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Operator Beat – Europe 2023

30/10/2023

Findings from the Cushman and Wakefield Operator Beat 2023 indicate that capital cities throughout Europe continue to hold their allure for operators, with the recent addition of Vienna to this esteemed list. Notably, City markets in France, Germany, Benelux, and Turkey have experienced a surge in operator interest since 2021. However, it is in the coastal and island markets of southern Europe where the most substantial increase in ratings can be seen, as an impressive 85% of operators express optimism regarding resort properties in the forthcoming year. Regarding contractual trends, over 50% of the operators surveyed now place considerable emphasis on ESG KPI reporting and the inclusion of a pandemic clause. Furthermore, there is a noticeable shift towards hybrid leases, accompanied by a decline in fixed leases. Challenges persist within the hotel pipeline, driven by escalating development costs and debt financing difficulties, culminating in an average delay of 6-12 months for projects. Lastly, the growing significance of ESG in the industry is evident, with nearly 60% of operators showing willingness to offer higher rents and a substantial portion ready to make other concessions in fees and key money for properties with the highest environmental certifications. 

The Operator Beat surveys were conducted among over 195 senior executives of leading hotel operators active in Europe. The surveys were carried out in H1 2023 across nine different markets: the Iberian Peninsula, UK & Ireland, France, Benelux, Italy, DACH, CEE, SEE, and Turkey. 

The results of our 2023 Operator Beat sentiment survey across Europe underlined keys trends for the hotel industry: 

PERFORMANCE OUTLOOK

Luxury hotels and Resorts are considered to have the best outlook, with 89% and 86% of surveyed operators being optimistic or very optimistic about these two hotel types, respectively.

CONTRACT TERMS TRENDS

53% of surveyed operators report an increasing trend of Pandemic Clause in their new contracts and renewals in the last 12 months. ESG KPIs Reporting Clause is also being increasingly included in contracts according to 50% of surveyed operators.

WILLINGNESS TO OFFER LEASE

Since last year, hybrid and variable leases have been increasingly offered by 35% and 28% of the surveyed operators, respectively. On the other hand, 19% of surveyed operators are offering fewer or have stopped offering fixed leases.

HOTEL PIPELINE TRENDS

Approximately 16% of the pipeline projects are currently delayed, while 8% are on hold. 6-12 months is the most common delay of pipeline projects (according to 40% of respondents). Not surprisingly, 63% of issues associated with delayed/pending pipeline projects are due to rising development costs, followed by debt funding issues and economic uncertainty.

ENVIRONMENTAL CONSIDERATIONS

Surveyed operators are likely to offer higher rent or lower fees for hotel properties with the highest environmental building ratings/certifications, according to 66% and 51% of respondents, respectively.

Learn more about the initial findings by downloading the report.

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