“Hotel owners did not immediately run into problems with low occupancy rates, because of the financial stimulus packages from governments, arrangements banks reached with their clients, and the buffers operators built before the pandemic," says Joost Mees, Head of Hotels. "As a result, no massive sell-offs occurred in the Netherlands. Owners who were considering selling postponed this until the corona uncertainty had passed. Investors, on the contrary, were willing to pay less because of the higher risks involved. So, there was demand, but hardly any supply."
Few transactions in the large cities
Next to the lack of supply, the low investment volume in 2021 also had two other reasons. Firstly, mostly small hotels were sold, which logically yield less. In total, 2,399 rooms were sold, an average of 55 rooms per hotel. This is less than the average of 107 rooms in 2019 and 73 in 2020. Secondly, few hotels have been sold in the big cities, where the biggest and most expensive hotels are located.
Amsterdam traditionally has a big impact on the Dutch hotel investment market. The sale of The Albus Hotel on Vijzelstraat was the largest transaction, for almost 25 million euros. Compared to past years, that is the ‘smallest leader”. Ever since 2014, at least one hotel in Amsterdam was sold for at least 80 million euros. Together with the six other transactions, the Amsterdam sales volume totaled 76 million euros in 2021, an unprecedented low amount. In the three years before the pandemic, a total of 3 billion euros worth of hotels were sold in Amsterdam.
The Netherlands is lagging behind
Compared to Europe, the Dutch investment market is still lagging. In Europe, €16.9 billion was invested in hotels last year. This was 39% less than in 2019, and up by more than € 5 billion compared to 2020. The Netherlands, however, fell short 81% last year compared to 2019.
Mees expects the investment market to pick up this year. “Some owners are only now getting into trouble, because of repayment arrangements or because they want to pay off their debts as quickly as possible. They now expect a higher return for their hotel, because the prospects for the hotel market are more favorable compared to a few months ago. The recovery of the investment market though depends on the development of the war in Ukraine, which brings uncertainty. Investors don’t like risks.”