The post-corona hotel industry: All will be well again … in 2023
In a new analysis, Colliers reviews the way corona has affected the Danish hotel industry so far. Colliers also gives its take on when the number of bednights will be back to normal as this is a key determinant of investment demand for hotel properties.
“Investments in hotels really picked up about three or four years ago, when e.g. pension funds became aware of this asset class. This happened on the heels of a virtual hotel boom throughout the 2010s with record-high revenues and earnings for the past three years. The market has clearly matured, but at the moment, investors have become more cautious after what may best be described as free-falling bednight numbers due to corona,” says Peter Winther, CEO Colliers in Denmark.
Already today, Colliers sees dwindling demand for hotel properties.
“Tourism growth is a key driver of demand. My guess is that we will be well into 2022 before we approach the same level of bednights as in 2019. Against this backdrop, investors are of course zooming in on more secure investments like residential properties,” says Peter Winther, referring to the analysis just released in which Colliers ventures a guess about the future trend in bednights.
Colliers prepared the above-mentioned prognosis based on the assumption that the current scenario continues, with COVID-19 increasingly contained in Denmark and in Europe alike and borders gradually reopening.
“We are likely to see an increase in the price of airline tickets, which will have negative bearing on bednights. As many conferences have been rescheduled to take place in 2020, however, we will see stronger activity in the conference market, pulling in the opposite direction. Last but not least, the fact that Denmark will host Euro 2021 games as well as the Tour de France prologue will have a positive, albeit short-lived, effect on bednights”.
In 2019, a hotel transaction in fact topped the list of the five largest transactions in Denmark as Copenhagen Admiral Hotel sold to Midstar. Colliers facilitated the sale, with Peter Winther having many years’ experience as advisor on exactly deals involving hotels.
To read the entire analysis, please see Colliers’ website.