European Hospitality Sector Outlook 2024 - Extended Version

BETTER THAN MOST YTD Q3 2023 VS Q3 2022 HOTEL RETAIL INDUSTRIAL 0%

HOTEL TRANSACTION ACTIVITY IS AMONG THE LEAST IMPACTED IN EUROPE (% CHANGE, BASED ON VALUES IN EUR)

YTD Q3 2023 VS 5-YEAR AVERAGE

OFFICE

ALL PROPERTY

-10%

-20%

-26%

-29%

“IN THE LAND OF THE BLIND, THE ONE-EYED MAN IS KING”

-36%

-42%

-40%

-47%

-54%

-58%

-61% -59%

-60%

Hotel transaction activity in Europe surpassed EUR 10B during the first 9 months of 2023, a drop of 10% YOY and 26% below the 5-year average (2018-2022). While a negative trend, it makes the hotels one of the least impacted sub-sectors within real estate, which recorded an overall 54% drop in transaction volumes over the same 5-year period. Country breakdown reveals Spain, France and Portugal, have even witnessed a surge in hotel transaction activity. Investors are especially interested in acquiring resorts and hotels in prominent gateway cities with robust tourism demand, such as Paris, Barcelona, Madrid and Rome. The primary attraction lies in the flexibility of hotels to enhance income in a higher inflation environment, coupled with the long-term prospects of capitalizing on structural shifts. These shifts include a growing population with increased leisure time, technological advancements improving operational efficiencies and transportation, a shift from expenditure on goods to experiences, and the evolving mobile lifestyle, leading to more time spent in transient forms of accommodation.

-80%

HOTEL TRANSACTION ACTIVITY IS AMONG THE LEAST IMPACTED IN EUROPE (% CHANGE, BASED ON VALUES IN EUR)

-100%

Q3 2023 VS 5-YEAR AVERAGE

Q3 2023 VS Q3 2022

HOTEL

RETAIL

INDUSTRIAL

OFFICE

ALL PROPERTY

0%

-7%

-20%

-34%

-34% -37%

-40%

-46%

-55% -54%

-59%

-60%

-65% -66%

-80%

Source: MSCI Real Capital Analytics

-100%

POLARISED HOTEL TRANSACTION ACTIVITY ACROSS EUROPE

YTD SEPTEMBER 2023 CHANGE VS 2019

COUNTRY

VOLUME (€BN)

CHANGE VS 2022

+19%

2.40

+92%

SPAIN

2.39

+11%

+79%

FRANCE

UNITED KINGDOM

1.41

-66%

-52%

0.97

-62%

-25%

GERMANY

0.51

-71%

-24%

ITALY

Source: MSCI Real Capital Analytics (change is versus the same period in a respective year)

Source: MSCI Real Capital Analytics (change is versus the same period in a respective year)

6 HOTELS OUTLOOK 2024

THE TIDE IS TURNING AMALGAMATED | 7