What future for hotel investment in Europe? A survey of more than 100 hotel executives points to both risk and a window for opportunistic acquisitions.
Deloitte unveiled the results of its annual report last week European hotel industry survey. Between mid-September and early October, the company interviewed more than 100 high profile individuals, including owners, operators, lenders, developers and investors.
Here are the main results:
- Expect more sales of struggling hotel assets. In this year’s survey, 27% of respondents expected to see this, double last year’s level.
- Inflation is the biggest risk to the growth of the hospitality industry over the next five years, according to 83% of respondents.
- Hiring remains a priority for 63% of hotel managers.
The survey asked for the most attractive city for hotel investment in 2023. The answers, ranked in order of popularity, are:
- Lisbon (last year’s top pick)
- London (second favorite last year)
The fastest growing countries in 2023 for hotel investment are:
- Portuguese (33%)
- Spain (33%)
- Greece (31%)
Deloitte’s investigation sparked cautious optimism. Other signals echoed this view. The hotel construction pipeline in Europe slowly improved in the first half of 2022.
Most of the growth occurred in a handful of markets. Countries representing half of the construction pipeline in Europe at the end of the second trimester were, according to data from Lodging Econometrics:
- Great Britain, with 309 projects (46,296 rooms)
- Germany, with 258 projects (44,692 rooms)
- France, with 152 projects (17,338 rooms)
- Portugal, with 123 projects (14,811 rooms)
- Poland, with 85 projects (12,205 rooms)
European cities with the largest pipelines were:
- London, with 80 projects (13,683 rooms)
- Düsseldorf, with 46 projects (8,492 rooms)
- Paris, with 35 projects (5,540 rooms)
- Lisbon, with 34 projects (3,850 rooms)
While some hotel investors and developers will find the next year challenging, others will find bargain-basement opportunities and thrive. Picking your fights will be critical. Properties in city centers that benefit from considerable domestic demand or long-term contracts with global brands will prove particularly attractive. judging by the recent deal feed.
Look at some of the latest offerings to see where the momentum is.
- Canada Pension Plan Investment Board (CPPIB) and UK-based hospitality consultancy Hamilton-Pyramid Europe said this month that they had created a joint venture with an initial capital of around 491 million dollars (475 million euros) for the acquisition of hotels in the main cities and tourist resorts of Europe. He acquired W Roma for around 178 million dollars (172 million euros).
- Halter AG said this month that it would invest around $210 million (200 million Swiss francs) over two years to renovate the Hotel Sonnenberg in Seelisberg, Switzerland, as well as some supporting properties around it.
- Peripheral Asset Management this month said it acquired a Premier Inns in Hannover for around 27 million dollars (27 million euros).
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