Main Photo: The Hotel D’Europe, Minsk, Belarus
Date: April 2019
Name: The Catella Research Report
Who and What: With tourism stays in Europe up 2.2% to 3.1bn last year, over 4,500 hotels are being built or planned, and competition in urban locations is intensifying, says Catella Research.
The firm, a unit of Stockholm-based financial group Catella, says in a new report that the tourist industry is booming, making hotels and hospitality popular with investors. Last year, the transaction volume in the sector in Europe came to around €23bn. Boutique, lifestyle and economy hotels are increasingly entering the market to cater to users’ needs.
Catella is one of the leading specialists for property investment and fund management, with operations in 15 countries. The Group has assets under management of around EUR 19 billion. Catella is listed on Nasdaq Stockholm in the Mid Cap segment.
What Did They Say: With more than 4,500 hotels currently being constructed or planned, it sees increased pressure on urban locations, which is leading to predatory competition, and initial signs of crowding-out, with suburban locations becoming more popular.
In terms of the analysis of global transaction volumes, hotels are still in fourth place after office, residential and retail properties. In Europe, the largest capital volume was invested in UK hospitality last year, at almost €7.7bn. Germany was in third place at €3.89 bn.
The report sees three factors as particularly important to investors: location, concept and the operator. “Brand hotels therefore still rank highly. However new types of hotel are entering the market, with established brands developing boutique and lifestyle hotels in order to attract a younger audience for whom authenticity, local flair, individual design and technical facilities play an important role.”
It cites the example of the Marriott chain which plans to open 14 more hotels under the Moxy brand throughout Europe this year. Accor, by 2020, aims at another 50 locations for its lifestyle brand Jo&Joe. At the same time, the number of economy hotels, which attach particular importance both to affordable prices and high quality – e.g. prizeotel – is growing.
“A very diverse supply structure has become established in the investment triangle consisting of location, concept and operator,” says Thomas Beyerle, Head of Group Research at Catella. “Individual, authentic experiences are becoming an increasingly important focus of travel and are therefore also being incorporated in hotels’ business models. Additional tourism services are finding their way into hotel concepts.”
This growing experience economy has also benefited alternative offers, especially the US site Airbnb which in London currently hosts 60,858 offers of accommodation. With new campaigns such as Airbnb Plus, which incorporates the luxury segment, pressure on the hotel sector is growing.
“Hotels are already jumping on the bandwagon and offering several functions in one space with mixed use,” says Beyerle. “This can be seen in the booming niche product of serviced apartments. Is the hotel intended to be an ideal place to work, or more of a retreat? This is one of many questions that the hotel sector will have to ask itself in the future.”
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THPT Comment: An interesting persepctive from this Swedish property investment and fund management company….Europe looking healthy despite massive growth.
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