HOTEL MARKET LISBON & PORTO

Transcription

1 HOTEL MARKET LISBON & PORTO 2018

2 Portugal EXECUTIVE SUMMARY Portugal s hotel market will continue its singular upwards trajectory, staying on course to achieve an unparalleled RevPAR growth, despite a slower pace increase in occupancy. RevPAR growth, in Lisbon and Porto, will achieve double digits, for the fourth time out of the last five years Gustavo Castro Research Tourism in Portugal has remained in the local news for numerous reasons. Recently, the slowing down of occupancy has been interpreted as the dawn of tourism downfall. If it is so, it is an amazing downfall! Occupancy in Lisbon and Porto, will, indeed, close the year on similar figures to last year. However, after recording 20% growth over the last 5 years, combined with an incredible increase in total room supply (more than new rooms in both cities), a stagnant year at this stage is probably good news. It is quite remarkable to consolidate the occupancy of a city around 80%, given constraints on seasonality, geographical dispersion and externalities. On top of that, prices have been going up by double digits for a long time, leading RevPAR to all-time highs and closer to the best performing touristic cities, in Europe. Since 2013, none of the major cities in Europe, has recorded a higher growth rate than Porto. Porto and Lisbon airports have also been faring well: Lisbon is expected to reach 29 million passengers and Porto s will stay close to 12 million passengers. Despite increasing, tourism weight in Portugal s economy remains lower than other tourism driven European countries, such as Greece or Croatia. Travel and Tourism weight over GDP has stayed below 8%, in 2017, with Travel and Tourism employment accounting for less than 9% of total. On a daily basis, in 2018 (and not including the summer season), tourists have spent 42 million euros, up from 41,5 million euros, in Tourism spending has been growing by double digits over the last 8 quarters and will close above the 15 billion euros threshold again.

3 3 LISBON (CITY) TREND Room Supply TREND Room Supply PORTO (CITY) Portugal 2018 Av. Room/Hotel 99,5 98,6 Av. Room/Hotel 64,2 62,3 ARR ARR ,5 Occupancy Rate 80% 81% Occupancy Rate 76% 77% RevPAR 82,7 92,2 RevPAR 69,3 77,7 Sources: : Colliers International

4 World FIGURE 1: INTERNATIONAL TOURIST ARRIVALS (MILLION) 0,527 0,855 1,323 FIGURE 2: AIRPORT TRAFFIC 3,18% 0,92% 4,06% 3,62% -3,85% 2,97% f 7,87% 2,70% 8,61% 10,68% FIGURE 3: LEADING CRUISE PORTS 15% 3% 25% 13% 27% % 4% 48% Sources: Figure 1: UNWTO Figure 2: Colliers International, ACI Figure 3: CLIA, APL, APdL

5 5 NO LIMITS TO WORLD TOURISM GROWTH World Tourism has increased on Spain, China and Turkey have been fourteen of the last fifteen years and among the fastest growing countries, shows no signs that a change may arise with Spain reaching the world s second in the near future. place, in 2017, with more than 80 million tourists. In a nutshell, tourism growth rate, although slightly slower in the past 5 Portugal lies on a second tier with, years, has been close to 5% pa, over the approximately, 20 million tourists, last 15 years. between Greece s 30 million tourists and Croatia s 15 million visitors. France has been the predominant country in world tourism, capturing more than 85 million tourists. World 2018 PORTUGUESE AIRPORTS BREAK RECORDS YEARLY Atlanta, USA, with more than 100 million passengers, remains the busiest airport in the world, with Beijing and, more recently, Dubai, closing in, quite rapidly. Heathrow, in London, is the busiest airport in Europe. Madrid airport, with 55 million passengers, is expected to close the year with a 7% increase yoy, which will equal its overall growth rate, between 2010 and Between 2010 and 2016, Lisbon airport s growth rate was close to 90% and Porto airport more than doubled total passengers. And both airports will continue to increase total passengers in 2018, with Lisbon expected to reach 29 million passengers and Porto hovering around 12 million passengers. MARITIME ARRIVALS ARE SET TO BECOME RELEVANT The busiest port in Europe is Helsinki, however mainly based upon connections to and from Estonia. On the cruise sector, the most important ports are located across the Mediterranean. This is a business where Portugal had been absent, but the opening of the new cruise terminal in Leixões (Porto), in 2015, changed mindsets, driving a 48% passenger increase, from 2014 to Lisbon opened a new cruise terminal in late 2017 and is expected to reach passengers in 2018 (15% yoy). Although disembarking passengers still represent a lower percentage than other Mediterranean ports, the recent impact of the new terminal will tend to increase that figure, especially, since the new terminal has a capacity for passengers.

6 World TRAVEL AND TOURISM ECONOMY Travel and Tourism weight on GDP (forecast) Sources: Colliers International, WEF

7 7 World M FR

8 Portugal FIGURE 4: OVERNIGHTS 75,4% 59,0% 17,5% 31,2% 38,3% 42,0% p 18,1% 20,0% 24,4% 25,6% FIGURE 5: AVERAGE STAY EUROPE (2018) left AVERAGE STAY (LISBON AND PORTO) right 2,4 2,5 2,0 2,0 4,5 2,1 2,3 2,4 2,3 2,1 2,3 2,4 2,0 1,9 Porto Lisbon FIGURE 6: DAILY TOURISM REVENUE Δ yoy 6% 4% 6% 6% 9% 9% 6% 13% 8% 6% 14% 11% 14% 15% 9% 9% 8% 8% 10% 15% 14% 27% 17% 21% 17% 12% Sources: Figures 4 and 5: Colliers International, INE, Tourism Offices Figure 6: Banco de Portugal

9 9 PORTUGUESE CITIES GROWTH RATE LEAD THE WAY Over the last 5 years, none of the most Porto, on the overall European scene, important touristic cities in Europe, remains on a second tier, by size, experienced similar growth rates to both however with an unparalleled growth Porto and Lisbon. rate, showing no signs of slowing down. London and Paris will record the closest When considering guests, the picture growth rates for 5 years, but, in 2018, does not change, with Porto and Lisbon London is expected to invert a long recording growth rates close to 60% in standing positive growth trend. the last 5 years. Portugal 2018 Lisbon total overnights growth has propelled the city to levels close to Vienna, Prague, Madrid or struggling Barcelona. By the end of 2018, Colliers International expects Porto s growth rate to be higher than Lisbon s, continuing among the highest in Europe. LISBON CONSOLIDATES, PORTO HAS POTENTIAL TO GROW Lisbon average stay has been increasing towards 2,5 nights, taking full advantage of the touristic influx. This figure is close to the largest touristic cities record, in Europe, only lagging to London s extraordinary lead. The seasonality effect, in Lisbon, has been lessening, which is sustained by the impressive increase in occupancy during winter months, over the last two years, without penalising summer and spring months performance. In Porto, seasonality has been traditionally smoother than in Lisbon. Porto s relatively short average stay remains an opportunity at hand, already targeted by local operators. TOURISM REVENUE WILL CONTINUE TO INCREASE Tourism has been among the major contributors to Portugal s recent economic recovery. In 2017, tourism generated more than 15 billion euros, 3 billion euros up from the previous year. The record will be broken, once again, in 2018, having already surpassed last years value, yoy, by 1 billion euros, according to the most recent data available. Tourism has been generating 42 million euros daily, going up from 37 million euros, during the same period of Since 2010, tourism income growth rate reached double figures in 5 of those 8 years. Last year, tourism income growth rate closed near 20% and 2018 is on course to reach double figure growth, once again.

10 Portugal FIGURE 7: OCCUPANCY RATE 66% 67% 63% 62% 65% 63% 67% 63% 73% 65% 75% 69% 76% 74% 80% 81% 76% 77% Porto Lisbon FIGURE 8: PRICES AND REVPAR ARR Lisbon ARR Porto RevPAR Lisbon RevPAR Porto FIGURE 9: OCCUPANCY, PRICES AND REVPAR (2018F) ARR (euros) 90% Amsterdam Prague London Lisbon Vienna Porto Munich Grand Paris Madrid Barcelona Berlin Brussels Rome Milan 60% Occ. Sources: Figures 7 and 8: Colliers International, INE, OTL Figure 9: Colliers International, INE, Tourism Offices

11 11 OCCUPANCY SLOWS DOWN After a staggering upwards trajectory initiated 5 years ago, occupancy in Porto and Lisbon, is set to slow down in 2018, albeit up from Since 2013, Lisbon and Porto s occupancy rate, by room, increased more than 20%. In Lisbon, 3 star hotels are set to become the best performing category in the city, surpassing 4 star hotels. Occupancy rate in 4 star hotels has been increasing, in 2018, but 3 star hotels have been performing best, increasing occupancy 3%, yoy. Portugal 2018 Porto s 4 star hotels are the best performing category in the city, closely followed by 3 and 5 star hotels. On the contrary, the occupancy rate in 5 star hotels has dropped almost 2%, yoy. PRICES SURGE IN BOTH LISBON AND PORTO The reasons behind occupancy s slow down can be traced to price increase, supply growth and the fact that, at 80% occupancy, it becomes increasingly difficult to fill rooms in the scattered empty rooms. Porto s ARR increased more than 80% in the past 5 years, leading to a 40 euros surge in ARR, during that period. Lisbon s ARR growth, although less remarkable, still achieved almost 50% (25 euros) over the past 5 years. Despite slowing down in the last year, 5 star hotels added 80 euros to the ARR charged in Despite merely adding 30 euros to ARR, since 2015, 3 star hotels recorded a 70% price increase in that period. EUROPEAN RELEVANCY KEEPS INCREASING The touristic trend in recent years has propelled Lisbon to the top of the best performing touristic cities. Lisbon s occupancy rate stands among Europe s top-3, and ARR, once lagging way behind that group, no longer pales to comparison with those cities. This has led Lisbon s RevPAR closer to the very best crop in Europe. Porto s smaller size has always made comparisons with the top harder. However, at this stage, Porto s recent touristic performance has driven the city to European relevancy, leaving important central European cities behind. Furthermore, Porto preserves a growth potential, probably unmatched in Europe, with Porto s RevPAR upwards path expected to continue in the near future.

12 12 H1 Lisbon FIGURE 10: TOTAL SUPPLY BY HOTEL QUALITY FIGURE 11: HOTEL PORTFOLIO BY HOTEL QUALITY left >2 Restaurants HOTEL PORTFOLIO BY F&B right / 1 2 Restaurants No restaurants 5 Restaurant FIGURE 12: HOTEL SUPPLY BY BRAND NATIONALITY left BY BRAND PRESENCE right International National Hotel Group International International Hotel Group National Nationa Sources: Figure 10: Colliers International Figure 11: Colliers International Figure 12: Colliers International

13 13 HOTEL QUALITY PREFERENCE IS SHIFTING New hotels have been reshaping Lisbon However, over the last two years, that over the last years. In the last 5 years, long term trend shifted, with 5 star total room supply has increased by more hotels accounting for a little less than than 30% and has been showing little 50% of new supply, in 2017, and 3 star signs of stopping. hotels weighting more than 60% of all new hotel rooms, opened in The city of Lisbon has now more than 215 hotel units, offering almost Overall, 4 star hotels still account by half hotel rooms. of total room supply in the city of Lisbon, representing a little more than 40% of Historically, 4 star hotels have always total hotel units in the city. been predominant in the city of Lisbon, accounting for more than half of total room supply. Lisbon H1 AVERAGE NUMBER OF ROOMS IS DECREASING The average hotel, in the city of Lisbon, has 99 rooms, but, after reaching 112 rooms in 2013, that figure has been steadily decreasing. Last year, it remained virtually unchanged. A quarter of the total room supply is found in units with 50 to 100 rooms and half of total supply belong to units with less than 150 rooms. The largest hotel is still the Lisbon Marriott Hotel. Hotel groups represent more than 80% of total room supply, with Sana Hotels (more than rooms), Vip Hotels (1.400 rooms) and Accor, emerging as the top players in the city. Food and beverage is included in more than 60% of hotels, with two thirds offering 2 or more restaurants. Spa facilities (14%) and gyms (22%) are not relevant, unlike meeting rooms (50%). NEW HOTELS WILL NOT SLOW DOWN The wave of new hotels is not expected to slow down, with almost 900 rooms still scheduled to open, in The trend is expected to continue in the coming years, with more rooms planned to open, until Despite growing international attention, national hotel brands are expected to capture 75% of the pipeline. Unlike the recent trend, 4 and 5 star hotels account for more than 80% of the pipeline, however it is not unusual for the hotel category to be adjusted downwards in latter parts of the project. Marriott Hotels, VIP Hotels and EuroStar Hotels are the most important brands in the pipeline, representing a third of the total pipeline.

14 14 H1 Lisbon LISBON ROOM PIPELINE Sources: Colliers International

15 15 PORTO ROOM PIPELINE Porto M FR Sources: Colliers International

16 16 H1 Porto FIGURE 13: TOTAL SUPPLY BY HOTEL QUALITY FIGURE 14: HOTEL PORTFOLIO BY HOTEL QUALITY left HOTEL PORTFOLIO BY F&B right / 1 >2 Restaurants 2 Restaurants Restaurant No restaurants FIGURE 15: HOTEL SUPPLY BY BRAND NATIONALITY left International Luxury BY TYPE right National Hotel Group Business Luxury Design International Hotel Group Business Leisure National Tourist Sources: Figure 13: Colliers International Figure 14: Colliers International Figure 15: Colliers International

17 17 SHORTAGE OF FIVE STAR HOTELS IS BEING ADDRESSED It is hard to find a city, where tourism Until this recent growth surge, 5 star has had a deeper impact, not only in the hotels accounted for a little over a local economy, but also in the property quarter of total room supply. However, regeneration of the city centre. between 2014 and 2017, no 5 star hotel was added to Porto s hotel portfolio, Since 2015, room supply has increased decreasing their overall weight to less more than 20%, elevating hotel rooms than 23%. total, in the city of Porto, above This started to be reversed last year, Although predominant, 4 star hotel and intensified this year with the rooms have remained relatively stable, opening of Pestana Porto A Brasileira representing approximately, 40% of total and will continue with Maison Albar Le room supply. Monumental Palace. Porto 2018 INTERNATIONAL BRANDS INCREASE THEIR PRESENCE Despite some changes, Porto remains less supported in International brands, with a quarter of total room supply, not integrated in hotel brands. Porto s average hotel has 62 rooms, decreasing since 2013, when it reached 70 rooms per unit. Half of total room supply has less than 100 rooms. The largest hotel remains Hotel Vila Galé. Hotéis Fenix (more than 750 rooms) remain the most active player in Porto, followed by Hoti Hotéis, Hotusa and Marriott. Food and beverage is included in more than 55% of hotels, with less than half offering 2 or more restaurants. Spa facilities (8%), gyms (15%) are not relevant, and even meeting rooms (38%) are not as important as in Lisbon. PIPELINE WILL INCREASE EXISTING SUPPLY BY 30% Porto s hotel pipeline is expected to increase even faster than Lisbon s, already, fast pace. By 2020, more than hotel rooms are planning to open in the city of Porto. International brands are expected to drive the pipeline upwards, even if national hotel brands still represent half of the total rooms pipeline. Hoti Hotéis are expected to add more than 300 rooms to their local room total, but other hotel players are planning on opening in Porto, such as Accor, Hotusa, Pestana, Turim or Catalonia Hotels. The city centre continues to capture most of the hotel pipeline. Avenida dos Aliados, Rua Gonçalo Cristovão, Ribeira or Praça Carlos Alberto stand among the most dynamic areas.

18 Investment FIGURE 16: HOTEL TRANSACTION VOLUMES Transaction Volume (million euros) Number of Transactions H1 237,90 160,35 93,60 347, FIGURE 17: HOTEL INVESTMENT IN PORTUGAL AND EUROPE (% OF TOTAL) Europe (Hotel Inv.) Portugal (Hotel Inv.) 22% 14% 11% 8% 8% 7% 5% 6% FIGURE 18: HOTEL INVESTMENT ( ) BY TYPE left 30% Portfolio Others Algarve 3% 23% BY REGION right Madeira 7% Porto 17% 70% Single Lisbon 50% Sources: Figure 16: Colliers International, RCA Figure 17: Colliers International, RCA Figure 18: Colliers International, RCA

19 19 PORTUGUESE HOTELS BREAK INVESTMENT RECORDS Portuguese property has been attracting record breaking investment volumes, having already surpassed 1,5 billion euros. Hotel investment represents 22% of that investment, having almost reached 350 million euros. In Europe, hotel investment has reached 7 billion euros, down one third from last year s figures and accounting for 6% of total property investment. Hotel portfolio sales, once the most important form of trading have been almost absent from the Portuguese investment scene, since Minor International completed the acquisition of Tivoli Hotels & Resorts. Minor International has been active once again, having added NH Hotel Group (more than 250 rooms in Lisbon and Porto) to their investment portfolio, despite Hyatt Hotels & Resorts late interest. Investment 2018 INTERNATIONAL INVESTMENT IS IN THE DRIVING SEAT This year, international investment regained momentum. Last year, international investment accounted for merely 40% of total hotel investment, but, in 2018, 80% of the capital flowing into Portuguese hotels, was international. British and Middle East investors were responsible for half of the investment volume in hotels. UIP, Jackyl Real Estate and Gaw Capital were the most active players. Lacking opportunities to rent or operate, through management agreements, hoteliers have been going for hotel development, acquiring high potential and heavily sought properties, to redevelop into hotels, usually, with complimentary commercial or residential, areas. PORTO JOINS THE HOTEL INVESTMENT SCENE Lisbon remains the preferred location for hotel investment, in Portugal. Algarve, and to a lesser extent, Madeira, traditionally, were the most in-demand touristic areas, in Portugal, and, thus, commanded higher attention of hotel investors. Over the last two years, their overall importance has dropped deeply, accounting for, approximately, 10% of total hotel investment, in Portugal. Porto, unsurprisingly, has come into prominence in 2018, capturing almost 40% of total Portuguese hotel investment. The deals of InterContinental Porto and Maison Albar Le Monumental Palace, both properties located less than 200 meters apart, stand among the highest room values ever paid for Portuguese hotels, having both hotels been sold for more than euros/room.

20 Future THE FUTURE OF THE HOTEL MARKET LOCAL LODGING LAW > > The recently approved Local Lodging Law will bring important changes to the Portuguese hotel market. With local authorities empowered to constrain local lodging facilities, alternative lodging, like hostels or short term rental apartments, are set to decrease their staggering supply increase. > > Unlike Lisbon, the local authority in Porto has not yet decided to create constraining areas. Lisbon has decided to stop new alternative lodging facilities in the city centre (Alfama, Mouraria, Madragoa, Castelo, Bairro Alto, Misericórdia, Bica, Príncipe Real e Graça). > > The importance of local lodging in Porto and Lisbon is highlighted by numbers: Porto has more than and Lisbon close to registered touristic apartments, with 68% (Porto) and 63% (Lisbon) of those, having been registered in 2017 and CURRENT OUTLOOK > > It is a fact that occupancy has been slowing down, in both Lisbon and Porto. So far, a descent has not started, instead occupancy has stabilized close to the 80% threshold. > > On the other hand, prices have been going upwards at an impressive pace, driving RevPAR to historical record levels. But given the European scene, there is still room to grow in Lisbon and Porto, which retains a virtually unmatched growth potential across Europe. > > The attraction both cities continue to command is demonstrated by investment growth and the arrival or expressions of interest by new international brands. The remarkable deals completed in Porto, by record breaking values, highlight the potential the city preserves. > > Maritime arrivals remain an opportunity up for grabs, mainly in Lisbon. 670M FR ANTICIPATING THE LONG TERM > > Porto and Lisbon have been coping well with the increase in total supply. Local industries have succeeded transforming local operations into profitable and efficient businesses. Portugal stands among the cheapest destinations in Europe, leaving potential to further increase in prices, in both Porto and Lisbon. And occupancy slow down is hardly a problem, given that at 80%, it becomes increasingly difficult to fill rooms in the scattered empty rooms. > > Although occupancy appears to have stabilized, some externalities may still benefit the local industry, contributing to absorb the impact of the planned increase in total supply: > > The change in local lodging regulatory framework will keep that form of competition at bay. > > The opening of new terminals in both cities will boost even further maritime touristic arrivals. > > Lisbon and Porto airports continue to attract new flight carriers and new air routes. > > The small size of both markets turns main events (regulars like the WebSummit or one-off, like the Eurovision Song Contest) into local game changers, delivering, otherwise unexpected, full occupancy weeks. And both cities have demonstrated their capacity to hold those events. > > Porto and Lisbon touristic appeal has been going upwards for a decade, turning tourism into one of the major contributors to national GDP, hence local and national authorities will hardly ever jeopardise the competitive edge of such an important industry. Furthermore, touristic attractions and security will continue to play a decisive role in tourist choices.

21 Joaquim Chambel FOR MD Portugal MORE INFORMATION Gustavo Castro Head of Research Portugal Colliers International is top tier global real estate services and investment management company operating in 69 countries with a workforce of more than 12,000 professionals. Colliers is the fastest-growing publicly listed global real estate services and investment management company, with 2017 corporate revenues of $2.3 billion ($2.7 billion including affiliates). Colliers has been operating in Portugal for more than 2 decades under Grupo IPG affiliation. With an enterprising culture and significant employee ownership and control, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide, and through its investment management services platform, has more than $20 billion of assets under management from the world s most respected institutional real estate investors. Colliers professionals think differently, share great ideas and offer thoughtful and innovative advice to accelerate the success of its clients. Colliers has been ranked among the top 100 global outsourcing firms by the International Association of Outsourcing Professionals for 13 consecutive years, more than any other real estate services firm. Colliers is ranked the number one property manager in the world by Commercial Property Executive for two years in a row. This report gives information based primarily on Colliers International data, which may be helpful in anticipating trends in the property sector. However, no warranty is given as to the accuracy of, and no liability for negligence is accepted in relation to, the forecasts, figures or conclusions contained in this report and they must not be relied on for investment or any other purposes. This report does not constitute and must not be treated as investment or valuation advice or an offer to buy or sell property. For the latest news from Colliers, visit colliers.com or follow us on and LinkedIn. Colliers International Largo das Palmeiras, Lisboa All rights reserved. Research & Forecasting