Some real estate investors thought maybe hotel assets would come to the market in a flood given covid-19 travel restrictions throughout the pandemic.
However, distressed deals were not forthcoming on a widespread scale.
According to Colliers, in the Netherlands for example, Dutch hotels were ‘not massively put on sale’. In total, 44 Dutch hospitality assets were sold during the whole of 2021 for a total of €326 mln, which is by far the lowest transaction volume in years.
In the record year 2019, volumes reached €1.75 bn.
Joost Mees, head of hotels at Colliers in the Netherlands, says: ’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.’
‘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 large cities
Next to the lack of supply, the low investment volume in 2021 also had two other reasons, according to the agent.
Firstly, mostly small hotels were sold, which logically yield less. In total, 2,399 rooms were offloaded at 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 mln. Compared to past years, that is the smallest leading transaction for years. Ever since 2014, at least one hotel in Amsterdam has been sold for at least €80 mln. Together with the six other transactions, the Amsterdam sales volume totalled just €76 mln last year, an unprecedented low amount. In the three years before the pandemic, a total of €3 bn worth of hotels were sold in Amsterdam.
Netherlands lagging in Europe
Compared to other major markets of Europe, the Netherlands is still lagging. In Europe, €16.9 bn was invested in hotels last year. This was 39% less than in 2019, and up by more than €5 bn compared to 2020. The Netherlands, however, fell short 81% last year compared to 2019.
However, Mees says he 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.’
