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CE hotel market report
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Investment volume of over 265mn EUR has been transacted in the hotel sector during the first six months of this year

  • 16 hotels changed ownership in CEE region (compared to 8 hotels transacted in the same period of last year).
  • Cushman & Wakefield Global Hospitality Group advised in all hotel transactions where an independent investment advisor was involved.
  • The future for hotel deals across Europe is very positive. A wide range of investors from all over the world look to invest in this sector, benefiting from stronger returns as trading conditions are set to improve and lending institution are more open to provide debt.

All hospitality indicators are growing

In the first 6 months of 2015, hotels in Europe recorded a significant increase in key performance indicators compared to the same period in 2014. Average Daily Rate (ADR) rose by 8% to 112 EUR, occupancy to 68% (65% in the same period of 2014) and Revenue per Available Room (RevPar) by 11% to 76 EUR.

Frederic Le Fichoux“The main factors driving growth in 2015 include the continued strength of inbound international tourism into Europe supported by Asian travellers, strong dollar driving demand from Americans and the challenges in North Africa that pushes leisure travellers to stay in Europe,” says Frédéric Le Fichoux, Head of Cushman & Wakefield’s CEE Hospitality Team.

Despite continuing economic and political uncertainty in Europe, travel and hotels did well in 2014. There were almost 600 million international visitors and 2.7 billion overnight stays recorded in Europe, representing a new record with these figures expected to increase further this year.

Prague, Budapest, Bratislava and Warsaw are among the cities in the CEE region that have benefited the most from these macroeconomic factors. Prague outperformed all other mentioned cities in ADR (80.3 EUR growing by 10.4% year on year) and in RevPar (54.7 EUR growing by 18% year on year).

New Developments

Due to the double digit growth, availability of debt and resurged interest from investors in the region, the investment activity is growing, both with investment products and development projects.

Despite the limited development opportunities available in the region, a number of international hotel chains are screening the region in search of opportunities to expend their portfolio of brands. 

We have recorded the following hotel openings that are expected in the coming two years:

  • Warsaw - 764 rooms to be opened until 2016 in the 3 to 5-star segments;
  • Budapest - 500 rooms to be opened until 2016 in the 3 to 5-star segments;
  • Prague - 727 rooms to be opened until 2017 in 3 to 5-star segments;

New trends

The focus of hoteliers for this year will be directed on guest satisfaction and experience during their stay including for example new wellness products and initiatives, RevPAR improvement through direct bookings, etc. Hotel owners which will improve their facilities and follow the development and new trend in hospitality business will find success in driving growth and profitability in 2015.

Hoteliers will be facing some specific issues in addition to economic outlook and political environment as alternative accommodation business models like Airbnb are being more widely used.

“Hoteliers being cautious about the operating costs and trying to continually improve the guest experience to higher levels are being innovative in installing new technologies in of the public areas such as self-service and mobile check-in initiatives, keyless entry via mobile device,” says Frédéric Le Fichoux.

Furthermore an increasing number of travellers are focused on maintaining their health-conscious lifestyles while traveling. Hotels are responding with several programs like MGM Grand’s “wellness rooms” and Westin’s partnership with New Balance to provide workout gear to guests. The shift towards “wellbeing tourism” provides the potential for hotels to attract completely new guest segments.

Leading hotel brands like Sheraton and Marriott are transforming typical view on standard lobbies into multifunctional spaces interchangeably used for meetings, working alone, or dining.

Executives who are able to capitalize on these trends will hold a distinct competitive advantage in the coming year. By testing each new initiative, industry leaders can accurately predict which programs will work, where they will work best, and how they can be tailored for maximum return at minimum risk.

Key performance indicators CE hotel market

Source: STR Global