EU: A survey by real estate investment platform Tranio and the International Hotel Investment Forum (IHIF) highlights the sentiment of hospitality professionals on market recovery.
52 per cent of respondents believe that the hospitality market will recover to pre-crisis levels by 2024, while 32 per cent state 2023.
Operators were the most optimistic. 44 per cent were split between a full hotel recovery in 2023 and 2024, whereas six per cent said 2022.
Investors were more cautious. The majority (87 per cent) expect a recovery in the next three years, and no one believed it to happen in 2022.
Geographically, more than one third of respondents believe that the German market will bounce back more quickly than others. Around 30 per cent also believe that the Spanish market will recover quickly.
69 per cent of investors expressed most confidence in the UK market, while the rest referred to Germany and Greece.
Regarding hotel prices, 44 per cent of operators believe that hotel prices have not changed or have fallen by up to five per cent. This compares to 85 per cent of real estate or hospitality professionals and 81 per cent of investors who are of the same opinion.
Speaking about prices, Tranio managing director George Kachmazov said: “There are several drivers that impact prices. Liquidity in the market is off the charts in a broad sense, as a consequence of the monetary policy of the states. Banks, i.e. the owners of loans secured by hotel properties, are loyal to landlords. They often refrain from seizing collateral, while also providing loan deferments. In general, in order to buy a hotel property today at a solid discount (with a net development yield of six per cent or higher), one should look at projects in non-ideal locations, not of an institutional size or in need of renovation. Also, properties with a significant share of MICE revenue can now be purchased at a discount of more than 10-20 per cent off pre-sale prices. For large properties in top locations in good condition, the highest discount one can get at this point is five-seven per cent, according to our estimates.”
Most hotel operators (70 per cent) said they renegotiated rental terms, with 34 per cent stating that operators preferred to switch to hybrid contracts. 23 per cent did not pay rent, around eight per cent switched to management agreements, and two per cent closed their hotels.
41 per cent of respondents believe that many hotels have come to favour mid and long term leases. Additionally, 32 per cent believed that many hotels were converted into coworking space, and 17 per cent that dark kitchens were opened.
Overall, when asked what will drive the market recovery, 71 per cent stated improved vaccination ratios followed by 58 per cent noting international tourism.
To read the full report by Tranio and IHIF, click here.
The survey presented upwards of 160 industry professionals from across Europe. Most of the survey participants (59 per cent) were real estate or hospitality professionals, 16 per cent hotel operators, and 13 per cent investors. The remainder comprised investment advisors, university professors and journalists.