Hotels & Hospitality. Hotel Intelligence Amsterdam

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1 Hotels & Hospitality Hotel Intelligence Amsterdam 2013 Amsterdam's hotel industry posted flat year-on-year growth in RevPAR in 2012 and we do not anticipate a significant uplift in 2013 in light of persisting economic difficulties resulting in subdued domestic corporate demand as well as growth in supply, notably on the city fringes. The medium term is viewed more optimistically as a number of well-known international brands firmly put Amsterdam on the map globally aided by new economic developments and initiatives capturing substantial growth in foreign demand and international travel.

2 2 Hotel Intelligence: Amsterdam Table of Contents Authors Market Snapshot Minor growth in tourism demand in 2012 Passenger arrivals at new record high of 51 million in 2012 Amsterdam remains one of Europe s major conference and event destinations A growing number of overseas visitors Josef Filser Associate, EMEA josef.filser@eu.jll.com Hotels in 3- and 4-star category take up major share 1st Hyatt Place to enter the market in Marcus Linden Research Assistant, EMEA marcus.linden@eu.jll.com No RevPAR growth in Upscale hotels outperforming the overall market 9 Jones Lang LaSalle s Hotels & Hospitality Group serves as the hospitality industry s global leader in real estate services for luxury, upscale, select service and budget hotels; timeshare and fractional ownership properties; convention centers; mixed-use developments and other hospitality properties. The firm s more than 265 dedicated hotel and hospitality experts partner with investors and owner/operators around the globe to support and shape investment strategies that deliver maximum value throughout the entire lifecycle of an asset. In the last five years, the team completed more transactions than any other hotels and hospitality real estate advisor in the world totaling nearly US$25 billion, while also completing approximately 4,000 advisory and valuation assignments. The group s hotels and hospitality specialists provide independent and expert advice to clients, backed by industry-leading research. For more news, videos and research from Jones Lang LaSalle s Hotels & Hospitality Group, please visit:

3 Hotel Intelligence: Amsterdam 3 Market Snapshot Tourism: Tourism in Amsterdam is highly dependent on international demand, which accounted for 82% of total visitor arrivals in A majority of Amsterdam s tourists are overseas leisure tourists, primarily from the UK, the US and Germany. Hotels also benefit from a robust business environment with various large conventions and exhibitions regularly hosted in the city. Tourism demand in Amsterdam has seen steady growth in recent years with visitation and overnight stays showing a cumulated annual average growth (CAAG) rate of 3.3% and 2.9% respectively between 2003 and Supply: As at January 2013 the hotel market in Amsterdam comprised of 398 hotels with roughly 24,000 hotel rooms. The market is dominated by 4- and 3-star hotels, which represent 66% of the entire hotel bedroom stock. Graded hotel room supply in the Dutch capital has grown at a compound annual average growth (CAAG) rate of 3.5% over the last 10 years. Growth in hotel supply has picked up within the last 5 years, growing by a CAAG rate of 4.5%. If all proposed developments are realised, total supply will increase by 4.4% in 2013 and by 4.3% in Trading: The Amsterdam upscale hotel market experienced solid growth in trading performance from 2004 until 2007, when weakening economic conditions started to impact occupancy and room rates. During 2008 and 2009 hoteliers suffered from double-digit declines in Revenue Per Available Room (RevPAR). Performance improved in 2010 and 2011, hotels posting year on year RevPAR growth of 19.8% and 7.7% respectively. Due to the effects of the Euro Crisis and a significant increase in hotel supply, performance weakened in 2012 with RevPAR declining by 0.5% year on year. Hotel trading in the upscale segment, however, has seen a considerable improvement during the first 4 months of 2013 with occupancy and RevPAR levels growing by 5.2% and 5.4% respectively.

4 4 Hotel Intelligence: Amsterdam Minor growth in tourism demand in 2012 Amsterdam: Tourism Trends CAAG Visitor Arrivals ( 000s) Domestic , % International 3,484 3,659 3,894 3,955 3,910 3,664 3,689 4,184 4,330 4, % Total 3,985 4,192 4,517 4,698 4,864 4,527 4,627 5,283 5,321 5, % Growth p.a. -2.4% 5.2% 7.8% 4.0% 3.5% -6.9% 2.2% 14.2% 0.7% 0.3% Bed Nights ( 000s) Domestic ,185 1,510 1,388 1,577 1,858 1,684 1, % International 6,745 7,037 7,204 7,472 7,334 6,922 6,984 7,867 8,064 8, % Total 7,611 7,925 8,199 8,657 8,844 8,310 8,561 9,725 9,748 9, % Growth p.a. -5.1% 4.1% 3.5% 5.6% 2.2% -6.0% 3.0% 13.6% 0.2% 0.6% Source: Dienst onderzoek en statistiek * Preliminary figures Amsterdam lies on the banks of two bodies of water, the IJbay and the Amstel river. Founded in the late twelfth century as a small fishing village, it is now a financial and cultural centre. Although the seat of the Dutch government is in The Hague, Amsterdam is the country s nominal capital. It is also the country s largest city, with a population of 790,000. Tourism in Amsterdam is highly dependent on international demand, which in 2012 accounted for 82% of total visitor arrivals. A majority of tourists are leisure visitors (64% of overnight stays in 2012) attracted by the city s wealth of cultural attractions including its renowned museums such as the Van Gogh Museum, the Rijksmuseum and Anne Frank House. A large proportion of tourism in Amsterdam is also accounted for by business/corporate visitors (30%) which is further supported by the large number of foreign companies in the city. Amsterdam: Tourism Demand Arrivals (000s) 5,600 5,400 5,200 5,000 4,800 4,600 4,400 4,200 4, ,000 9,500 9,000 8,500 8,000 7,500 7,000 Bed Nights (000s) Amsterdam: Top Feeder Markets 2012 vs Spain France Italy Asia Germany USA UK ,000 1,200 1,400 1,600 Source: Dienst onderzoek en statistiek Bed Nights (Thousands) Visitor Origin 2012 Visitor Origin 2011 Tourism demand has seen steady growth in the last 10 years with visitation and overnight stays showing a cumulated annual average growth (CAAG) rate of 3.3% and 2.9% respectively. This was fuelled by a strong growth in foreign demand. In 2012, tourism demand reached a new record at 5.3 million arrivals and 9.8 million overnight stays. Amsterdam s major foreign feeder markets are the UK (14% of foreign overnight stays in 2012) followed by the US ( 10%) and Germany (7%). Most visitors come from major European cities, most notably London, Paris, Barcelona, Madrid and Milan. According to the Amsterdam Tourism & Convention Board, US and UK leisure tourists have the highest spending power at 181 and 155 per day respectively. Visitor Arrivals Source: Dienst onderzoek en statistiek Bed Nights Similar to other destinations emerging markets have gained importance with a growing amount of overseas visitors coming from BRIC countries: Brazil (+23%), Russia (+25%), India (+10%) and China (30%).Strong growth in foreign demand has also been witnessed from other emerging economies in Asia and South America.

5 Hotel Intelligence: Amsterdam 5 The municipal council of Amsterdam has recently started the implementation of project 1012 which is aimed at improving the quality of the city centre within the 1012 postcode. These improvements will be achieved through discouraging crime and corruption, substantial investments in public areas, regulating and closing several coffee shops & adult shops and alleviating some restrictions on planning consent for the development of new hotels, restaurants and businesses. The complete realisation of Project 1012 will take approximately 10 years to complete, however initiatives and implementations have already begun. Passenger arrivals at new record high of 51 million in 2012 In 2012, Schiphol was Europe s fourth largest airport with 317 direct connections to European and intercontinental airports in 99 countries. A number of additional intercontinental destinations were added, such as Guangzhou, Rio de Janeiro, Buenos Aires and Orlando. Since the dip in passenger traffic in 2009, the airport has seen consistent growth in passenger arrivals and in 2012 witnessed a new record high at 51 million, reflecting a 2.6% growth year on year. This was fuelled by an increase in passenger arrivals from Europe (+2.4%) and overseas (+3.0%). In recent years, the airport has continuously modernised and expanded its infrastructure and opened a new general aviation terminal in For 2013, the airport expects a small increase in the number of passengers and a slight shrinkage in freight traffic. Schiphol Airport: Passenger Arrivals Passengers (millions) Source: Schiphol Airport Group Amsterdam remains one of Europe s major conference and event destinations Amsterdam s main conference centre is the RAI complex, which is located in the Zuidas (South Axis) business district. It is now one of the Europe s busiest exhibition and conference centres, and has welcomed over 90 million visitors since it was opened in Each year the venue hosts some 600 events and attracts about 1.5 million visitors. The venue is therefore a major demand generator for the local hotel industry. Amsterdam is also an important city for trade shows, the largest being the Auto Rai, a biannual motor show, hosted in the Amsterdam RAI. The fair attracted about 270,000 visitors in In November 2012 it was announced that the AutoRAI 2013 would be cancelled due to the economic crisis and lack of applications from car importers. Another major trade show is the Huishoudbeurs, one of the largest consumer goods fairs, hosted annually and attracted around 250,000 visitors in In the global ranking by the International Congress and Convention Association (ICCA), Amsterdam achieved 10 th place with 122 meetings in This reflected a significant improvement from 114 events held in The ICCA ranking relates to events attended by at least 50 participants, organised on a regular basis and moving between at least three different countries. In 2013, we expect the MICE segment to struggle in light of the absence of the AutoRAI and a weak economy. This will likely impact the 4 and 5-star hotels where about 86% of the corporate meetings are generally held according to the Amsterdam Tourism & Convention Board (ATCB). Some of this loss in demand is expected to be offset by various cultural events such as the 400th anniversary of the canals and the 125th anniversary of the city s concert hall and the reopening of some of the most renowned museums. Amsterdam: International Conference & Exhibition Demand Number of Events Source: RAI

6 6 Hotel Intelligence: Amsterdam A growing number of overseas visitors Amsterdam tourism sector benefits from a balanced mix of both leisure and business demand. Especially the leisure segment has grown in importance with foreign visitation accounting for a majority of total overnight stays and arrivals in the capital. Recent research also revealed that a growing amount of visitors to Amsterdam are attaching an increasing importance to the city s range of cultural offerings. Emerging markets have also boosted arrivals with the city witnessing a growing amount of visitors coming from the so called BRIC (Brazil, Russia, India and China) countries. In 2013, we expect tourism demand to remain stable despite difficult economic condition. Business demand will likely come under pressure especially in light of the absence of the Auto Rai, being one of the leading trade fairs in Amsterdam. Some of these losses are, however, expected to be compensated by an increase in leisure visitors. In the long term, Amsterdam s visitor profile is expected to change significantly due a growing amount of visitors from emerging economies, in particular Asia and South America. These often young and affluent visitors will very likely put Amsterdam on top of their agenda when travelling to Europe. Tourism demand is therefore anticipated to further grow over the coming years. Hotels in 3- and 4-star category take up major share Amsterdam: Graded Hotel Supply (2012) Grade Hotels Rooms % Of Total 5 star 12 2,982 12% 4 star 55 8,819 36% 3 star 105 7,372 30% Other 226 5,043 21% Total , % Source: Amsterdamse bureau voor onderzoek en statistiek, Jones Lang LaSalle There are currently 398 graded hotels in Amsterdam, comprising about 24,000 rooms. The market is dominated by 4-star and 3- star hotels, which represent 66% of total hotel bed supply. Various large international operators have entered the Amsterdam hotel market and about 70% of total hotel room stock is branded. This is relatively high in comparison to other major European cities. Graded hotel room supply in the Dutch capital has grown at a CAAG of 3.5% over the last 10 years. Growth has picked up in recent years, increasing by a CAAG rate of 4.5% between 2007 and A number of these projects were redevelopments of existing buildings and office to hotel conversions. In 2012, a large number of hotels opened in the 3 and 4 star segment. Major operators such as the Carlson Rezidor Hotel Group and the InterContinental Hotel Group (IHG) expanded their presence in the capital thereby enhancing the number of internationally branded hotels in the city. Amsterdam: Graded Hotel Supply Total Rooms 28,000 26,000 24,000 22,000 20,000 18,000 16,000 14,000 12,000 10,000 Developments Existing InterContinental Amstel Amsterdam F = forecast Source: Jones Lang LaSalle

7 Hotel Intelligence: Amsterdam 7 1st Hyatt Place to enter the market in 2013 Being a major gateway destination in Europe Amsterdam remains a top priority for many international hotel operators. Room supply is expected to continue to grow with the majority of new supply being internationally branded and positioned in the upscale segment. Park Plaza for example will enter the market with its lifestyle brand art otel in Summer 2013 and Motel One with its first Dutch hotel at the beginning of Hyatt is also increasing its presence with the opening of a 330 room Hyatt Place (the first in Europe) by the end of 2013 and announced plans to open a 211 room Hyatt Regency in The hotel chain recently opened the 5-star 122 bedroom Andaz, on the Prinsengracht in central Amsterdam. If all hotel projects are realised Amsterdam is expected to see 10 hotel openings between 2013 and 2014, reflecting a room stock increase of 8%. Hyatt Place - opening end of 2013 Amsterdam: Hotel developments (as at February 2013) Hotel Location Rooms Grade Date Operator Recently Opened Holiday Inn Express Sloterdijk railway station Q IHG Fletcher Hotel "Foodstrip" - Southeast Q Fletcher Hotel Group Park Inn Schiphol Q Carlson Rezidor Ramada Apollo Amsterdam Centre Staalmeesterslaan Q Apollo Hotels & Resorts Andaz Amsterdam Prinsengracht Q Aedes Real Estate Meininger Hotel Amsterdam City West Orlyplein Q Meininger Hotels Golden Tulip Amsterdam West Molenwerf Q Louvre Hotels Holiday Inn Express Amsterdam South Zwaansvliet Q IHG Hotel Sir Albert Albert Cuyp Q Independent Total Rooms Under Construction New Developments 2013 art'otel Central Station Q Carlson Rezidor Hyatt Place Amsterdam Airport Schiphol Airport Q Hyatt Hampton by Hilton Schiphol Airport Q Hilton Courtyard by Marriott Atlas Park Arena Football Stadium Q Marriott Room Mate Westerdokseiland Ijdock Q Room Mate Total Rooms Under Construction New Developments 2014 Waldorf Astoria Herengracht 94 5 Q Waldorf Park Inn by Radisson La Guardiaweg, Q Carlson Rezidor Holiday Inn South East 95 4 Q IHG Holiday Inn Express South East Q IHG Staybridge Suites Valkenburgerstraat Q IHG Total Rooms Under Construction New Developments 2015 Motel One Zuidas district Q Motel One Hilton Amsterdam Airport Schiphol Schiphol Airport Q Hilton Hyatt Regency City Centre Hyatt Total Rooms Under Construction Source: Jones Lang LaSalle

8 8 Hotel Intelligence: Amsterdam No RevPAR growth in 2012 Amsterdam Upscale Segment: Hotel Trading Performance Occupancy 76.1% 71.5% 74.9% 78.5% 81.1% 78.5% 70.2% 66.5% 75.4% 75.4% 76.8% ARR ( ) RevPAR ( ) RevPAR Growth (%) -3.1% -13.3% 1.4% 8.2% 9.3% 0.4% -10.0% -19.9% 19.8% 7.7% -0.5% Inflation 3.9% 2.2% 1.4% 1.5% 1.7% 1.6% 2.5% 1.2% 1.3% 2.3% 2.5% ARR 2012 values ( ) RevPAR 2012 values ( ) Hotel performance in the upscale segment suffered significantly in 2008 and 2009 due to the global and domestic economic crisis that also had a negative impact on tourism demand. Occupancy levels fell to 66.5% by year-end 2009, the lowest experienced in the millennium. Room yield fell by 19.9% at year -end In 2010, upscale hotel performance showed a strong recovery from the economic downturn, with hotels posting a 19.8% increase in room yield compared to The improvement was backed by a 13.3% growth in occupancy and a 5.7% rise in average room rates. Amsterdam s well-diversified demand mix is a key factor in the city s resilience during the crisis, allowing demand to quickly bounce back. Growth in hotel performance continued into 2011, with average room yield increasing by 7.7% compared to This was due to a 7.7% increase in average room rates, while occupancy remained stable at 75.4%. In 2012, hotel demand continued growing despite a strong supply growth and occupancy increased from 75.4% in 2011 to 76.8%. However, RevPAR remained flat (-0.5%) due to a 2.3% decline in ADR. Historically demand has been price sensitive, however, the future arrival of true luxury hotels is likely to fuel ADR growth. Amsterdam: Quality Hotel Trading (2012 values) ARR 2012 values ( ) Yield 2012 values ( ) Occupancy 100% 80% 60% 40% 20% 0% Occupancy Upscale Hotels: Amsterdam Year to date Trading 2013 April % Change Average Occupancy 67% 71% 5.2% ADR ( ) % RevPAR % Despite experiencing flat performance results in 2012, Amsterdam s upscale hotel market has fared considerably well during the first four months of During this period, major events fuelled hotel demand such as the inauguration of Dutch King Willem Alexander on 30 April As a result upscale hotels in the capital posted a 5.2% increase in occupancy, boosting RevPAR by 5.4% year on year. It must be noted, however, that the wider Amsterdam s hotel market has been much more vulnerable to the difficult economic circumstances and growth in hotel supply. Performance results in the overall market have been negative at YTD April 2013 with RevPAR down by 1.4%, when compared to the same time period last year. General Market: Year to date Trading 2013 April % Change Average Occupancy 68% 68% 0.3% ADR ( ) % RevPAR % The table below shows the evolution of trading in Amsterdam in real terms. Average occupancy in the last five years was 1.1% lower than in the last 10 years. This, however, was primarily due to very weak results during the crisis years of 2008 and Despite several years of positive results, the real change in room yield was negative over both periods. Amsterdam Trading Growth Rates Average Occupancy 75.0% 73.8% ARR CAAG (2012 values) -2.2% -3.0% RevPAR CAAG (2012 values) -2.1% -3.4%

9 Hotel Intelligence: Amsterdam 9 Amsterdam s hotel market largely depends on events and conferences held in the city, with room yield peaking in the spring and autumn months when most events tend to be held. The weakest months are generally January and December. In 2012, performance was largely similar to levels experienced in 2011 although was slightly weaker in the first four months of the year. During the summer months hotel posted particularly good results seeing growth in RevPAR in May (+5%), June (+7%) and August (+11%), when compared to the same period in Demand during this period was supported by healthy levels of leisure tourism backed by a number of events such as the Memorial and Liberation Day celebrations in May, the Holland festival in June (Netherlands's largest performing arts festival) and Dance Valley in August (The biggest open air summer dance festival in the Netherlands). Amsterdam: RevPAR Seasonality Upscale hotels outperforming the overall market As could be seen in previous years, the hotel market is significantly correlated to the wider economic environment. A further recession in Europe could therefore limit a further increase in tourism demand in Some of the losses from the more traditional source markets in Europe, however, will be offset by growing levels of demand from emerging economies in Asia and South America. The city s upscale hotel market is on track to achieve noteworthy growth rates in 2013, as can be seen by the 5.4% year-on-year RevPAR increase in the first four months of However, Amsterdam s overall hotel industry is faring less well and we do not expect an improvement in 2013 in view of the continued economic difficulties in Europe and a further growth in hotel supply In the long run, we expect hoteliers to benefit from a pronounced economic recovery aided by new and exciting brands in conjunction with new initiatives such as Project 1012 which will enhance Amsterdam s attractiveness. This will likely translate into a rebound in ADR growth whereas occupancy will likely stay between 75% and 80%. 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

10 Hotel Intelligence: Amsterdam This report is confidential to the recipient of the report. No reference to the report or any part of it may be published in any document, statement or circular or in any communication with third parties without the prior written consent of Jones Lang LaSalle, including specifically in relation to the form and context in which it will appear. We stress that forecasting is a problematical exercise which at best should be regarded as an indicative assessment of possibilities rather than absolute certainties. The process of making forward projections involves assumptions in respect of a considerable number of variables which are acutely sensitive to changing conditions, variations in any one of which may significantly affect the outcome and we draw your attention to this factor. Jones Lang LaSalle makes no representation, warranty, assurance or guarantee with respect to any material with which this report may be issued and this report should not be taken as an endorsement of or recommendation on any participation by any intending investor or any other party in any transaction whatsoever. This report has been produced solely as a general guide and does not constitute advice. Users should not rely on this report and must make their own enquiries to verify and satisfy themselves of all aspects of information set out in the report. We have used and relied upon information from sources generally regarded as authoritative and reputable, but the information obtained from these sources may not have been independently verified by Jones Lang LaSalle. Whilst the material contained in the report has been prepared in good faith and with due care, no representation or warranty is made in relation to the accuracy, currency, completeness, suitability or otherwise of the whole or any part of the report. Jones Lang LaSalle Hotels, its officers, employees, subcontractors and agents shall not be liable (to the extent permitted by law) to any person for any loss, liability, damage or expense ( liability ) arising directly or indirectly from or connected in any way with any use of or reliance on this report. If any liability is established, notwithstanding this exclusion, it shall not exceed $1,000.

11 12 Hotel Intelligence: Amsterdam Hotels & Hospitality Our domestic & global reach EMEA Barcelona Dubai Dusseldorf Exeter Frankfurt Glasgow Istanbul Leeds London Lyon Madrid Manchester Marseille Milan Moscow Munich Paris Rome AMERICAS Atlanta Buenos Aires Chicago Dallas Denver Los Angeles Mexico City Miami New York San Francisco Sao Paulo Washington DC ASIA Bangkok Chengdu Jakarta New Delhi Peking Shanghai Singapore Tokyo ANZ Auckland Brisbane Melbourne Perth Sydney Our dedicated team & expertise: George Nicholas Executive Vice President Hotel Investment Sales Jake Egberts Senior Vice President Hotel Valuations Katleen Van den Brande Vice President Hotel Valuations Daniel O Connor Vice President Hotel Investment Sales Larissa Esser Associate Hotel Investment Sales george.nicholas@eu.jll.com jake.egberts@eu.jll.com Katleen.VandenBrande@eu.jll.com daniel.oconnor@eu.jll.com larissa.esser@eu.jll.com LONDON 30 Warwick Street W1B 5NH United Kingdom COPYRIGHT JONES LANG LASALLE IP, INC. 2013