebounds on the back of a
development dynamics are near 0
6 healthy leisure/corporate travel
impossible to predict at this stage. 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 mix and relative value for money.
Source: CBRE 2021 4
2
0
2019 Q4 2020 Q1 2020 Q2 2020 Q3 2020 Q4
HOTELS PAN EMEA MARKET UPDATE Source: CBRE 2021 HOTELS PAN EMEA MARKET UPDATE
- 19 - - 20 -HOTELS PAN EMEA MARKET UPDATE IRELAND IRELAND
“We are hopeful for a strong recovery in the second half 2020 had begun with real hope
Domestic and Inbound Tourism Demand, Dublin of consolidating Ireland’s strong
of 2021 and beyond. The certainty around Brexit, the roll
tourism performance of recent
out of vaccinations and a new pro Irish US President are 9,000 years. However, from the
all factors to be positive about. We will continue to see cancellation of St. Patrick’s Day
Overnight stays , thousands
8,000
appetite from international hotel groups looking for 7,000 Parade and festivities in March, it
representation in Dublin, including from some investors 6,000
quickly became apparent that
who heretofore ruled the city out on the basis that it was 5,000
COVID-19 would have a
too expensive. devastating economic impact on
4,000
the tourism and hospitality
We expect to see several alternative deal structures being 3,000 industry.
used in hotel transactions going forward. In addition to an 2,000
Tourism Economics Forecast
increase in sale and leaseback transactions, which will 1,000 2020 for Dublin:
prove popular considering that they enable hotel owners Paul Collins 0
• Domestic Nights decline -45%
to release capital and focus on their core business, we are Head of Hotels Ireland 2017 2018 2019 2020F 2021F 2022F 2023F 2024F
- (CAGR 2020-24 +58%)
likely to see increased incidence of vendor financing, Domestic Tourism Nights Inbound Tourism Nights
• Inbound Nights decline -63%
deferred payments, lease purchase arrangements and Source: Tourism Economics, 2021
- (CAGR 2020-24 +45%)
possibly ground lease transactions in this sector.”
Regional areas of Ireland
experienced a rebound of sorts in
Hotel Key Performance Indicators, Ireland July and August from pent up
Key Hotel Transactions, 2020 demand for domestic leisure. In
200 90%
PROJECT NAME CITY KEYS PRICE CONTRACT 2019 over 5.5m trips were made
180 80% by Irish people overseas for
Clayton Hotel Charlemont 160 leisure reasons and in 2020,
Dublin 187 €65,000,000 Sale & Leaseback 70%
Dublin once hotels reopened, they
ADR & RevPAR (€)
140
60%
The K Club Straffan 134 €60,000,000 Vacant Possession experienced demand for
120
Occupancy
50% staycations as overseas travel was
Management 100 not permitted. We expect this
Conrad Dublin Dublin 192 €116,400,000 40%
Agreement 80 demand to continue in 2021.
30% Although the domestic market
Vacant 60
Hilton Dublin Kilmainham Dublin 120 €45,500,000 Possession, with 20% normally spends less when
40
Franchise holidaying in Ireland, we expect
20 10%
to see a spike in domestic spend
The Marker Dublin 187 €134,000,000 Vacant Possession 0 0% as a result of people taking fewer
2016 2017 2018 2019 2020
Source: CBRE 2021 holidays abroad and spending
Dublin ADR All Ireland ADR Dublin RevPAR
more on their domestic trips.
All Ireland RevPAR Dublin Occ All Ireland Occ
Source: HotStats (Dublin); Treding.ie (All Ireland excl. Dublin), 2021
HOTELS PAN EMEA MARKET UPDATE HOTELS PAN EMEA MARKET UPDATE
- 21 - - 22 -HOTELS PAN EMEA MARKET UPDATE IRELAND IRELAND
“Encouragingly, both Hotel Investment Volumes, Ireland Hotel Operational Lease Yields (%), Dublin Prime Yields in Dublin improved
domestic and international throughout 2019, with vacant
1,000 80% 100% 8
operators and investors possession and management
75% contract yields sharpening by 25
remain confident in the 800 6
50% bps in Q3 2019 and remaining
Dublin market given the
Investment volume, EUR€ m
stable into Q1 2020.
y/y change
13%
strong economic 600
-9%
25% 4
Occupational lease yields
fundamentals, demographic 0%
remained stable in 2019 prior to
400 2
make up and office -50% -25% sharpening by 50 bps in Q1
occupier activity which will -75% -50% 0 2020.
200
drive demand for the hotel -75% Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 As a result of the pandemic,
sector into the long term.” 0 -100% sentiment towards hotel
Dave Murray, Director 2016 2017 2018 2019 2020
Hotel Vacant Possession Yields (%), Dublin investment weakened, and as a
Source: CBRE 2021 result vacant possession and
Following a very active year in bounce back first, whereas it is management contract yields
from the Autumn of last year 8
2019, during which a number of likely to be 2022 before there is a moved out by 50 bps during
onwards.
prime Dublin hotel properties meaningful recovery in US and 6 2020. However, occupational
changed hands for strong We are hopeful of an increase in lease yields have remained stable
long-haul business. Prospects for
pricing, we expected some of the transactional activity in the hotel 4 throughout 2020. This has been
regional hotels are somewhat
underbidders on these sector in 2021 with some supported by the sale &
better than city hotels for the
opportunities to bid again on carryover of activity from last year 2
leaseback deal of the Clayton
foreseeable future due to strong
prime assets in 2020. However, and several new campaigns due Charlemont in April 2020, in the
domestic demand. 0
instead of expected strong to be launched over the coming midst of the pandemic, at a net
Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020
trading conditions and healthy months. For the most part, A number of hotel projects in
initial yield of 4.25%.
volumes of sales activity from a Dublin at various stages of the
transactional activity in 2021 will
comprise single asset trades. planning process (particularly It should be noted that these
property perspective, the hotel
those at pre-planning stage) may Hotel Management Contract Yields (%), Dublin yields are largely based on
industry faced what was probably 2021 will be all about
now not proceed. The viability of market sentiment given the
its worst year on record from a recovery, with momentum 8
hotel developments will certainly limited transactional evidence.
trading perspective. hopefully continuing to build
be reviewed in schemes where 6
Demand for Dublin hotels
Against this backdrop, from the second half of the
works have not yet commenced, remains encouraging with
transactional activity in the hotel year onwards. 4
while other schemes with particularly strong appetite for
property market was severely The pace of growth will, however, planning may struggle to secure
curtailed, with most sales 2 hotel development projects where
be dictated by the success of the development funding in the
campaigns deferred, resulting in the properties will not be
COVID-19 vaccine rollout and current climate. According to our
very few hotels traded in the Irish 0 completing until 2022 or later,
the implications of Brexit. research, just over 4,000 hotel Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020
market during 2020. We did demonstrating confidence in the
Recovery will be at different rooms are currently on site in
however begin to witness medium-term prospects for the
speeds. We expect that leisure Dublin and due to open by Q1
increased appetite from investors Source: CBRE 2021 sector.
and short-haul business will 2023.
HOTELS PAN EMEA MARKET UPDATE HOTELS PAN EMEA MARKET UPDATE
- 23 - - 24 -HOTELS PAN EMEA MARKET UPDATE ITALY ITALY
“Investor sentiment in Italy, for 2021, is for an expected Domestic and Inbound Tourism Demand, Italy In 2020 demand volumes
discount on pricing due to the lack of liquidity and limited decreased considerably as the
financing from lenders. COVID-19 pandemic spread
250,000 throughout the country.
The hotel sector remains of strong interest to investors, September YTD figures showed
Overnight stays, thousands)
given its size, high fragmentation and low brand 200,000
this decrease to be at -70% for
penetration. This favours opportunities for repositioning international and -33% for
and rebranding, therefore strong potential upside for domestic bed nights respectively.
150,000
hotel properties. It is important to note that the
data is still provisional but
Hotel investment volumes in Italy for 2021 are therefore 100,000
remains representative of the
expected to grow compared to the previous year, driven disruption caused by the travel
by flight to quality and value add investments.” 50,000 restrictions imposed by the
Francesco Calia pandemic.
0
Head of Hotels Italy 2017 2018 2019 YTD YTD Domestic demand proved
September September more resilient during the
Domestic International 2019 2020 summer months with bed
nights dropping by just 14%
Key Hotel Transactions, 2020 Source: ISTAT 2021
between June and September
PROJECT NAME CITY KEYS PRICE CONTRACT compared to the same period
International Tourism Spending, Italy
in 2019. International bed
Dedica Anthology (Italian Florence, Venice, 485 Confidential Planned Lease
nights decreased by 59%
Perimeter) Rome
8.000 compared to the same period
in 2019.
The Bauer & Palazzo Venice 210 255 M Vacant Possession
Together with the strong
6.000 contraction in international
Autograph Pantheon Iconic Rome 79 62 M Lease
EUR€ m
tourism volumes there has been
an associated reduction on
4.000
international spending of -57%
Citizen M Rome Rome 162 29 M Planned Lease between January and September
Source: CBRE 2021 2020, largely caused by the
2.000
absence of American and
Russian tourists (source: Bank of
0.000
Italy).
Jan. Feb. Mar Apr May Jun. Jul. Aug. Sep. In terms of key transactions, the
2019 2020 Dedica Anthology portfolio was
Source: Bank of Italy 2021
the largest registered in 2020,
HOTELS PAN EMEA MARKET UPDATE HOTELS PAN EMEA MARKET UPDATE
- 25 - - 26 -HOTELS PAN EMEA MARKET UPDATE ITALY ITALY
with four out of the eight Hotel Development Pipeline and Existing Supply, In terms of future supply, the
Hotel Operational Lease Yields (%)
properties based in Italy. Italian Cities pipeline predominantly includes
Pipeline 2021 -2024
8 international brands, who are
New Supply 2020
“The volume of hotel (Number of Rooms: 18.812) looking at opportunities to enter
(Number of Rooms: 1.915) 6
investments achieved in the Italian market, which still
2020 is not far from the features limited brand
Other 4
Other Rome penetration (10% of the total
typical levels achieved 24%
28% 27% rooms in 2019).
between 2006 to 2018. 2
Pipeline remains robust and Rome Yields are generally returning
Milan 58% 0 to early 2019 levels for all
openings have generally Milan Venice 13% Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020
15% types of operating structures
just been postponed.” 18% Milan Rome (Leases, VP & HMA).
Florence
Raffaella Peloso, Director VAS 12% Florence
5% Hotel Vacant Possession Yields (%) The sudden and very strong
contraction in hotel demand has
The volume of hotel investments Source: CBRE 2021 8 impacted trading performance
in Italy in 2020 recorded a sharp and therefore rent sustainability.
slowdown, by almost 70%, Hotel Investment, Italy 6
This has led to an increase of the
compared to 2019. This was not 3,500 30%
risk associated with this asset
only attributable to the profound 4
Investment volume, EUR€
3,000 25% class given the volatility during
climate of uncertainty caused by 2,500 COVID-19.
20% 2
the pandemic, but also due to 2,000
the concentration of large 15%
0
1,500
portfolio deals completed in 10% Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020
1,000
2019, which remains an Milan Rome
500 5%
exceptional year for this asset
class. 0 0% Hotel Management Contract Yields (%)
Moreover, the transactions 8
observed in 2020 confirm
Hotel Investment Volume Share of all RE Investment
investor confidence in trophy 6
assets, with transactions
Source: CBRE 2021 4
originating in the pre-COVID
period which were closed almost
Many new hotels which were Nonetheless the interest of 2
without repricing.
expected to open in 2020 shifted international and domestic
Most of the recent new supply opening by 12-18 months as a operators remains high for both 0
and pipeline is located in Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020
result of the delay in the supply prime and secondary locations.
Milan Rome
Rome. of materials and a more limited
workforce caused by COVID-19. Source: CBRE 2021
HOTELS PAN EMEA MARKET UPDATE HOTELS PAN EMEA MARKET UPDATE
- 27 - - 28 -HOTELS PAN EMEA MARKET UPDATE POLAND POLAND
“2020 was shaping up to be another positive year for Tourism Demand, Poland Hotel demand in Poland pre-
hotels in Poland, with early KPI performances in January COVID-19 showed a growth
trajectory. In 2019, the hotel
and February indicating improved demand. market saw over 23.5m arrivals
50,000 20%
In 2021, we expect slow recovery of occupancy to and almost 45m overnight stays,
10%
commence in Q2 driven by domestic demand. We believe reflecting growth in overnights of
40,000
domestic tourism will be a key factor for recovery, with 0% 5.5% and 6.6% in 2018 and
Overnight stays, thousands
Polish tourists responsible for 70% of overnight stays in 2019 respectively.
-10%
2019. Due to the strong summer months experienced last 30,000 The average length of stay
y/y change
year, resort destinations are likely to be some of the best -20% was 1.91 days per one arrival
performers in Poland in terms of occupancies in 2021.” 20,000
in 2019.
-30%
According to available year-to-
-40% date November data in 2020,
Rafał Florczyk 10,000
accumulated tourism nights
-50%
Consultant Hotels Poland decreased by 46.5%, while the
0 -60% inbound decreased by 67.1%.
2015 2016 2017 2018 2019 2020
Domestic demand proved
Source: Central Statistical Office, 2021 robust and helped absorb
some new supply
Key Hotel Transactions, 2019-20 Hotel Key Performance Indicators, Poland development.
Poland's market absorbed an
PROJECT NAME CITY KEYS PRICE CONTRACT 80 80%
average of over 3,500 new
Regent Warsaw Hotel (2020) Warsaw 250 €29m Owner Operator 70 70% bedrooms annually over the last
three years, which put pressure
60 60% on the key performance
ADR & RevPAR, EUR€
Ibis Styles Mogilska (2019) Krakow 259 €40.0m Vacant Possession indicators. Since 2017, the
Occupancy
50 50%
country’s average occupancy has
Mercure Mlynska (2019) Katowice 268 €46.0m Lease 40 40% stabilised ca. 70% and RevPAR
30 30%
at EUR 48.
Despite a good beginning of the
B&B Portfolio (2019) Various 433 €23.9m Planned Lease 20 20%
year, in 2020 revenues dropped
10 10% significantly, with RevPAR decline
Radisson Collection (2019) Wawsaw 311 €82.5m Management varying between the key markets
0 0%
from -55% and -80%, reflecting
2018 2019 2020
the country index -69%.
ADR RevPAR Occupancy
Source: CBRE 2021 Source: STR, 2021
HOTELS PAN EMEA MARKET UPDATE HOTELS PAN EMEA MARKET UPDATE
- 29 - - 30 -HOTELS PAN EMEA MARKET UPDATE POLAND POLAND
“Poland started 2021 with Hotel Operational Lease Yields, Warsaw The Polish market noted
Hotel Development Pipeline, Polish Cities
a further closure of most increased investment volumes
8 from 2017 onwards. Institutional
hotel operations with, as 10,000
investors entering the market
yet, no date for reopening. 8,000 6 compressed yields to new lows.
Questions on how the Operators and developers
Bedrooms
vaccination program will 6,000 4
responded and groups of
affect demand recovery 4,000 investors introduced more lease
2
remain. It is unlikely we will structures.
2,000
see the majority of pipeline 0 CBRE expects the restriction
projects materialise in 0 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 for hotels may last longer
2021. Looking further 2021 2022 2023 2024 Unconfirmed Prime Office Yield (%) Hotel Lease Yield (%) than expected, and a
ahead, when there is cumulative desire for travel
Warsaw Krakow Tricity Poland
greater clarity on recovery, Hotel Vacant Possession Yields (%), Warsaw may not be strong enough to
Source: CBRE 2021 generate demand for
we expect an increase in 8
operational break-even in
investment activity and Hotel Investment Volumes, Poland 2021 for some of the
6
repositioning of existing markets.
assets.” 450 250% 4 Since the COVID-19 outbreak,
Rafal Florczyk, Consultant 400 200% yields have increased, with yields
Investment volume, EUR€ m
2
350 150% being at 6.0%, 7.0%, and 7.0%
300 for Lease, Management
y/y % change
100% 0
250 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Contracts, and Vacant
50%
The market presents a positive 200 Possession structures
0% respectively.
investor sentiment in Poland with 150
multiple new hotel developments 100 -50% Hotel Management Contract Yields (%), Warsaw
in the pipeline. Warsaw will 50 -100%
8
remain the investor's first choice. 0 -150%
However, due to bank financing 6
issues with new developments in
2021 and the uncertain post- 4
Source: CBRE, 2021
COVID-19 recovery, we expect
to see rescheduled openings and The investment market remains their portfolio are open to 2
a greater level of deferred in a wait and see mode. New considering new opportunities.
funds are being established New acquisitions will be more 0
projects. However, the upcoming Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020
supply will probably lag the focused on Hotel assets. deeply analysed, and only prime
recovery of market key Experienced funds with locations will be considered.
performance indicators. significant shares of hotels within Source: CBRE 2021
HOTELS PAN EMEA MARKET UPDATE HOTELS PAN EMEA MARKET UPDATE
- 31 - - 32 -HOTELS PAN EMEA MARKET UPDATE PORTUGAL PORTUGAL
“2019 was marked as the strongest period of Portuguese Tourism Demand, Portugal During the last five years (2015-
transactional activity within the hotel investment sector, 2019) we have observed robust
and this trend continued into the Q1 of 2020, with an performances in Hotel demand.
Portugal, has recorded 41m
investment of over 300M€ deployed in this period alone. 45,000 20.0%
overnight stays in 2019,
The remainder of the year was strongly affected by the 40,000 10.0%
representing +3.3% increase
Overnight stay thousands
market downturn and the strong risk perception of the 35,000 0.0%
compared to 2018.
y/y % change
sector. 30,000 -10.0%
25,000 -20.0% As expected, due to Covid-19
Nevertheless, Portugal still remains a very attractive YTD October 2020 (latest data
20,000 -30.0%
market for investors, a view supported by the increased available) the country has
15,000 -40.0%
demand for prime located assets. observed a -63.4% decrease in
10,000 -50.0%
Going forward, we expect different transaction structures 5,000 -60.0%
the number of overnight stays
in the investment market, with investors open to acquire 0 -70.0%
compared to 2019.
single assets, portfolio deals and debt positions. “ DUARTE MORAIS 2015 2016 2017 2018 2019 YTD YTD In the five year period Portugal
Oct Oct
SANTOS 2019 2020 experienced overall positive
Director, Hotels Portugal KPI trends, with a RevPAR’s
Source: INE, 2021 CAGR for the period of +8.8%
The hotel industry was one of the
most impacted sectors by the
Key Hotel Transactions, 2020 Hotel Key Performance Indicators, Portugal Covid-19 pandemic. YTD
PROJECT NAME CITY KEYS PRICE CONTRACT October 2020 (latest data
available) the country observed a
€ 120 80%
decrease in RevPAR to €27.2 (-
Group Hotéis Real Portugal 1059 ¤300,000,000 Vacant Possession 70%
€ 100 55.4% when comparing with
ADR & RevPAR, EUR
60% 2019 same period figure). This
€ 80
change was driven by Occupancy
Occupancy
Aqualuz Lagos Algarve 179 ¤20,650,000 Lease 50%
€ 60 40% levels with ADR actually recording
30% a +8.9% growth over the period,
Stay Hotel Lisbon Lisbon 84 ¤9,000,000 Lease € 40
illustrating a strong touristic
20%
€ 20 appetite for the country, despite
10%
Source: CBRE 2021 the pandemic.
€0 0%
2015 2016 2017 2018 2019 YTD YTD
Oct Oct
2019 2020
ADR RevPAR Occupancy (%)
Source: Travel BI, 2021
2020 KPIs based on open hotels only
HOTELS PAN EMEA MARKET UPDATE HOTELS PAN EMEA MARKET UPDATE
- 33 - - 34 -HOTELS PAN EMEA MARKET UPDATE PORTUGAL PORTUGAL
“Investors continue to Hotel Operational Lease Yields (%), Lisbon As a consequence of the strong
Hotel Development Pipeline, Portugal
demonstrate a strong investor demand for hotel assets
interest in the local hotel 6,000 8 and the growth in liquidity, hotel
yields in Portugal reached their
market, looking mostly to Number of rooms
5,000 6
lowest point in 2019. The risk
acquire in prime city or 4,000 perception in hotel investment
4
leisure locations with strong 3,000 decreased in the past years
covenants. We expect to 2 caused by the improvement in the
2,000
witness in the next months touristic sector (large increases in
an alignment between 1,000 0 RevPAR) associated with the
sellers and buyers' 0
Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 security in operators able to
expectations, with a strong 2021 2022 2023 2024 10-Year Government Bond Prime Office Yield commit to larger leases instead of
Hotel Lease Yield
only management fees. Lease
transactional activity in the yields remain the lowest of all
Lisbon Porto Rest of Portugal
second half of the year” Hotel Vacant Possession Yields (%), Lisbon operating structures
Source: CBRE 2021
Duarte Morais Santos 8
The pandemic, as at Q2 2020,
Director, Hotels Portugal Hotel Investment Volumes, Portugal 6 has realised an increase in
yields by 50 bps in the lease
Most of the hotels that were 4 structures and 25bps for other
900 250%
planned to open in 2020 have 2
operating structures.
been postponed to 2021/2022, 800
200%
Investment volume, EUR m
mainly due to delays in 700 0
150%
construction caused by the 600 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020
y/y % change
pandemic. In the next few years, it 500 100% 10-Year Government Bond Prime Office Yield
is expected that some of the hotel 400 50%
Hotel VP Yield
pipeline will be transformed to 300
other uses. 200
0% Hotel Management Contract Yields (%), Lisbon
In 2019, hotel investment reached -50% 8
100
record levels of over €800M, with 0 -100% 6
the most notable portfolio deal 2015 2016 2017 2018 2019 2020
being the Tivoli Portfolio, thereby 4
Source: CBRE 2021
illustrating investor confidence on
the market. As expected, in 2020 for leased hotels in locations capital versus domestic 2
the investment decreased by 57% with mainly leisure demand. representing 85% of the total in
due to the Covid-19 sanitary crisis. 0
The origin of investment has 2019. Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020
Nevertheless, in 2020 large changed significantly from the 10-Year Government Bond Prime Office Yield
transactions were recorded such previous cycle of the market, with Hotel HMA Yield
as the Hoteis Real Group and a considerable weight of foreign Source: CBRE 2021
HOTELS PAN EMEA MARKET UPDATE HOTELS PAN EMEA MARKET UPDATE
- 35 - - 36 -HOTELS PAN EMEA MARKET UPDATE SPAIN SPAIN
“Although in 2019 we were already anticipating the Tourism Demand, Spain Hotel demand in Spain has
beginning of a new tourism and hotel cycle, nothing displayed good performance
foretold that in 2020 we would experience one of the during the last five years (2015-
2019), achieving a record
most challenging years for the Spanish hotel market. 400,000 30%
number of 342.9m overnight
After solid transactional activity at the beginning of 2020, 350,000
10% stays in 2019 (+0.9% increase
with investment volume being 14% above Q1 2019, 300,000 compared to 2018).
-10%
transactional activity in Spain has been severely impacted
Overnight stays, thousands
250,000
y/y change
However, due to the COVID-19
due to the market uncertainty, scarcity of bank financing 200,000 -30%
outbreak, as at YTD November
and slowdown in operating activity prompted by the 150,000 2020 (latest data available) the
-50%
COVID-19 outbreak. 100,000 country has witnessed a -72.9%
However, the Spanish hotel market continues to be very 50,000
-70% decrease in the number of
attractive for investors, with some notable transactions 0 -90%
overnight stays over the 2019
that have taken place during Q4 2020. Looking ahead, JORGE RUIZ 2015 2016 2017 2018 2019 YTD YTD equivalent figure.
Nov Nov
as for 2021, a further alignment between buyer and Head of Hotels Iberia 2019 2020 In terms of KPIs, Spain
seller expectations is foreseen.” exhibited an overall positive
Source: INE, 2021 trading performance between
2015 and 2019, resulting in a
RevPAR’s CAGR for the period
Key Hotel Transactions, 2020 Hotel Key Performance Indicators, Spain of +4.8%
PROJECT NAME CITY KEYS PRICE CONTRACT Hotel trading performance has
100% been sharply impacted by the
200 90% COVID-19 pandemic. In
Pollença Management
Hotel Formentor 123 ¤165,000,000
(Mallorca) Agreement 175 80% numbers, as at YTD July 2020
ADR & RevPAR, EUR€
150 70% (latest data available) the country
has seen a decrease in RevPAR,
Occupancy
Nobu Hotel Barcelona Barcelona 259 ¤80,000,000 Franchise 60%
125
50% to €31.1 (-62.7% compared with
100
Management 40% the same period in 2019). This
Project Jewel* Various (Tenerife) 1,216 Confidential 75 downturn has been driven by year
Agreement 30%
50 20% on year decreases in both
Mallorca,
25 Occupancy and ADR of -55.5%
Project Margaux** Menorca and 485 Confidential Lease Agreement 10%
Roses 0 0%
and -16.1% respectively.
2015 2016 2017 2018 2019 YTD YTD
*Note: Portfolio of 6 hotels located in the Canary Islands July July
2019 2020
**Note: Swiss Life acquired a portfolio of 4 hotels located in beachfront destinations across the Balearic Islands and Catalonia
Source: CBRE 2021 ADR RevPAR Occupancy
Source: STR, 2021
HOTELS PAN EMEA MARKET UPDATE HOTELS PAN EMEA MARKET UPDATE
- 37 - - 38 -HOTELS PAN EMEA MARKET UPDATE SPAIN SPAIN
“Hotel investors continue to Hotel Operational Lease Yields (%), Madrid Since 2016, Prime Yields in Spain
Hotel Development Pipeline, Spain
exhibit strong interest in the have experienced an overall
16,000 8 compression resulting from
Spanish hotel market,
14,000 strengthening investor demand
accentuated by a low- 6
and the growth in operating
12,000
interest rate environment, performance.
10,000
Bedrooms
high stock market volatility 4
8,000 From Q2 2020 onwards we
and the possibility to 6,000 2 have seen exit yields move out
acquire prime and strategic 4,000 25bps across all key operating
assets at more attractive 2,000 0 structures due to the COVID-
prices. In the coming 0 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 19 outbreak.
10-Years Goverment Bond Prime Office Yield
months, we anticipate a 2021 2022 2023 2024
Hotel Lease Yield This has led to market
higher transactional activity, uncertainty, strain in liquidity of
Madrid Barcelona Rest of Spain Hotel Vacant Possession Yields (%), Madrid
especially from Q2 hotel assets and limited leverage
onwards.” Source: CBRE 2021 8 available from traditional lenders.
Miguel Casas Albandor, Hotel Investment Volumes, Spain 6 Going forward and due to the
Head of Investment market downturn, further
Properties Continental 4 movements in hotel yields will be
6,000 160%
Europe tied to recovery conditions,
5,000 120%
2 together with the government’s
Investment volume, EUR€ m
measures in response to the
Most of the new hotel supply 0
4,000 80% pandemic.
expected to open in 2020 was Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020
y/y change
10-Years Goverment Bond Prime Office Yield
either postponed or moved to 3,000 40% Hotel VP Yield In addition, following the
2021. In terms of pipeline, there COVID-19 crisis, investors will
are a total of 198 hotels (27,182 2,000 0% Hotel Management Contract Yields (%), Madrid be required to take higher
rooms) that are expected to open financial risk on transactions,
1,000 -40% 8
in Spain up to 2024. driving higher risk preference
0 -80% 6 purchasers to become the
With regards to Investment, the
2010 2012 2014 2016 2018 2020 market’s key players.
excellent trading performance of Source: CBRE 2021
4 Therefore, higher returns will
the Spanish hotel sector along with
be asked.
the major presence of Spanish at circa €5,000 million. wait-and-see approach. 2
REITS (SOCIMIs) and international After a strong Q1 2020, In 2020, Spanish hotel
institutional investors has caused transactional activity in Spain investment volumes reached 0
the Spanish hotel transaction Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020
has been severely affected by €1,005 million (a y-o-y drop of -
volume to increase significantly in 10-Years Goverment Bond Prime Office Yield
the COVID-19 outbreak and 58.7%).
Hotel MA Yield
recent years, peaking in 2018 traditional lender’s current Source: CBRE 2021
HOTELS PAN EMEA MARKET UPDATE HOTELS PAN EMEA MARKET UPDATE
- 39 - - 40 -HOTELS PAN EMEA MARKET UPDATE THE NETHERLANDS THE NETHERLANDS
“2020 was undoubtedly a gruesome year for the Dutch Statistics for 2019 indicate that
Tourism Demand, Netherlands
hotel market, with performance dipping to unprecedented the Netherlands welcomed
levels across the country (RevPAR averaging below 60,000 20% 30.8m arrivals, who together
€30.00). Investment volumes reached a historic low in accumulated 54.8m overnight
10% stays – reflecting annual
2020, with transaction volumes cumulating between ¤300 50,000
increases of 3.9% and 6.3% on
and ¤350 million, which is a fragment of 2019 when the 0%
Overnight stays, thousands
2018 levels. Following the
volume exceeded ¤2 billion. 40,000
-10% outbreak of the pandemic,
y/y change
We expect the market to recover in 2021. Slowly but overnight stays declined to
30,000 -20% 26.5m, which is 51.8% down
gradually. The Dutch market is agile due to the healthy
compared to the previous year.
mix of corporate and leisure as well as domestic and 20,000
-30%
This decline is partially due to
foreign demand. Expectations are that The Netherlands -40% the fact that Amsterdam,
will be one of the countries that will show the strongest Jan Steinebach 10,000 Rotterdam and The Hague hotel
-50%
recovery in terms of occupancies.” Head of Hotels, markets rely on a significant
The Netherlands - -60% proportion of demand via
2015 2016 2017 2018 2019 2020 international source markets.
The pre-COVID-19 period
Source: CBS, 2021
from 2015 to 2019 has
Key Hotel Transactions, 2020 marked very positive
Hotel Key Performance Indicators, Netherlands
development in the Dutch
PROJECT NAME CITY KEYS PRICE CONTRACT hotel market, with strong
140 80% growth figures recorded for
Hilton The Hague The Hague 195 ¤70,250,000 Management
all KPI’s.
Agreement 120 70%
This is reflected in the RevPAR
Hotel Pullman Cocagne Eindhoven 320 ¤59,200,000 Lease 60%
ADR & RevPAR, EUR€
100 growth rate from 2015 to 2019
The Bridge Hotel Amsterdam 53 Confidential Owner Operated 50% of 23.9%, with KPIs in 2019
Occupancy
80
40% being extremely strong (ADR of
Holiday Inn Leiden & ECC Leiden 200 ¤19,375,000 Vacant Possession
Leiden
60 ¤122.60, Occupancy of 75.6%
30%
and RevPAR of ¤93.07).
40
Urban Residences Rotterdam Rotterdam 78 ¤29,500,000 N/A 20%
We note that 2020 was a
20 10% weaker year in terms of hotel
Leonardo The Hague The Hague 178 Confidential Owner Operated
0 0% performance as RevPAR declined
Source: CBRE, RCA, 2021
2015 2016 2017 2018 2019 2020 significantly to ¤27.9 compared
to ¤93.07 (-70.0%) in 2019, this
ADR RevPAR Occupancy
representing the largest drop
Source: STR, 2021 encountered in the last 10 years.
HOTELS PAN EMEA MARKET UPDATE HOTELS PAN EMEA MARKET UPDATE
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