MARKETBEAT BELGIUM HOTELS H1 2017

Transcription

1 MARKETBEAT BELGIUM HOTELS H1 2017

2 CONTENTS 01 Executive summary 02 Economic overview 03 Supply 04 Demand 05 Investment market

3 BELGIUM HOTELS H The Belgian hotel market's recovery from the negative consequences of the Paris and Brussels terrorist attacks is well underway. The market is offered respite by a wave of consolidation after the number of existing establishments had decreased in several successive years (Figure 1). International investors and operators are now evaluating their presence and are expanding in key locations. This is underscored by an everincreasing pipeline of premises with more than 100 rooms. In addition the average number of rooms per establishment is on the increase. The Belgian market showed its resilience to negative consequences from 2016 attacks. Although the number of arrivals and overnight stays decreased in 2016, these figures were still higher than those of 2014 (2015 having been a peak year). In addition, the number of nights per arrival remained at a high of 2.42 in Recovery is underway in Brussels which bore most of the brunt from the attacks with foreign tourists having retreated somewhat in their immediate aftermath. Indeed the 12-month moving average occupation rate has increased every month since its nadir in ober Specialised international investors are prominent, with Belgians accountable for 8% of the total invested volume since Brussels' landmark former Sheraton hotel has been purchased by PrimeCity Investment from Cyprus. Figure 1 Evolution of the hotel supply in Belgium 2,500 2,000 1,500 1, Source: Eurostat Number of establishments (LHS) Number of bedrooms (RHS) 61,000 60,000 59,000 58,000 57,000 56,000 2

4 ECONOMIC OVERVIEW Internal demand boosts GDP growth. GDP growth is expected to post a robust 1.7% growth this year (compared to 1.2% in 2016) and 1.6% in 2018, mainly thanks to the rebound in European trade activity and a firm domestic demand (Figure 2). This is underpinned by reductions in the unemployment rate which will boost earnings as well as increased confidence indicators. Figure 2 GDP Growth, % Confidence indices remain high. Despite witnessing a slight decrease since May, consumer and business confidence remain at high level so far this year, helped by a favourable labour market and positive perspectives in the economy (Figure 3). As far as consumer macroeconomic estimates are concerned, fears of a rise in unemployment over the coming twelve months slightly increased while the outlook for the general economic situation remains unchanged. Business confidence slightly decreased in the businessrelated services sector as well as in the manufacturing due to an expected decrease of the global demand. Conversely, the trend remains on the upside in the construction sector. Growth outlook in the accommodation and food services sector in part attributable to consolidation trend. While perspectives for economic growth in the accommodation and food services sector are positive over the period, varying between 1% and 2%, growth in employment is expected to be depressed, hovering between 0.1% and 0.9% over the same period (Figure 4). With regards to accommodation services this outlook can be linked to the consolidation trend whereby the number of establishments is decreasing (hence fewer new jobs) and hotels are looking to maximise revenue by focusing their offerings on strategic locations Source: Oxford Economics Figure 3 Consumer and business confidence indices Consumer confidence Source: National Bank of Belgium Figure 4 Evolution of Accommodation & food services indicators, Belgium, % Eurozone Belgium Business confidence Gross value added Employment Source: Oxford Economics 3

5 SUPPLY Market offered respite by consolidation after successive years of shrinkage. Eurostat figures indicate a fifth successive annual decrease of the number of hotels in Belgium, to 1,522 establishments in 2016 (Figure 5). Nevertheless the decrease has been fairly marginal (35 fewer in 2016 against a peak decrease of 320 establishments in 2012). Additionally the number of rooms has increased for the first time since 2011 to 58,791 in 2016, bringing the average number of rooms per hotel to 39. Indeed, the average number of bedrooms per establishment has continuously increased since This phenomenon can be explained by the increasing role of international players including investors (property-wise) and international companies (operations-wise), carrying out arbitrations and consolidations of their portfolios and looking to increase revenue from strategically located establishments. Indeed, many new hotel projects (detailed on the next page) include more than 100 rooms. Figure 5 Evolution of the hotel supply in Belgium 2,500 2,000 1,500 1, Source: Eurostat Number of establishments (LHS) Number of bedrooms (RHS) Figure 6 Distribution of establishments per region 61,000 60,000 59,000 58,000 57,000 56,000 At the other end of the spectrum small local independent players market share also suffers from the additional competition that Airbnb-type structures constitute. Regulation measures for such platforms have been set up and increased tax inspections have been put in place, but the trend has been resolute. The share of establishments per region has changed very little over the past years - Brussels and Flanders have each gained 1% in share since 2012 (Figure 6). The most recent breakdown of hotels made available by Statistics Belgium (FPS Economy), outlines the dominance of three-star establishments (Figure 7). Wallonia 31% Source: Eurostat, 2016 Brussels 12% Flanders 57% Figure 7 Distribution of establishments per star rating 5* 1% Not rated 8% 4* 15% 1* 10% 2* 23% 3* 43% Source: FPS Economy,

6 SUPPLY PIPELINE Projects underscore the sector s long term confidence. Every quarter, several new projects are announced and delivered throughout the country a testament to the sector s long term prospects. Several new hotel projects are integral to multifunction schemes, where developers understand the requirement to diversify their mix in order to create sustainable projects. Follows a non-exhaustive list of projects and recent deliveries announced during the first half of Flanders In Diegem the Park Inn by Radisson Brussels Airport opened in Q1 in the reconverted Twin Squares Prater office building. The 162-room hotel is owned by Upgrade Estate. ION plans to develop a mixed-use project in Waregem which will include a 60-room hotel. Antwerp: The opening of the 135-room Park Inn by Radisson at Post X in Berchem is still scheduled for the beginning of Wallonia In Champion (Namur), Actibel is currently developing its Ecolys Business Center, a mixed-use scheme which will include a 120-room hotel expected to be delivered around spring Three major projects are currently underway within a small radius in Liège: The former Holiday Inn ( Hôtel Alliance ) next to the Palais des Congrès has been demolished and will be replaced by a 219-room Van der Valk by the beginning of Marriott will open a 140-room Moxy on the Boulevard de la Sauvenière in A 100-room Park Inn by Radisson is expected to open near the Cadran from A Novotel will open within the setting of the recently opened Rive Gauche shopping centre in Charleroi. The four-star hotel will include 128 rooms. In Spa there is a project to extend the existing Radisson Blu Balmoral by 74 rooms. Permits for the controversial 120m-high hotel tower in Wavre have been cancelled following several appeals. Ghelamco is developing the 243-room Ringhotel next to KAA Gent s Ghelamco Arena soccer stadium. Brussels The capital s second Meininger hotel will open its doors on Rue Bara near the Midi station in The building, owned by Nelson Group (also the owner of the Meininger at the former Brasserie Belle-Vue) will include 668 beds spread across 150 rooms. Maltese group Corinthia will invest heavily in the refurbishment of the Astoria hotel as planned, with an expected reopening in The premises will include 126 rooms and suites. Corinthia s ambition for the hotel is to gain the status as the best in Brussels. In June, NH Hotels opened its 192-room NH Collection Grand Sablon. The NH Collection range targets an upscale clientele. 5

7 DEMAND BELGIUM Belgian market shows its resilience to negative consequences from 2016 attacks. Arrivals and overnight stays experienced decreases (both close to -4%) in 2016 as a direct result of the 22 March attacks (Figure 8). Nevertheless they remained superior to 2014 in absolute figures with a degree of momentum sustained from a mostly buoyant The total number of recorded arrivals in 2016 amounted to 15.2 million for a total of 36.8 million overnight stays. The average number of nights per stay, which had increased by a substantial 8% in 2015 to 2.42 nights per stay (the highest level recorded since 2007) has remained at exactly the same figure in Foreign visitors represent 49% of arrivals and 46% of overnight stays in 2016 across all forms of collective accommodation establishments (i.e. including campsites, holiday apartments, etc.). Their share of arrivals has decreased from 53% in 2016, again a probable result of the attacks in March Hotels represent 65% of arrivals and 47% of overnight stays in 2015 (Figure 9). On the basis of the top ranked municipalities in 2016, it is reasonable to assume that the Brussels region bore most of the negative consequences from the terrorist attacks coupled with a reduced presence of foreign visitors. Tellingly, Ixelles (favoured by foreign tourists) has been replaced by coastal town De Haan (favoured by Belgian tourists) in the ranking. The rest of the ranking remains unchanged. Additionally, while Antwerp and Bruges retain approximately a million annual visitors, Brussels (municipality) retains its top ranking, albeit having recorded a 14% visitor decrease in 2016 (Figure 10). Figure 8 Evolution of tourist visitors and overnight stays 45,000,000 40,000,000 35,000,000 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 Source: FPS Economy Figure 9 Share of arrivals and overnight stays per type of establishment in % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 5,000,000 0 Arrivals Source: FPS Economy Overnight stays Hotels Youth hostels Leisure parks Other Overnight stays Arrivals Avg nights/arrival (RHS) Figure 10 Top ranked municipalities by number of tourist visitors in 2016 De Haan (Fl.) Koksijde (Fl.) Saint-Josse-t.-N. (B.) Saint-Gilles (B.) Machelen (Fl.) Ostend (Fl.) Ghent (Fl.) Antwerp (Fl.) Bruges (Fl.) Brussels (B.) B.: Brussels Fl.: Flanders Source: FPS Economy 6

8 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Paris attacks Brussels attacks Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Paris attacks Brussels attacks DEMAND BRUSSELS Recovery underway. Following several years of increases, the average occupation rate on the Brussels hotel market suffered as a result of the Paris and Brussels terrorist attacks. In 2016, the 12-month rolling average having slipped to a trough rate of 70% in ober (Figure 11). Based on this curve it transpires that Brussels is on the path to recovery. Indeed according the Brussels Hotel Association, the occupation rate at the New Year was 85% against 64% a year previous. By June 2017, the occupation rate was at 75.00% against in 66.30% June 2016 and a benchmark rate of 85.80% in Brussels tourism body, visit.brussels intends to push overnight stays back to its 2014 level of 7 million in 2017, before increasing this number to 10 million in It aims to achieve these numbers by boosting Brussels' image through international promotional campaigns, attending trade fairs as well as leveraging events such as sporting and cultural events. Hotel operators have not made significant changes to pricing levels on the back of the attacks with only a slight decrease of the ADR. By June 2017, the average rate was EUR 114/night against EUR 111 in June 2016 and EUR 120 in June 2015 (a peak level for this month over the past decade) (Figure 12). Rates varied between EUR 95/night for three-star hotels and EUR 161/night for five-star hotels in June. The RevPAR for 2016 averaged EUR 65 in 2016 having decreased by more than 15% as a result of the reduced occupation rate. The RevPAR over the first half of 2017 increased to EUR 75 as occupation is on the road to recovery (Figure 13). Figure 11 Evolution of the average occupancy rate in Brussels 90% 85% 80% 75% 70% 65% 60% 55% 50% Source: visit.brussels Figure 12 Evolution of the average daily rate in Brussels, EUR Average occupancy rate Average rate Source: visit.brussels 12-month moving avg rate 12-month moving avg rate Figure 13 Evolution of the RevPAR in Brussels, EUR RevPAR Source: visit.brussels 12-month moving avg rate 7

9 INVESTMENT MARKET Specialised international investors are prominent. The total volume invested in Belgian hotels amounted to EUR 136 million in H compared to EUR 155 million (communicated) in H (Figure 14). Nevertheless, the real total in 2016 was much higher due to the fact that acquisition prices remained undisclosed on half of the 10 deals which were then recorded. In H1 this year, three deals took place over the first six months, with all prices disclosed. The largest deal in H1 was the acquisition of a nine-hotel (including one in France), 1,120 room portfolio by Canadian hospitality management company Westmont Hospitality Group. The portfolio is worth EUR million and includes establishments in Antwerp, Brussels and Liège. The second largest purchase was carried out by Pandox who paid EUR 32.7 million for the five-star Hotel Silken Berlaymont (more than 212 rooms). The new owners plan to invest EUR 3.5 million to upgrade the premises. Finally, one of Brussels landmark hotels, the former Sheraton (Place Rogier) was bought by specialised hotel investor PrimeCity Investment for EUR 28 million. This follows the bankruptcy of the 500-room establishment in December Primecity Investment will lease the premises to an operator following substantial works which could be delivered in several stages starting from All three investments in H1 involved foreign capital (from Canada, Sweden and Cyprus in the case of PrimeCity Investment) (Figure 15) and players specialised in the hotel segment. Indeed a glance at past years reveals Belgian investors have accounted for 8-9% of the total invested volume. Figure 14 Invested volumes in Belgian hotels, EUR millions Source: RCA, Cushman & Wakefield Figure 15 Investment distribution by nationality 100% 80% 60% 40% 20% 0% H H Belgium Other Middle East France United States Germany Asia Source: RCA, Cushman & Wakefield 8

10 CONTACT DETAILS AUTHOR Shane O Neill Senior Research Analyst shane.oneill@cushwake.com Koen Nevens Northern Region Leader Head of Belgium & Luxembourg koen.nevens@cushwake.com Antoine Brusselmans Head of Office Agency antoine.brusselmans@cushwake.com Marc-Antoine Buysschaert Head of Capital Markets Office marc-antoine.buysschaert@cushwake.com Arnaud de Bergeyck Head of Capital Markets Retail arnaud.debergeyck@cushwake.com Christophe Ackermans Head of Valuation & Advisory christophe.ackermans@cushwake.com Kris Peetermans Head of Valuation & Advisory kris.peetermans@cushwake.com Henry Morauw Head of Asset Services henry.morauw@cushwake.com Disclaimer This report has been produced by Cushman & Wakefield for use by those with an interest in commercial property solely for information purposes. It is not intended to be a complete description of the markets or developments to which it refers. The report uses information obtained from public sources which Cushman & Wakefield believe to be reliable, but we have not verified such information and cannot guarantee that it is accurate and complete. No warranty or representation, express or implied, is made as to the accuracy or completeness of any of the information contained herein and Cushman & Wakefield shall not be liable to any reader of this report or any third party in any way whatsoever. All expressions of opinion are subject to change. The data contained in this report is based upon that collected by Cushman & Wakefield. Our prior written consent is required before this report can be reproduced in whole or in part CONFIDENTIALITY CLAUSE This information is to be regarded as confidential to the party to whom it is addressed and is intended for the use of that party only. Consequently and in accordance with current practice, no responsibility is accepted to any third party in respect of the whole or any part of its contents. Before any part of it is reproduced, or referred to, in any document, circular or statement, our written approval as to the form and context of such publication must be obtained.