HOTEL MARKET
Robust ADRs drive the performance of hotels across CEE, although occupancy rates continue to lag behind pre-pandemic levels
- In H1 2023, the CEE-6 region saw 8 hotel transactions worth around EUR 152 million, involving 917 rooms. Regarding the hotel investment volume, Hungary led with the sale of the Sofitel Budapest to local investor Equilor for EUR 87 million, while the Czech Republic and Romania contributed the remaining €47 million and €18 million, respectively.
- Looking ahead, the CEE-6 region anticipates increased hotel investment volumes, with several transactions expected to close by late 2023 or early 2024. This recovery is driven by robust hotel performance, especially ADR, and the anti-inflationary nature of hotel assets.
- The pricing gap between sellers and buyers is narrowing, with more motivated sellers seeking to deleverage and improve their credit lines, resulting in more assets offered to the market. Well-capitalized, cash-rich investors are showing interest in hotel assets due to the strong fundamentals of the hospitality industry.
- An estimated €4.2bn of capital was raised by 11 significant funds targeting European hotels, with some funds allocated to the CEE region. Financing costs, a significant hurdle for hotel sales, are expected to improve alongside stabilising inflation rates.
- In H1 2023, CEE-6 hotels experienced an upward trajectory, with a 20% ADR growth compared to the pre-crisis H1 2019. Occupancy remains 11% below 2019, but RevPAR increased by 6% to an average of €66.
- The positive outlook for the CEE-6 region is bolstered by factors including a limited supply pipeline, proximity to major large source markets like Germany, strong leisure demand in Prague and Budapest, and robust domestic demand in Warsaw/Poland. This upward trend in the CEE-6 region is expected to continue, with ADR growth slowing but occupancy growth maintaining momentum, surpassing pre-pandemic levels, similar to most other European hotel markets.
