Occupancy rate moves on from its nadir after chain of devastating events since 2015.
More than any other market in the Benelux, Brussels has been subject to severe tremors these past years. Aside from successive restrictive COVID-19 containment measures also applied throughout the rest of the Benelux and beyond in some shape or form, the market had to deal with:
- The November 2015 lockdown in the wake of the 2015 Paris attacks, and;
- The devastating impact of the 22 March 2016 Brussels attacks.
In an occupancy sense, the market recovered from the latter through 2019, with RevPAR (more on this crucial indicator later) even outperforming pre-2015-16 numbers by that stage. The overall occupancy rate of the Brussels hotel market reflects this timeline. It also, most strikingly, underlines the effect of enforced containment measures which put a halt to the post-2015-16 recovery.
The 12-month moving average indicates that the market has moved on from its nadir. The most recent data made available by visit.brussels is from April (55% occupancy rate). However recent indications given by Brussels Hotel Association signal further improvement with a 66% occupancy rate in May.
Source: visit.brussels
What of the latest difficulties to afflict the global economy?
It would be naïve to discuss recovery without taking into account the effects of rising inflation and the war in Ukraine. Regarding the latter, Ed Fitch, Partner EMEA Hospitality Capital Markets at Cushman & Wakefield notes: “We have seen no effects in terms of travel safety concerns, however one must be aware of the effects of higher inflation and recession on corporate and MICE travel recovery.
According to Ed Fitch, inflation has not yet had a noted effect on tourists’ ability to travel: “Consumers appear to be paying what it takes, likely due to pent up demand for travel post pandemic and consumers having built up savings during lockdowns. We also see plenty of anecdotal evidence that consumers see travel now as almost an essential rather than a luxury.”
Optimism prevails.
A recent Benelux survey of hotel operators1 carried out by Cushman & Wakefield’s Hospitality Research team signaled very positive intentions by operators regarding Brussels.
Indeed, Brussels scored higher than any other Belgian city in terms of interest by hoteliers (marked at 4.1/5, a 22% growth against the same survey from a year previous), and fourth highest among major hotel markets in the Benelux. Crucially, the survey indicates that a majority of operators believe Benelux’s capital cities will recover (i.e. reach a similar RevPAR level to 2019) by 2023 or 2024.
1 Benelux Operator Beat H2 2021, March 2022. Survey results collected from more than 15 international & regional hotel operators that are active in the Benelux region.
Building on a foundation of business travelers with an increase of leisure tourists.
Seasoned observers would point to a strong public sector presence (large bodies such as the EU, Belgian federal and regional entities, and NATO) as a dependable driver of demand for Brussels hospitality. Indeed, visit.brussels’ 2019 report - its last before the COVID-19 pandemic - indicated a 52.4% of overnight stays in Brussels were attributed to business travelers, corresponding to 4.09 million overnight stays (a 9.3% increase on 2018).
The Brussels Regional government is striving to put Brussels forward as cultural destination of exceptional variety and create further opportunities for hotels to add to its bedrock of business travelers. In May for instance, the first edition of Core music festival brought many leisure tourists to Brussels hotels over the weekend. In fact, Brussels Hotel Association recently indicated that weekends (72.7%) are currently doing better than the weekdays (61.2%). Before the global health crisis, weekdays were more successful due to Brussels business travelers, however now more leisure travellers appear to be coming for weekend getaways.
Furthermore as ESG becomes a key concern to the hospitality industry, “Brussels can play to its strengths in appealing to the leisure market by putting forward its good accessibility by road and rail as well as air” notes Ed Fitch.
Assessing the recovery.
As Belgium is in the midst of a return to normal in a post-COVID context, we gauge the current state of the recovery according to the criterion referenced earlier in this article: When will RevPAR reach a similar level to 2019?
The average monthly RevPAR in 2019 for Brussels was EUR 94, varying between EUR 59 in August and EUR 118 in September that year.
Source: visit.brussels
A glance at the RevPAR evolution chart for Brussels establishes the overall upward movement of the 12-month moving rate, which was at EUR 36 in April 2022 and is not expected to stop anytime soon growing as life returns to normal.
The actual RevPAR for April 2022 jumped to EUR 63, against a level of EUR 90 in 2019, underlining the way forward as the market returns to normal.
Thanks to the regional government’s initiatives and festivalgoers, the approaching holiday season will surely further boost these numbers.
Are you considering Belgian hotels?
As usual, our team of local and international experts are at hand to help you out with your queries.
March 2021
The OperatorBeat survey was concluded over the last few months and includes responses from selected international and regional operators who are active/interested in the region.
2020 key takeaways:
1. Brussels among the top 5 most attractive markets in the Benelux region
In Belgium, transaction volume reached approximately EUR 82 million in 2020, down 88% from EUR 689 million in 2019. However, the transaction volume in 2019 was exceptionally high due to the purchase of two Centre Park properties by Aroundtown from Blackstone. Another reason for the notable decline in 2020, was the lack of assets on the market in Belgium, with owners waiting for stronger signs of market recovery before putting their properties for sale, despite the ongoing investors’ interest in hotel assets within European’s core markets, such as Brussels. Similarly, from the operators’ perspective, Brussels was among the top-5 most attractive markets in the Benelux region, according to the OperatorBeat survey.
2. Antwerp, Gent and Brugge among top 10 market by international operators
Other cities in the Belgium that were listed among top-10 market by international operators were Gent, Brugge and especially Antwerp – where there are several operators who are highly interested in this market.
3. Revenue per available room in declined in Brussels but less impacted than its neighbour
With regards to hotel market performance, according to STR data, the revenue per available room (RevPAR) in Brussels declined in 2020 by 77% to EUR 19.6. While this is a significant drop in performance, it was less impacted than Amsterdam (y-o-y decline by 79%) but more than overall Europe (-70%)
4. Impact of the pandemic on hotel occupancy
The main driver of performance decline was low hotel occupancy in 2020, with the annual average at only 19%. Throughout the year, the hotel occupancy fell to as low as 6% in April, due to government restrictions on hotel operations. As restrictions eased in the summer, occupancy picked up to 16% in July, before declining again amid the second wave and re- implementation of travel restrictions.
5. Delays or cancellations of several development projects
COVID-19 affected not only existing hotels but was also causing delays or even cancellations of several development projects across the Benelux region. This could be good news for hoteliers, as it is likely to constrain future supply growth and facilitate a faster market recovery. According to OperatorBeat survey, 22.7% of responded indicated that about half or more of their projects in BeNeLux region are not proceeding as planned.
6. Some ongoing projects are proceeding in Brussels and others are delayed
In Brussels, supply pipeline has been limited even before the virus outbreak. However, the few ongoing projects are proceeding, with Juliana-Brussels and Residence Inn By Marriott set open in 2021 and Corinthia Grand Palace Hotel Astoria Brussels on Rue Royal expected to open in 2022. Nonetheless, there are some early-stage development projects which are facing challenges and experiencing delays. According to OperatorBeat survey, the main reasons for projects not proceeding as planned in the BeNeLux region are:
a. Issues with dept funding (according to 38.5% of respondents);
b. Commercial terms have become unviable (according to 23.1% of respondents) and
c. Issues with equity funding (according to 15.4% of respondents).
7. Brussels' nights in paid accommodation expected to reach 2019 levels by 2024
In terms of recovery pace, according to the OperatorBeat survey, majority of respondents are expecting major regional cities in BeNeLux to recover earlier than capitals. Nevertheless, 68% of respondents expect Brussels to fully recover already in 2023, the remaining 32% of operators expects this in 2024. This is in line with forecast by Oxford Economics, that anticipates the nights in paid accommodation in Brussels to reach 2019 levels by 2024. This is underpinned by Brussels’ lower reliance on long-haul international markets (European and domestic markets accounted for 65% of overnight stays in Brussels in 2019 according to visit.brussels) and being at the heart of the European institutions.
Ed Fitch, Partner at Cushman & Wakfield explains: “Despite the current significant challenges for hotels in Brussels, investors and operators remain optimistic on its longterm prospects. We are continuing to see keen interest in the city and expectations of a relatively quick market recovery, once the pandemic is contained. This is underpinned by the strong market fundamentals of the Brussels hotel market, which has remained one of the most attractive markets in the region.”
If you need more information on the hospitality sector in Belgium please contact our expert team.
