GREEK HOSPITALITY MARKET OVERVIEW

Transcription

1 MARKET OVERVIEW GREEK HOSPITALITY 216

2 GREEK HOSPITALITY MARKET OVERVIEW 216 MARKET OUTLOOK 217 The country s ranking as one of the top tourism destinations worldwide, its classification as a safe destination in the wider region, the encouraging returns of international tour operators, the arrival of new global hotel operators and the promotion of Athens and Thessaloniki as city break destinations will continue to have a positive impact on the investment flows and commercial activity in the hospitality real estate and related leisure sector. Nonetheless, a series of challenges remain ahead. As an example, the persistent domestic macroeconomic instability has led to, among other things, underinvestment in the needed improvement of major transportation infrastructure and unpredictability in the hospitality business tax regime. At the same time, potential furtherance of the refugee crisis and any fresh international political uncertainty might also affect the sector. Main market determinants for the year ahead A successful assessment review of the economic adjustment programme in the beginning of Q2 217 would improve economic stability and could lead to a further stabilisation of the domestic banking system and thus increase commercial and investment activity. The active management of the systemic banks non-performing loans (NPLs) portfolio could lead to successful disposals of large hotel assets and portfolios to investors, who are looking to follow a more hands-on approach. New arrivals from international renowned hotel operators as a consequence of the limited presence of branded hotels and the increasing demand for luxury hospitality services. The arrival of Four Seasons to manage the (currently under extensive renovation) Astir Palace Hotel in Vouliagmeni could be regarded as a sign of the upcoming market development. The shortage of available properties to serve the need for hotel assets in excess of 1 rooms could continue to support the new development trend of boutique hotels with capacity of less than rooms. 1

3 CONTENTS MARKET SNAPSHOT 3 HOTEL SUPPLY ARRIVALS, TURNOVER AND OVERNIGHT STAYS 8 MARKET PERFORMANCE 12 INVESTMENT ACTIVITY 1 LIABILITY DISCLAIMER 17 CONTACT 18 2

4 GREEK HOSPITALITY MARKET OVERVIEW 216 MARKET SNAPSHOT GREEK HOTEL MARKET PREFECTURES Eastern Macedonia & Thrace 2 Central Macedonia 3 Western Macedonia Thessaly 3 Epirus 6 Ionian Islands 7 Central Greece 8 Western Greece 9 Peloponnese 1 Attica 11 Crete 12 South Aegean North Aegean The positive developments in recent years in the hospitality industry, the partial recovery of the political and economic stability, the recognition of Greece as a safe European destination, the general instability in neighbouring countries along with the certain upgrades in infrastructure have led to positive results and encouraging commercial activity in 216. At the same time, the country continues to face a number of economic and political challenges and uncertainties that have delayed the strengthening of growth in the sector. In addition, the unresolved refugee crisis and the uncertainty from political developments in Europe (e.g. Brexit referendum etc.) also impacted demand and certain destination choices. 3

5 HOTEL SUPPLY Investment activity in the Greek hotel market in 216 was mainly focused on * and * hotels, following the trend during the past two years, which is anticipated to continue in 217. According to the Hellenic Chamber of Hoteliers, during 216 the available stock of * and * hotels in Greece was increased by 1 and hotels respectively, which amounted for each star rating category to an increase of 3.% and 3%. GREEK HOTEL MARKET - AVAILABLE STOCK & CAPACITY IN * - * HOTELS PREFECTURE Available Stock HOTELS YOY HOTEL CHANGE (216-21) ROOMS Available Stock Eastern Macedonia & Thrace % % 1, ,86 Attica % % 31,29 6,2 7,811 North Aegean % % 11, ,7 Western Greece % % 9,69 1,111 2,1 Western Macedonia % % 2, Epirus % 9% 8, 711 1,33 Thessaly % 1% 1,737 1,316 2,878 Ionian Islands % 9% 7,18,27 1,237 Central Macedonia 1, % 3%,368 6,76 8,76 Crete 1, % % 88,62 17,88 2,37 South Aegean 2, % -1% 1,22 17,39 3,26 Peloponnese % 3% 19,31 2,89 3,71 Central Greece % % 1, ,611 Total 9, ,31 13,792 6,981 11,21 Source: Hellenic Chamber of Hoteliers Edit: ARBITRAGE RE The majority of investments targeted upgrades in existing hotels through the modernization of facilities and offered services. New developments in the market were limited. The available stock was also enriched with lower capacity units, such as boutique 1 hotels. As a result of the general trend in Europe, there was an increased demand in the last five years for small sized luxury hotel development of unique architecture. The identified trend led to an increase of the boutique hotels share in the domestic hotel market. Growth prospects for this hotel segment remains positive through the development of new facilities and the upgrade of existing stock. 1. High-end boutique hotels in Greece, especially in Cyclades, usually have a small number of rooms, 1-, adopt a guest centred approach and try to offer a customised experience by sophisticating and personalizing their service.

6 GREEK HOSPITALITY MARKET OVERVIEW 216 CAPE SOUNIO Hotel Stock Rooms 3, 2, 2, 1, 1, 3 2 1, Eastern Macedonia & Thrace Attica North Aegean Western Greece Western Macedonia Epirus Thessaly Ionian Islands Central Macedonia Crete South Aegean Peloponnese Central Greece Source: Hellenic Chamber of Hoteliers Edit: ARBITRAGE RE Hotel Stock *-* Eastern Macedonia & Thrace Attica North Aegean Western Greece Western Macedonia Epirus Thessaly Ionian Islands Central Macedonia Crete South Aegean Peloponnese Central Greece Source: Hellenic Chamber of Hoteliers Edit: ARBITRAGE RE

7 In wider Athens region, investors interest for * and * hotels followed the national trend. More specifically, the increase in tourist arrivals in Athens triggered the interest of hoteliers, domestic and non-domestic, for the renovation, acquisition and development of more luxury hotels. New Hotels that started operating were * Wyndham Grand located in Karaiskaki Square, * Electra Metropolis in Mitropoleos Street, * Tiare Hotel close to Omonia square and * MET3 Hotel in Syntagma. Athens s hotel stock was also enriched with small sized facilities such as * Zillers Boutique Hotel in Mitropoleos Square, the Pi Athens Suites close to Panathenaic Stadium, in[n] Hotel in Syntagma and * Somewhere Boutique Hotel in Vouliagmeni. ATTICA HOTEL MARKET AVAILABLE STOCK & CAPACITY IN * - * HOTELS REGIONAL UNIT Available Stock HOTELS Available Stock ROOMS East Attica ,9 1,69 2,11 North Athens 28 1, West Attica West Athens Central Athens ,696 3,888,191 Attica Islands , South Athens , Piraeus , Total ,39 6,367 8,133 Source: Hellenic Chamber of Hoteliers Edit: ARBITRAGE RE 6

8 GREEK HOSPITALITY MARKET OVERVIEW 216 VOULIAGMENI ASTIR PALACE Following the trend, we believe that due to a number of pending acquisition and reopening negotiations that investment activity will keep its growing pace in Athens and the suburbs. This trend will be supported by the recent sales and forthcoming renovations of * Astir Palace in Vouliagmeni and the central * Hilton hotel in Vassilisis Sofias, which have or will attract added-value interest from High End Operators. Hotel Stock in Attica 9 8 REGIONAL UNIT 7 Hotels East Attica North Athens West Attica West Athens Central Athens Attica Islands South Athens Piraeus Attica Hotel Market in Stars Source: Hellenic Chamber of Hoteliers Edit: ARBITRAGE RE 7

9 ARRIVALS, TURNOVER & OVERNIGHT STAYS ARRIVALS International flight arrivals in 216 ended on a more positive note than in 21. Specifically, arrivals increased by approximately 9.%, exceeding 16. million passengers, 1.3 million more than 21. A downward trend in international flight arrivals was recorded only in the islands of Kos, Samos and Lesbos, which can be attributed to the impact of immigrant and refugee influx. International Arrivals - Main Airports 3,, 3% 3,, 2% Travellers 2,, 2,, 1,, 1,, 2% 1% 1% YOY Change, % % January February March April May June July August September October November December International Arrivals 21 International Arrivals 216 YOY Change (216/21) Source: Greek Tourism Confederation Edit: ARBITRAGE RE 8

10 GREEK HOSPITALITY MARKET OVERVIEW 216 LAGONISSI GRAND RESORT Athens International Airport recorded an increase of over 9.% in international flight arrivals compared to 21. Further increase is expected in international flight arrivals from the more efficient operation and infrastructure upgrades in 1 regional airports formerly managed by the Greek state and located in major tourist destinations, whose ownership and operations were recently passed under a year concession to an international consortium led by Fraport and Slentel. International Arrivals - Athens International Airport 7, 2% 6, 1% Travellers,, 3, 1% % YOY Change 2, 1, % -% January February March April May June July August September October November December International Arrivals 21 International Arrivals 216 YOY Change (216/21) Source: Greek Tourism Confederation Edit: ARBITRAGE RE 9

11 TURNOVER & OVERNIGHT STAYS The positive trends in tourism were reflected in turnover and tourist arrival figures from 212 to 21. Total tourist arrivals in 21 exceeded 23. million, while in 21 amounted to approximately 22 million. The proceeds in 21 also recorded an increase albeit marginal compared to 21 figures. They amounted to 1 billion whereas in the previous year reached 13. billion. Tourist Arrivals & Receipts in Million visitors in Billions Receipts Tourist Arrivals Source: Bank of Greece - Edit: ARBITRAGE RE Despite the c.% increase in the average overnight (stay) expenditure of international visitors, first time in 7 years, the average expenditure per trip decreased due to a decrease in overnight stays per trip. According to data published by the Bank of Greece, inbound tourism revenues in 216 amounted to 13.2 billion, a decline of 6.% compared to 21. The reported losses in revenues were largely due to the weaker tourism demand in East Aegean islands (e.g. Kos, Lesvos, Chios, Samos etc.) as a result of the continuing refugee inflows and also due to the economic impact of the British referendum result, which led to less UK visitors. Furthermore, the latest changes in the hospitality industry VAT regime may have also played a role in the competitiveness of the offered product. It is true though that the reported losses were partly offset by the increase in international visitor arrivals since many tourists favoured Greece over neighbouring competing markets in the wider region due to their political and social situation. 1

12 GREEK HOSPITALITY MARKET OVERVIEW 216 HOTELS PERFORMANCE According to Arbitrage RE analysts, revenues per available room (RevPAR) for * and * hotels in the country s main tourist destinations (e.g. Athens, Crete, Chalkidiki, Rhodes, Zakynthos etc.) have followed a balanced course in the last three years ranging from 18, to 2, with a limited number of high end hotels reporting RevPAR in the range of 3, to 3,. In wider Athens region, revenues per available room (RevPAR) increased by 3.% to.% approximately, compared to the corresponding period in

13 MARKET PERFORMANCE Turnover Index - F&B and Accommodation Quarters 1o 2o 3o o Source: Hellenic Statistical Authority Edit: ARBITRAGE RE The growth rate of the Greek tourism market marginally appreciated in 216, following an upward trend with a relatively lower pace than 213, 21 and 21. More specifically, the aforementioned increase is attributed to the marginal recovery of the market in H2 216, compared to H1 216 when there was a decrease in turnover. These market trends were also reflected in the turnover figures of businesses in accommodation, food and beverage sectors. The turnover index linked to these sectors recorded a decrease of 11.2% in Q1 216 and 1.3% in Q2 216 compared to 21. Furthermore, proceeds in Q3 and Q 216 showed an increase of 2.9% and.3% respectively, compared to 21. The average turnover index in F&B and Accommodation sectors recorded a marginal increase of.2% in 216, compared to the previous year. Based on data and forecasts from the World Travel & Tourism Council (WTTC) 2, the longterm effect of tourism in the Greek economy is mainly linked with indirect contributions. It is estimated that indirect contributions to the country s GDP exceeded 18. billion in 216, surpassing direct contributions which amounted to over 13 billion. According to WTTC, the tourism contribution to the Greek GDP during the current year is expected to fall by 2%, with total contributions reaching 32 billion, amounting to 22.% of the GDP Tourism Contribution in GDP Indirect Contribution Direct Contribution 2. The direct or indirect contributions of tourism to the country s GDP from 216 to 226 are study forecasts in Billions Source: World Travel & Tourism Council - Edit: ARBITRAGE RE 12

14 GREEK HOSPITALITY MARKET OVERVIEW 216 Annual Tourist Expenditure 2,,, 2,,, 1,,, 1,,,,,, According to analysis by WTTC, there will be a long term increase in capital investments in tourism as well as in businesses operating in the related food & beverage, transportation and logistics sectors. It is anticipated that capital investments will increase annually by % on average until 226. The analysis also shows that a major factor affecting the hotel market relates to revenues from international visitors. This market indicator has seen an increase in recent years and according to long term forecasts its upward trend is expected to continue in the coming years and exceed 23 billion by 226. Considering this outlook, an increase in inbound tourism revenues is anticipated to trigger an inflow of foreign capital in the sector. We anticipate this to result in an increased demand for property assets suitable to accommodate hospitality operations and related services. Source: World Travel & Tourism Council - Edit: ARBITRAGE RE CHALKIDIKI SANI RESORT 13

15 INVESTMENT ACTIVITY During 216 investment activity in the hotel market focused mainly in renovation of existing hotels and reconfiguration of commercial buildings and conversion into in accommodation facilities. The completed transactions including new hotel management and operational contracts indicated the interest for luxury and high specifications hotels, predominantly of * or * rating. A notable transaction was the acquisition of 3 hotels, 2 in Corfu and 1 in Kos, from the hotel group SANI IKOS. The acquired hotels would be renovated and operated under a new brand, Ikos Resorts. The group s main international investors are GS AM, Hermes GPE and Oaktree CM. In addition, Astir Palace Beach Resort in Vouliagmeni was sold to Apollo Investment, a subsidiary of Jermyn Street RE Fund IV. Alpha Bank also completed the sale of the central Athens landmark Hilton Hotel to Home Holdings SA, owned by TEMES SA and D-Marine Investments Holding BV, a subsidiary of Dogus Holding AS. At the end of the year, ASTERAS 22, an investment vehicle owned by Douzoglou family was the preferred bidder to acquire Leto Hotel in an auction organized by HRADF and London & Regional Group acquired Amathus Beach Hotel in Rhodes for c. 3. million, excluding any debt obligations of the previous owner, LANDA S.A., amounting to 23 million approximately. HOTEL MARKET - RECENT SALE TRANSACTIONS HOTEL STAR RATING LOCATION AVAILABLE BUYER ROOMS SALE PRICE ( ) CLUB MED KEFALOS KOS 1 SANI - IKOS 9,, CORFU CHANDRIS DASSIA CHANDRIS KERKYRA KERKYRA 1 SANI - IKOS 11,, ASTIR PALACE VOULIAGMENI - APOLLO INVESTMENT HOLD Co,, ATHENS HILTON ATHENS 6 HOME HOLDINGS SA & D-MARINE INVESTMENTS 12,, LETO MYKONOS 2 ASTERAS 22 16,9, AMANTHUS BEACH RHODES 318 LONDON & REGIONAL 3,, Source: ARBITRAGE RE Regarding new hotel operations in Athens in 216, the * Athens Tiare hotel in Omonia was launched in August with Mage Hotels & Resorts as managers. At the same time, the * Athens Avenue hotel, following the property s conversion, opened in Syngrou Avenue. The property is owned by Eurodomus group. Mid-September marked the inauguration of the * Electra Metropolis hotel after extensive upgrade works. The building is a well-known landmark building of the Greek capital as it was housing for decades the Ministry of Education. 1

16 GREEK HOSPITALITY MARKET OVERVIEW 216 Furthermore, * Wyndham Grand Athens, member of the American chain, opened in early December in Karaiskaki Square in early December following also renovation. The property is owned by Viohalco group and it is managed by Zeus International. In 216, the Saudi Arabian hotel group Somewhere Hotels entered the European hotel market through the acquisition and renovation of a * boutique hotel in Vouliagmeni, which was subsequently renamed as Somewhere Vouliagmeni, and also the acquisition * Eden Beach Resort hotel (to be renamed as Somewhere Eden Beach Resort), located on 7th km of Athens Sounio Avenue in the area of Anavyssos. Further important developments in the domestic hotel market was the expansion of Marriott International group in Chania, Crete, through the inclusion of * Domes Noruz hotel in Marriott s Autograph Collection Hotels and also the opening in April 216 of * Radisson Blu hotel (formerly known as Minos Imperial Luxury Beach Resort and Spa) in the area of Milato in Lasithi, which is operated by Carlson Rezidor Hotel Group under a 1 year franchise agreement with Geniataki family, the owners. The hotel stock in Crete was also enhanced with * Anemos Luxury Grand Resort, owned by Vontarakis group, in Georgioupoli. In addition, Thomas Cook opened in May 216 its first hotel, Casa Cook in Rhodes and is expected to expand with a second hotel complex on the island of Kos. Other notable investments in tourism include the new Thassos Grand Resort hotel complex on the island of Thassos, developed by Luke Lukanov, the Bulgarian entrepreneur, and the luxurious star Mirragio Thermal Spa Resort in the Kanistro region of Kassandra, Chalkidiki. They also include * Hydrama Grand Hotel in the city of Drama which started operating after the conversion of a listed property first constructed in 1926 to house the Spirer Tobacco Warehouse. Finally, it is also worth also noting Maris Hotels group investment in Oia Santo Maris Luxury Suites & Spa in the island of Santorini. ATHENS GRANDE BRETAGNE 1

17 The major investment and commercial activity in the hotel sector is summarised below: HOTEL MARKET - NEW HOTELS IN OPERATION HOTEL STAR RATING LOCATION AVAILABLE INVESTOR - OPERATOR ROOMS TOTAL INVESTMENT ( ) METROPOLITAN PALAIO FALIRO 336 CHANDRIS HOTELS 1,, WYNDHAM GRAND ATHENS ATHENS 273 ZEUS INTERNATIONAL,, ELECTRA METROPOLIS ATHENS 216 ELECTRA HOTELS GROUP 17,, TIARE ATHENS 111 MAGE HOTELS & RESORTS - DOMES NORUZ CRETE 83 LEDRA HOTELS - ATHENS AVENUE KALLITHEA 9 EURODOMUS - CASA COOK RHODES 73 THOMAS COOK - RADISSON BLU CRETE 318 GENIATAKI FAMILY - SOMEWHERE VOULIAGMENI VOULIAGMENI 11 SOMEWHERE HOTELS - THASSOS GRAND RESORT THASOS 173 ETON 1,, MIRRAGIO THERMAL SPA RESORT CHALKIDIKI 3 MED SEA HEALTH 12,, HYDRAMA DRAMA 73 ERGOEPISKEYASTIKI 1,, ANEMOS CRETE 2 VANTARAKIS HOTELS 2,, OIA SANTO MARIS SANTORINI 2 MARIS HOTELS - Source: ARBITRAGE RE There were also a series of investments announced in 216 that will materialise this year. These announcements included the development of a Spa Resort in Mistras from Domotel and the million hotel development programme by Sani Ikos, in Chalkidiki. The latter programme includes the development of 136 room Sani Dunes hotel, expected to start operations in late June 217, the upgrade of Sani Club and the renovation of Ikos Oceania, with a total capacity of 3 rooms. 16

18 GREEK HOSPITALITY MARKET OVERVIEW 216 LIABILITY DISCLAIMER This report has been prepared for information purposes. Therefore, it should not be construed as advice and no action should be taken based upon any information contained in this document. You should seek independent professional advice from a person or a firm who is licensed and/or knowledgeable in the applicable are before acting upon any information contained in this document. No other party is entitled to gain access to or rely on this document for any purpose other than the one described above and thus we accept no to any other party who gains access to this document. You should not disclose or refer to this document in any prospectus or other document without our prior written consent. 17 2

19 Arbitrage Real Estate Advisors 2 Amfitheas & Syngrou Avenue Nea Smyrni Tel: Fax: info@arbitrage-re.com Web: Research Contacts: Ioannis Orfanos Associate Partner, Head of Asset Management i.orfanos@arbitrage-re.com Christos Mantzouratos Senior Associate, Valuation & Advisory c.mantzouratos@arbitrage-re.com Dionysis Myronidis Associate, Valuation & Advisory d.myronidis@arbitrage-re.com 2