Rising tourism and growing demand is creating a promising future for hotels
The global hotel industry has managed to overcome the crises of recent years. RevPAR (Revenue per Available or revenue per available room, (calculated by multiplying the average daily rate of hotels by the occupancy rate)) has not only recovered to pre-pandemic levels but has exceeded 2019 levels by 12 %. The resurgence is particularly evident in the Middle East and Europe, where tourism is back in full force. This is one of the main points in JLL’s hotel report, Global Hotel Investment Outlook 2024. Other key points are that sustainability is increasingly important and city hotels have regained ground.
Joseph Alberti, Head of Research at EDC Poul Erik Bech, says: “After a period of very low investment activity, mainly due to the uncertainty of post-Corona travel, investment appetite is slowly returning.” JLL expects hotel investment volumes to increase significantly during 2024, and in the report, they predict growth of between 15-25 % globally, mainly due to stabilizing economic conditions and interest rate cuts. The same trend is emerging in Denmark, where investors are starting to become more confident and are starting to show more interest in the hotel sector.”
The increased interest in hotels has resulted in EDC Poul Erik Bech establishing a dedicated and independent hotel group to ensure a more structured advisory and sales process in the hotel sector. The sale of the former Hornbæk Hospital, which is currently being converted into a five-star luxury hotel, was the starting point for establishing an independent hotel group with brokers from all over the country. At the same time, it has meant that EDC Poul Erik Bech has sold and got even more hotels for sale.
For example, the former Comwell Grand Park Hotel in Korsør is for sale for DKK 90 million, the recognized and historic Benniksgaard Hotel in Rinkenæs close to the Danish-German border, is for sale for DKK 42.5 million and a gem of a gourmet and beach hotel in East Jutland is for sale as a pending case for DKK 55 million. In addition, EDC Poul Erik Bech has a large number of hotels for sale in the mid-range of DKK 5-30 million.
Sustainability as a competitive differentiator
The Global Hotel Market Report also addresses the growing consumer focus on sustainability. Hotels that can demonstrate a strong commitment to sustainable practices are expected to have a competitive advantage. Helle Nielsen Ziersen, Head of EDC International Poul Erik Bech, who has completed a mini-MBA as Sustainable Manager, agrees that sustainability has become a competitive parameter:
“In general, sustainability is becoming more and more important, and also a lot more internationally than in Denmark. Consumers and hotel guests are becoming more aware of their environmental impact, and they often choose hotels that reflect their own values, so if hotels can demonstrate a sustainable profile, it can help provide a competitive advantage. We also see this in the Danish hotel market.”
“As sustainability becomes an integrated part of hotels’ strategy, we are seeing an increase in the use of green financing. Green bonds and sustainable loans are becoming increasingly common as investors seek new sources of capital with lower Expenses and more favourable terms. In the report, JLL estimates that we see an increase in green financing and green bonds in the future, most likely with Europe as the leading continent,” says Helle Nielsen Ziersen.
Stephen Berthelsen, partner at EDC Poul Erik Bech Nordsjælland and chairman of EDC’s dedicated hotel group, adds: “The deselection of sustainability is also an active rejection of a large proportion of all potential hotel guests, including the public sector and larger corporate customers. The Green Key label is a national and international sustainability standard for hotels, which also speaks to the sustainability agenda. It is complex to manage, especially for smaller operators, and all the major operators and chains are already certified.”
City hotels are the most popular
A third key point in JLL’s hotel report is that city hotels are experiencing a resurgence. It is no secret that city hotels were the hotel type most affected by the Corona pandemic with travel restrictions, closure of tourist attractions and no business or group travel. But now city hotels are back and in a better place than pre-corona.
Stephen Berthelsen says: “We can clearly see an increased interest in hotels and other accommodation options from investors compared to just a few years ago. In Denmark, we saw a record number of overnight stays in 2023, and according to the report, this trend looks set to continue in 2024 and beyond, both globally and in our own neighbourhood. This is also reflected in the number of hotel stays in Denmark, which is above pre-corona levels. Hotel apartments and holiday apartments are also an emerging trend in Denmark, and German tourists in particular are very interested in the Danish country.”
“As the boundaries between living and working in different countries blur and it becomes more common to work remotely, we will see hotels preparing for this development with spaces that can be easily reconfigured or repurposed, such as meeting rooms or co-working areas in the hotel lounge. For hotel investors, it is all about adapting to new trends, technologies and consumer preferences to stay competitive,” says Stephen Berthelsen.
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Trends in the global hotel market
- The hotel industry has globally recovered its pre-pandemic levels and has exceeded 2019 levels by 12 %.
- The resurgence is particularly evident in the Middle East and Europe, where tourism is back in full force.
- Hotel investment volumes globally will increase significantly during 2024 with an expected growth between 15-25 %.
- Sustainability has become a competitive parameter in hotels.
- City hotels were hit the hardest during Corona and are experiencing a strong resurgence.
- Working remotely is becoming more and more common – a trend hotels need to adapt to and offer inviting workspaces both in guest rooms and common areas.