European Hotel Real Estate Report 2019

European Hotel Austria

Hotel Investments – 2019 recap

Ahead of our appearance at the International Hospitality Investment Forum in Berlin (2-4 March), we’re sharing an overview of the current Hospitality Real Estate market in Europe.

In a report conducted by CBRE, investments in the European hotel industry remain strong. In fact, in the 12 months leading up to Q4 of 2019, the industry saw an increase of nearly 14% in investments. This is despite Europe experiencing a dip of 2% for investments across all sectors.

With the EU undergoing significant changes along with the advent of Brexit on the horizon, uncertainty hasn’t dampened investment and progress too much. 9% of all capital deployed in European real estate was within the hotel and hospitality sector.

Surprisingly, the UK showed the most resistance as it continues to be the largest region for the hotel investment market, accounting for more than 25% of all capital deployed in 2019. Still, there is a caveat that the UK is down 31% from the year prior.

Other countries also ended 2019 on a strong note. Germany ended with €2.4B of hotel stock transacting in Q4; Italy ended with 21 deals, notably in Venice with the building of additional luxury hotel brands; France grew 19%; the Benelux region, despite showing slow H1 growth, also grew 19% with a notably strong Q4 of €840M transactions.

The biggest year-on-year investment growth came from Austria, Portugal, and CEE. Portugal continues to show growth with a year-on-year increase of 153%, thanks to its main cities Lisbon and Porto standing out amongst the top 20 European tourism growth cities in 2019.

Austria experienced a phenomenal 906% year-on-year increase, with Vienna accounting for 33% of all investment projects for the upcoming year. The focus looks to be within the luxury sector.

CEE saw an investment increase of 239% thanks to cities like Prague, Budapest, and Bucharest showing rapid tourist growth in 2018. On the back of such rapid growth, 2019 saw high levels of investment in the region.

Hotel Investments – 2020 looking forward

The DACH region is looking to construct over 900 hotels with a particular focus on the midscale market. Despite the tremendous growth seen in Austria in 2019 and moderate growth in Switzerland, it’s Germany that will see the most number of projects as it storms away with a projected 774 hotels.

London, despite all the business uncertainty surrounding Brexit, could see an incredible 2020, poised to be one of the busiest years yet, with an additional 90 hotels in the pipeline, all to be constructed over the next 5 years. Unlike many other regions, the focus is solely on upper-scale, luxury hotels.

These new hotels, and not just in the DACH region and London but across much of Europe, will need to focus on the culturally immersive experience for travellers. This change in traveller preference has been noted by Skift, who has seen more than 2/3rds of high-income travellers opting for holidays that offer a rich, culturally relevant experience and pay more for local activities as opposed to upscale hotel accommodations. One report estimates this personal and experiential luxury holiday will rise to a market value of €1.26B.

Despite the changes that Europe is going through uncertain external market factors like China-United States trade wars, hotel investments look to remain strong and show growth opportunities.

It’ll be interesting to see how the European hotel real estate market develops in the coming years.

Did you know?

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