+33(0)173101995European real estate investments experienced real growth in 2017 in the hotel sector. Let’s reflect on hotel investments in Europe in 2017 with Blandine Trotot, Senior Consultant, Expertise and Hotel Consulting.
How did the performance of the hotel sector in Europe evolve in 2017?
In 2017, the main European countries, apart from Switzerland, recorded an increase in hotel performances. Some countries posted significant growth, such as Portugal with revenues per available room (RevPAR) up +19%.
France has also recovered after suffering in 2015 and 2016. At the end of December, hotels posted a clear recovery in RevPAR, but supported only by the rise in occupancy rates, with average prices still slightly lagging behind with a fall of -0.3% compared to 2016.
This improvement is all the more significant in Ile-de-France, which had been particularly affected by the drop in international tourist demand in previous years.
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Are we witnessing the same trend for all hotel categories?
In this context, it was mainly the mid-range (+5.7%) and high-end (+5.1%) segments, which had previously suffered more from the decline in foreign customers with strong purchasing power, that recorded the strongest growth.
What is the ranking of the main European countries in terms of hotel property investment in 2017?
After a year of "megadeals" in 2015 and then 2016 that had already seen this ranking reversed, 2017 brings its share of surprises with a Top 5 once again completely overhauled.
Top 5 European investments : Hôtels
The United Kingdom regains first place, with nearly €5 billion, closely followed by Germany. The third place is occupied by Spain, which for the first time crossed the threshold of €3 billion invested in hotels.
However, France is only 6th in the ranking, after the Netherlands and Italy, with a clear underperformance with €840 million against €3.7 billion in 2016.
This decline can be explained in particular by the absence of transactions involving emblematic Parisian assets or major pan-European portfolios, as well as by the absence of hotel groups acquisitions.
Did the French market still record some transactions in 2017?
Of course. For example, two significant transactions involving national portfolios were recorded. The Simply portfolio, comprising 45 economic assets, was sold by Blackstone to Mata Capital for approximately €90 million, and a 62 hotelF1 portfolio was acquired from AccorHotels and La Française AM by the SNI Group, a subsidiary of the Caisse des Dépôts, in order to convert them back into emergency accommodation.
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As far as individual assets are concerned, the most important transactions on the Parisian market concern projects, such as the hotel Tours Duo sale which will be operated under the MGallery by Sofitel banner, or a 4-star hotel project in the 20th arrondissement acquired by Aina Hospitality. VEFA sales also boosted the regional market, particularly in Lyon with the Meininger transaction and the To-Lyon tower transaction.
What are the 2018 prospects for the French tourism market?
The outlook is good. With an estimated 88 million foreign tourists, France remained the most visited country in the world in 2017 and there is no reason for this to change this year.
The Parisian market, in particular, should continue to recover. Major events such as the Ryder Cup this year, the Rugby World Cup in 2023 and the 2024 Olympic Games the following year will help put the capital back in the spotlight.
In addition, to meet this anticipated growth in demand, nearly 15,000 additional hotel rooms should be built by 2024 in Paris and the inner suburbs.
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And what about the outlook for hotel investment?
2018 should see the completion of several operations that have already been initiated. Starting with the sale of an emblematic Parisian asset, the Westin Paris Vendôme, with 428 rooms located in Rue de Rivoli, which should change hands for over €500 million. In addition, AccorHotels will finalise the spin-off of its HotelInvest real estate division.
What is certain is that the hotel business continues to attract, always offering levers for creating value.
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