Investors pour more money into the booming CEE hotel industry, says Cushman & Wakefield
The investment volume achieved in 2016 totalled almost 1.2 billion Euro with 46 transactions recorded in core CEE hotel investment markets, while in 2015 reached just over 700 million Euro with 45 transactions, shows a press release issued by Cushman & Wakefield.
Austria was the star performer with almost 800 million Euro transacted, which made up 67 per cent of the total investment volume. In other CEE markets volume was lower than in 2015 with a decline in Poland which more than halved in volume. The Czech Republic accounted for 18 per cent of total CEE investment share; most of the investment took place in Prague which saw 7 transactions including the Hilton Old Town, Park Hotel and Chopin Hotel.
The CEE hotel industry reported growth across all key performance metrics. Increasing number of tourists have chosen CEE destinations, thus occupancy rates returned or even surpassed the pre-crisis levels, reaching 72 per cent on average up from 69 per cent. As the cost of visiting CEE has gone up along with the increasing hotel room rates, profits have been soaring. The average price per room reached 76.6 Euro up from 73.6 Euro in 2015. While the Eastern markets achieved double digit growth in terms of revenue per available room, the more mature markets of Central Europe including Prague and Warsaw saw growth of around six per cent.
"The Romanian hotel industry currently benefits from strong fundamentals and an important growth potential," said Marius Grigorica, senior broker capital markets Cushman & Wakefield Echinox. "The main performance indicators in 2016 benefited from a positive evolution and registered growth rates almost double as compared to other capital cities like Prague and Warsaw. Thus, the Bucharest occupancy rate in 2016 increased by 4.7 per cent as compared to the previous year and the average daily rate (ADR) benefited by 5.8 per cent rise."
In 2017, investors' activity will be notable especially in Hungarian, Austrian and Romanian hotel investment markets, where significant assets are set to be put up for sale or about to be transacted.