MARKETBEAT BELGIUM HOTELS · 2018. 3. 30. · Cushman & Wakefield | Marketbeat Belgian Hotels H2...

MARKETBEAT

BELGIUM HOTELSH2 2017

CONTENTS

01 Executive summary

02 Economic overview

03 Supply

04 Demand

05 Investment market

2Cushman & Wakefield | Marketbeat Belgian Hotels H2 2017

Hotel market indicators point towards an

imminent successful recovery from recent

troubles.

• Well-known international chains continue to expand

with large (over 75-100 rooms) hotels across the land.

In addition, the average number of rooms per

establishment is on the increase. The list of projects

and deliveries has grown substantially; in Flanders, the

pipeline includes many independent boutique hotels

ranging up to 50 rooms – especially in fashionable

Antwerp.

• Demand figures suggest 2017 is expected to record

solid numbers in terms of hotel tourist visitors and

overnight stays. More than 15 million visitors had

already been registered by November against 15.2

million for the entire year 2016. Overnight stays

amounted to 35.9 million against 36.8 million for the

whole of 2016.

• Similarly, a return to normal market figures in Brussels

should be imminent. Indeed, the overall average

occupancy rate in 2017 was 71% (the average

occupancy rate in a benchmark 2014 amounted to

73%) (Figure 1). Recovery of the occupation rate has

been incremental and monthly and at its current rate,

we expect occupancy to be back to its 2014 level by

February 2018.

• Following a lively beginning to the year, no investments

transactions were recorded in H2. As a result, the total

volume invested in Belgian hotels in 2017 was EUR

136 million (vs EUR 155 million disclosed in 2016). This

might be explained by the market opacity with many

owners remaining private investors who also handle the

running of premises.

BELGIUM HOTELS

H2 2017

Figure 1

Evolution of the average occupancy rate in

Brussels

Source: visit.brussels

50%

55%

60%

65%

70%

75%

80%

85%

90%

Jan-1

3

Apr

Jul

Oct

Jan-1

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Jan-1

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Average occupancy rate 12-month moving avg rate

Bru

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ECONOMIC OVERVIEW

Figure 2

GDP Growth in Belgium

GDP growth to be reduced in 2018.

2017 has observed its highest GDP growth since 2011

in Belgium with a 1.7% increase (Figure 2).

The upbeat economy suggests this robust economic

momentum is set to continue. 2018 should witness the

same rhythm and record a 1.6% growth. In the longer

term, growth is set at a stable 1.5% per year.

Confidence indices oriented upwards.

Consumer and business confidence indices continued

to post upward movements in the past months to return

in positive territory at the end of 2017 (Figure 3), helped

by a favourable labour market and positive perspectives

in the economy. Activity next year is likely to find

support in robust consumer spending as households

continue to benefit from the employment recovery in

Belgium.

Meanwhile, world trade dynamics remain vibrant at the

start of Q4, pointing to a further strength of European

supply chains next year. This bodes well for Belgian

exporters, which trade mostly with their European peers

given recent competitiveness gains. Nonetheless,

robust domestic demand is also likely to lift imports.

Finally, the acceleration in aggregate demand is leading

to capacity pressures for firms. This points to an

acceleration in investment spending, as firms take

advantage of historically low interest rates. This will help

boost profitability, with a growing number of firms

reporting profits above their long-term average and a

brightening outlook for investment, also driven by rising

exports.

Figure 4

Evolution of Accommodation & food services indicators,

Belgium

Moderate accommodation and food

services growth forecasted.

Employment prospects in the accommodation and food

services sector over the coming 2018-2021 period are

quite bleak with an average growth of -0.24%.

Economic growth in the accommodation and food

services sector is forecast at an average rate of 0.84%

over the same period (Figure 4).

With regards to accommodation services this outlook

can be linked to the consolidation trend whereby the

number of establishments is decreasing (hence fewer

new jobs) and hotels are looking to maximise revenue

by focusing their offerings on strategic locations.

Figure 3

Consumer and business confidence indices

Source: Oxford Economics

Source: Oxford Economics

Source: National Bank of Belgium

0.0%

0.5%

1.0%

1.5%

2.0%

-30

-25

-20

-15

-10

-5

0

5

10

Consumer confidence Business confidence

-3.00%

-2.00%

-1.00%

0.00%

1.00%

2.00%

Gross value added Employment


Figure 7

Distribution of establishments per star rating

Source: FPS Economy, 2012

SUPPLY¹

Market offered respite by consolidation

after successive years of shrinkage.

Eurostat figures indicate a fifth successive annual

decrease of the number of hotels in Belgium, to 1,522

establishments in 2016 (Figure 5). Nevertheless the

decrease has been fairly marginal (35 fewer in 2016

against a peak decrease of 320 establishments in 2012).

Additionally the number of rooms has increased for the first

time since 2011 to 58,791 in 2016, bringing the average

number of rooms per hotel to 39. Indeed, the average

number of bedrooms per establishment has continuously

increased since 2011.

This phenomenon can be explained by the increasing role

of international players including investors (property-wise)

and international companies (operations-wise), carrying

out arbitrations and consolidations of their portfolios and

looking to increase revenue from strategically located

establishments. Indeed, many new hotel projects (detailed

on the next page) include more than 100 rooms.

At the other end of the spectrum small local independent

players’ market share also suffers from the additional

competition that Airbnb-type structures constitute.

Regulation measures for such platforms have been set up

and increased tax inspections have been put in place, but

the trend has been resolute.

The share of establishments per region has changed very

little over the past years - Brussels and Flanders have

each gained 1% in share since 2012 (Figure 6). In 2016,

184 hotels were noted in Brussels, 870 in Flanders and

468 in Wallonia.

The most recent breakdown of hotels made available by

Statistics Belgium (FPS Economy), outlines the dominance

of three-star establishments (Figure 7).

Figure 5

Evolution of the hotel supply in Belgium

Source: Eurostat

Figure 6

Distribution of establishments per region

Source: Eurostat, 2016

1*10%

2*23%

3*43%

4*15%

5*1% Not

rated8%

Brussels12%

Flanders57%

Wallonia31%

56,000

57,000

58,000

59,000

60,000

61,000

0

500

1,000

1,500

2,000

2,500

2012 2013 2014 2015 2016

Number of establishments (LHS)

Number of bedrooms (RHS)

¹ At the time of writing, the most recent available supply

statistics ran up to 2016.


List of projects and deliveries continues to

grow.

With well-known international chains are continuing to

expand with large (over 75 rooms) hotels across the land

and new boutique hotels also making their presence felt,

we look at deliveries and pipeline region-by-region.

The following is a non-exhaustive list of projects and

recent deliveries announced during the second half of

2017.

Brussels

In Brussels we note several requests for permits to expand

or reconvert from other functions with a potential pipeline

of minimum 166 rooms (excluding the redevelopment of

the former Rogier Sheraton). At least 50 rooms were

delivered in the second half of 2017.

Deliveries

• Following the recent delivery of the Yadoya, Everland

opened Hotel Hygge in September. The 50-room hotel

is located on Rue des Drapiers in Ixelles. This is

located within a perimeter between the Chaussée

d’Ixelles/Porte de Namur and Avenue Louise which

counts numerous competing operations.

Pipeline

• The former Sheraton hotel, recently acquired by

Primecity Investment is expected to partly reopen

under the new name ”Rogier Hotel” in 2018, although

works will still be carried out on several floors.

• Macan Development is overseeing the construction of

the Tagawa, a mixed-use project on Avenue Louise

which will include 64 appart-hotel units which will be

operated by Ginosi Apartels.

• Heavy renovation works on Corinthia's five-star Astoria

hotel (126 rooms) in Brussels have not yet started.

Furthermore, several permit requests have been submitted

in H2 2017, including:

• Eurhostel s.a. submitted a request for a permit to

extend the Train Hostel in Schaerbeek.

• Permits have been requested to convert an office

building in Schaerbeek into a 50-room hotel on Avenue

de la Reine in Schaerbeek.

A request for permits has been submitted to increase the

capacity of the Hotel Bentley in Schaerbeek from 30 to 49

rooms.

Atlantis Real Estate have applied for a permit to develop a

33-room hotel on Rue Sallaert in place of a current storage

unit near the Midi station.

Flanders

The list of projects and deliveries in Flanders has grown

substantially and includes many independent boutique

hotels ranging up to 50 rooms – especially in fashionable

Antwerp. Upwards of 450 rooms have been delivered in

H2, with at least another 570 in the pipeline.

Deliveries

• A new 42-room four-star Hotel FRANQ has opened

near the Meir in Antwerp.

• The 17-room designer hotel Pilar has opened in

Antwerp in November near the KMSK (Royal Museum

of Fine Arts).

• IHG has brought its Hotel Indigo boutique hotel concept

to Belgium, having opened a 82-room hotel at the end

of 2017 in Antwerp.

• The 38-room upscale hotel 1898 The Post (operated by

Zannier) has opened in Ghent on the Korenmarkt.

• The hotel Serwir (four stars) has opened at the end of

the year in Sint-Niklaas. The 40+room hotel developed

by Stars of Flanders aims to attract tourists thanks to its

location within the economic hotspot delimited by the

Brussels-Antwerp-Ghent triangle.

• In Leuven, upscale hotel The Fourth (44 rooms)

opened on the Grote Markt.

• Bricks & Leisure opened a 80-room Ibis Budget in

Bruges at the end of the year. Some of the rooms have

been sold to private investors.

• The new three-star Corbie Hotel in Lommel has opened

27 rooms in November, with works still to be fully

wrapped up. Upon completion in 2018, the hotel owned

by the Koch family will count 47 rooms including 20

apartments for long-term stays.

• Group GL opened the new 84-room Park Inn by

Radisson in the smaller of the two TT Towers in

Hasselt. Group GL is also behind the Radisson Blu in

the neighbouring tower.

SUPPLYPIPELINE AND RECENT DEVELOPMENTS


Pipeline

• The Ringhotel developed by Ghelamco on the

Ghelamco Arena site in Ghent will add 243 rooms to

the Ghent hotel landscape in 2018. Furthermore, a 110

room Ibis Budget will open in the Dampoort area. In

total, Gent-Hotels vzw, a non-profit association active in

the hotel sector expects around 500 rooms to open in

Ghent in 2018. These new developments aim to

leverage increased tourism around World War I

memorials in the region as well as soccer matches and

business travel.

• Marriott will open two Moxy hotels Hotel in Ghent and

Antwerp from 2019. Marketed as a millenial-focused

boutique hotel concept, Moxy is backed and co-

designed by IKEA. The Ghent hotel will include 103

rooms and will be located on the Kouter. In Antwerp,

the hotel will open where previously a nightclub stood.

The concept is competitively priced by forgoing room

service and a higher than average rooms/surface ratio.

The hotels will be operated by Groupe Cayman.

• Vestio and Group GL will open a new 69-room hotel in

Bilzen, Limburg in June 2018 which will be operated by

Martin's Hotels.

• ARH Invest is planning to develop mixed-use Les

Jardins d'Oaktree in Overijse a residential complex

which would also include an 43 aparthotel units.

• The Vanmoerkerke family, the new owners of the iconic

Thermae Palace hotel in Ostend will invest EUR 75

million to refurbish the more than 100-rooms premises.

SUPPLYPIPELINE AND RECENT DEVELOPMENTS

Wallonia

Many of the hotel projects under discussion in Wallonia

are integrated in mixed-use projects. Deliveries in H2

amounted to at least 248 rooms have been added to

the stock, with potentially at least another 380 rooms in

the pipeline.

Deliveries• A four-star 123-room Novotel (Accor group) opened

next to Rive Gauche shopping centre in Charleroi at

the end of 2017.

• In Arlon, a new 125-room Van der Valk has started

to welcome its first guests although it will officially

open in 2018.

Pipeline

• A 120-room hotel will open in 2019 in the Actibel

Business Center (a mixed-use project) developed

by Actibel in the Namur area.

• Phase I of works on CBTC Smart Valley in Louvain-

la-Neuve was launched in Q3 2017. This mixed-use

development will include a 160-room hotel.

• Construction works on Ardent Group's Liège Office

Center have started and will include a 100-rooms+

hotel.


BELGIUM

Figure 9

Share of arrivals and overnight stays per type of

establishment Jan.-Nov. 2017

Source: FPS Economy

DEMAND

Solid demand after 11 months.

Although full year results for 2017 are yet to be published,

2017 had already posted solid results by November in

terms of hotel tourist visitors and overnight stays. In

excess of 15 million visitors had already been registered

by November against 15.2 million for the entire year 2016.

Overnight stays amounted to 35.9 million against 36.8

million for the whole of 2016 (Figure 8).

Based on previous years’ dynamics for the month of

December, it is fair to assume arrivals and overnight stays

will increase compared to 2016 levels, possibly even

posting record figures.

The average number of nights per stay up to November

was 2.39, a 1.20% decrease on 2016, albeit a good level

superior to its average as the tourism market emerges

from a difficult interval period having been hit by the GFC

as well as the recent terrorist attacks.

At the time of writing no statistics regarding the impact of

foreign tourists has been published. Nevertheless we

expect an improvement on 2016 figures (40% of arrivals

and 46% of overnight stays were made by foreign tourists)

which suffered from travellers wariness of travelling to

Belgium in the wake of the attacks.

Hotels represented 51% of arrivals and 51% of overnight

stays up to November 2017 (Figure 9). The share of

arrivals is below its 70% bracket of recent years. This is

principally due to the increase of arrivals in youth hostels,

which after 11 months recorded a higher figure than for the

whole of 2016 (1.4 million for January-November 2017 vs

1.3 for the entire year 2016).

Figure 8

Evolution of hotel tourist visitors and overnight

stays, millions (LHS)

Source: FPS Economy

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Arrivals Overnight stays

Hotels Youth hostels Leisure parks Other

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2.45

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2013 2014 2015 2016 Jan-Nov2017

Overnight stays Arrivals Avg nights/arrival (RHS)


BRUSSELS

Figure 11

Evolution of the average daily rate in Brussels, EUR


DEMAND

Return to normality should be imminent.

The 12-month average occupancy rate fell to a trough of

60% in October 2016 as a direct lasting consequence of

tourists’ wariness to travel to Brussels following the 22

March terrorist attacks as well as the Paris attacks in

November 2015. Since this trough the recovery of the

indicator has been incremental and monthly. At the current

rate of monthly recovery, we expect occupancy to be back

to its 2014 level by February 2018.

The overall average occupancy rate in 2017 was 71%,

improving from 69% at the end of the first semester. The

average occupancy rate in a benchmark 2014 amounted to

73% (Figure 10).

Brussels tourism body, visit.brussels intended to push

overnight stays back to its 2014 level of 7 million in 2017,

before increasing this number to 10 million in 2020. It aims

to achieve these numbers by boosting Brussels' image

through international promotional campaigns, attending

trade fairs as well as leveraging events such as sporting

and cultural events. This will include hosting the start of the

2019 Tour de France. In addition, the presence of key

international institutions (the EU and NATO) lay a solid

foundation of “loyal” business tourists (more than 55% of

overnight stays) and boost occupancy with punctual events

such as the Greek bailout negotiations in 2015 or the

Catalan protests in early December 2017. The latter drove

a 100% occupancy ratio in the days surrounding the event.

Annual ADR increases to highest level of

past five years.

As indicated by the 12-month moving average daily rate,

prices are marginally at their highest level since 2013

included. Indeed the ADR for 2017 was EUR 107.75

against a previous high of EUR 107.52 in 2013 (Figure 11).

This trend was certainly boosted by the aforementioned

Catalan protests in December which allowed hotels to

increase the average monthly rate to a 10-year high of

EUR 111.

As a result of the improving occupational situation as well

as the increased ADRs, the RevPAR² for 2017 continues

to increase with an annual average of EUR 76.66.

Traditionally the annual average is within a EUR 76-77

bracket, hence this constitutes a further positive indicator –

the 2016 average RevPAR amounted to EUR 64.79

(Figure 12).

² Revenue Per Available Room. Calculated by multiplying the

ADR by the occupancy rate over a determined period.

Figure 10

Evolution of the average occupancy rate in

Brussels


Figure 12

Evolution of the RevPAR in Brussels, EUR


50%

55%

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90%

Jan-1

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20

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RevPAR 12-month moving avg rate

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Jan-1

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Average daily rate 12-month moving avg rate


INVESTMENT MARKET

Disclosed deals come to a halt in H2

although appetite remains strong.

Following a lively beginning to the year, no transactions

were recorded in H2. As a result the total volume invested

in Belgian hotels in 2017 was EUR 136 million (vs EUR

155 million disclosed in 2016) (Figure 13).

This remains a decent performance although it remains in

the shade of the past couple of years’ dynamic activity. In

addition it may conceal an underlying market opacity

where certain deals are carried out under the radar.

Despite the recent and increasing internationalisation and

consolidation trends (illustrated by the merger of Foncière

des Régions’ subsidiaries Foncière des Murs and FDM

Management) on the market, many owners remain private

investors who also handle the running of premises.

Therefore the real total is likely to have been higher as

demand for these type of alternative assets increases

tangibly.

The largest deal was the acquisition of a nine-hotel, 1,120

room portfolio by Canadian hospitality management

company Westmont Hospitality Group worth between EUR

70- and EUR 95 million. Its Belgian assets are located in

Antwerp, Brussels and Liège amongst others. One asset is

located in France.

The purchase of the five-star Silken Berlaymont (located in

Brussels’ European district) by Swedish specialist

investors Pandox for EUR 32.7 million was also notable.

The Silken Berlaymont became Pandox’s sixth hotel in the

capital.

Foreign capital continues to dominate.

All three investments in 2017 involved foreign capital (from

Canada and Sweden as well as Cyprus through the

purchase of the former Sheraton Rogier in Brussels by

PrimeCity Investment) (Figure 14). Furthermore, all

recorded investments in 2017 were carried out by players

specialised in the hotel segment.

Figure 13

Invested volumes in Belgian hotels, EUR millions

Source: RCA, Cushman & Wakefield

Figure 14

Investment distribution by nationality

Source: RCA, Cushman & Wakefield

0

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2013 2014 2015 2016 2017

0%

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100%

2013 2014 2015 2016 2017

Belgium Middle East France United StatesGermany Asia Other

CONFIDENTIALITY CLAUSE

This information is to be regarded as confidential to the party to whom it is addressed and is intended for the use of that party only.

Consequently and in accordance with current practice, no responsibility is accepted to any third party in respect of the whole or any part

of its contents. Before any part of it is reproduced, or referred to, in any document, circular or statement, our written approval as to the

form and context of such publication must be obtained.

Disclaimer

This report has been produced by Cushman & Wakefield for use by those with an interest in commercial property solely for

information purposes. It is not intended to be a complete description of the markets or developments to which it refers. The

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© 2018

CONTACT DETAILS

Shane O’Neill

Senior Research Analyst

+32 510 08 33

[email protected]

AUTHOR

Christophe Ackermans

Head of Valuation & Advisory

+32 2 629 02 87

[email protected]

Marc-Antoine Buysschaert

Head of Capital Markets Office

+32 2 546 08 75

[email protected]

Henry Morauw

Head of Asset Services

+32 2 629 05 50

[email protected]

Kris Peetermans

Head of Valuation & Advisory

+32 2 546 08 76

[email protected]

Koen Nevens

Northern Region Leader

Head of Belgium & Luxembourg

+32 2 546 08 63

[email protected]

Arnaud de Bergeyck

Head of Capital Markets Retail

+32 2 546 08 77

[email protected]

Cédric Van Meerbeeck

Head of Research Belgium &

Luxembourg

+32 2 629 02 86

[email protected]

Elisabeth Troni

Head of EMEA Research

+44 20 3296 2121

[email protected]

MARKETBEAT BELGIUM HOTELS · 2018. 3. 30. · Cushman & Wakefield | Marketbeat Belgian Hotels H2...

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Transcript of MARKETBEAT BELGIUM HOTELS · 2018. 3. 30. · Cushman & Wakefield | Marketbeat Belgian Hotels H2...