European Hotel Investment Survey
Opportunity out of uncertainty?
Our annual survey of delegates registered to attend the Deloitte European Hotel Investment Conference 2016 found some interesting insights following a mixed year.
The following key findings represent the views of over 100 senior hospitality figures including owners, operators, lenders, developers and investors.
Our survey findings focus on three key areas:
The outlook for the European hotel market
Chinese and North American investors are expected to dominate the market in 2017 with 62% of respondents predicting China to be the biggest source of inbound investment into Europe, up from 51% last year and followed by North America (46%).
Despite a bumper year of transactions in 2015, deal flow has remained subdued this year. Hotel executives remain optimistic about future investment opportunities however, with 34% of respondents believing that the European investment cycle is 12-18 months away from peaking. Looking further ahead, nearly 60% of respondents view disposals and consolidation as future prominent investment themes.
The European hotel investment market: an ocean of opportunity
Amsterdam has replaced London as Europe’s most attractive hotel investment destination, after more than a third (34%) of respondents ranked the Dutch capital in first place. London (32%) had held top position for the last two years, but slipped to second place, followed by Barcelona (28%) and Dublin (24%), with Berlin and Madrid (both 18%) ranked joint-fifth.
Interestingly, only a quarter of those surveyed were concerned about the UK’s decision to leave the European Union, with the various European elections scheduled for 2017 generating greater unease (37%). Following this outlook, one-third of respondents cited the budget segment as being the most attractive area for investment next year, followed by the upscale (24%) and midscale (20%) segments.
Spotlight on Ireland: Development Opportunities
2016 saw Irish hotel transaction activity reach €800m which occurred over 66 transactions. Notable sales included the disposal of the Burlington Hotel for c€180m and the Gresham Hotel for €90m, these Dublin sales were in addition to the sales of the Lyrath Hotel in Kilkenny and the Farnham Hotel in Cavan. Acquisitions continued to be dominated by international buyers but 2016 also saw the return of domestic buyers, particularly in the regional market.
Recent statistics show Dublin, Cork and Galway are all suffering from an undersupply of hotel accommodation with industry experts predicting up to 300 extra rooms will come on stream in Dublin in 2017 which will be augmented with a further 1,700 beds in 2018 through new builds and extensions. The attractiveness of developing these new rooms in Dublin is underpinned by the improving Occupancy and RevPar statistics that occured in 2016.