Hotel values across Europe registered another strong year in 2018 showing 3% growth and reaching new highs, according to the annual European Hotel Valuation Index (HVI), compiled by global hotel consultancy HVS.
Although a more modest growth than that of 2017 at 3.9%, 2018 saw recovery for many cities as well as a levelling off in values for some markets, which had previously been depressed compared with the European average.
“While there has been geopolitical uncertainty and instability in Europe, the influence of this on investors, developers and lenders within the hotel sector seems to be continually lessening,” commented Magalí Castells, senior associate with HVS and co-author of this year’s HVI.
“Although individual changes in 2018 were much more modest than in 2017, with no double-digit growth, it was a positive year for Europe’s hotels with growth and recovery in many cities, new value highs reached by hotels in many markets, and a positive outlook going forward.”
The annual HVI ranks the percentage change in the values of typically four-star and five-star hotels across 33 major European cities, both in Euro and local currency terms, as well as ranking each market in terms of the average price per hotel room.
Hotels in Lisbon, Moscow, Paris, Brussels and Berlin filled the top five slots in terms of highest percentage growth in values in euro terms, with Lisbon seeing an impressive 9% uplift, the year’s biggest climber.
Only six of the 33 markets analysed experienced a value drop, with those at the bottom of the index, in euro terms, including Barcelona, which was badly impacted by the civil unrest caused by the strengthening of the Catalan independence movement; Hamburg, Manchester and Warsaw, which all suffered from an influx of new supply in the market; and Geneva and Stockholm, which were impacted by currency dynamics in 2018.
In terms of the absolute value of hotel rooms, those in Paris, London, Zurich, Geneva and Rome filled the top five slots for the most expensive in Europe, with Birmingham, Sofia, Bratislava, Bucharest and Manchester at the bottom end of the ranking.
“Demand for hotel accommodation remains vigorous across most markets in Europe, and while economic growth for this cycle might be beyond its peak hotel demand is unlikely to suddenly fall away,” commented Sophie Perret, director at HVS London.
“For investors the advice is to factor in a slightly longer exit window and be cautious, but there are some good deals to be had by those seeking to acquire hotels in many European cities.”