Amount invested in million euros
Hotel assets are characterised by their diversity. Each hotel estimate is a special case based on a careful analysis of the asset’s customer segment, services offered and location. Another characteristic that has a significant impact on valuation scenarios for hotels is that they must be regularly renovated to respond to changing consumer expectations.
The hotel investment market is particularly dynamic thanks to solid fundamentals, limited supply expansion and positive growth prospects for the international tourism industry, which recorded 3.9% growth (2016) for the seventh consecutive year (source: UNWTO) with 1,235 million international tourists worldwide in 2016.
Investors see this asset type as an interesting diversification product with a high potential for added value.
Amount invested in million euros
Evolution of the amounts invested compared to 2021
RevPAR (Revenue Per Available Room)
Hotel assets are first and foremost characterised by their diversity. The hotel asset class includes: independent and chain-affiliated hotels, business or leisure tourism oriented hotels, hotel residences, hotel shops, resorts, etc. This diversity can also be found in regard to their locations: large capitals, seaside, mountains....
A major feature common to all hotel assets is that they must be regularly renovated in order to remain modern and up-to-date. Customers' expectations are constantly changing - especially in terms of services - trends are changing, and so are environmental requirements: all factors that can lead to an adaptation of the hotel, ranging from decoration to a complete overhaul of the spaces. BNP Paribas Real Estate - Valuation experts can play an advisory role by proposing several valuation scenarios.
For several years now, there has been both a densification and diversification of players interested in the hotel industry. Private investors see this asset class as an interesting diversification opportunity. Hotel assets offer a number of advantages over other types of tertiary real estate assets: a holding structure (generally involving a single tenant or operator), cash flow sustainability, minimum vacancy, favourable taxation, creation of capital gains through conversion or renovation and above all an attractive risk/return ratio.
In the hotel sector, as in other sectors, location remains an essential valuation criterion. Other criteria are also decisive, such as benefits, ownership structure, operational performance and market conditions.
Our hotel valuers use traditional methods of capitalising income and discounting cash flows to estimate the value of a hotel asset. They also refer to the most recent market information in order to establish the fairest possible asset value.
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