MARCH 2016 | PRICE £500

2016 EUROPEAN
HOTEL VALUATION INDEX
Simon Hulten
Analyst
Constance Biria
Consul ng & Valua on Analyst
Sophie Perret
Director

HVS.com HVS London | 7-10 Chandos St, London W1G 9DQ, UK

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Highlights
The low-interest rate
environment continues to
propel investors’ appetite
Growth in visitation Hotel performance and deal volumes.

According to the WTO, RevPAR continued to

visitation to Europe grew by improve across the board
5% in 2015, thanks partly in Europe, to almost double
to the relative weakness of igures on average for the Main transactions
the euro compared to the markets in our sample
US dollar and other main 2015 was a record year in
(and this despite continued
currencies. The reduction terms of total transaction
declines in the Russian
of BRICS tourists continued volume: €24 billion, or a
markets and Istanbul). Even
to be felt across Europe, 66% increase on 2014 (and
the strength of the Parisian
balanced by strong visitation well above the previous
market was remarkable, in
from the USA, Asia and record of €20.3 billion in
light of last year’s terrorist
intra-Europe. Chinese 2006). The UK again took the
attacks.
visitation increased by 30% crown as the strongest driver
in 2015. Europe remains of transactions (49%), with
exceptionally popular, Germany, Spain and France
with nine of the top 20 following. More than 60% of
destinations across the world New investment interests the total transaction volume
(of which London and Paris was portfolio driven (more
are in the top three). Strong interest in Spain than double that of 2014).
is being followed by the
promise of upside in
the other PIGS markets
(Portugal, Italy and Greece)
as investors continue their ME & Asian investments
Increased investment
hunt for value and hotel
Hotel investment volume In addition to almost 50%
performances improve
in Europe increased by of the investment money
across these markets.
66% in 2015 (see our sister coming from Europe, both
publication, European Hotel It has taken time, but interest North America and the
Transactions 2015), coming in Eastern Europe is now Middle East continued to be
from typical sources such as inally gaining momentum, strong players. Please refer
Europe (nearly half of the with investors increasingly to our sister publication,
total transactions volume), pushing the boundaries in European Hotel Transactions
the USA and the Middle their search for yield. Strong 2015 for more details.
East, but also increasingly above-average RevPAR
from Asian buyers. Western recoveries and the relative
Europe is considered by price of assets represent
many overseas investors good upside opportunities.
to be a haven where the Hotel values
rule of law, as well as safety Values per room in 2015
and security, makes it a were 5% higher than in
good place to invest for the 2014, on aggregate. In
foreseeable future. Yields and interest rates this year’s publication, we
Continued compression on present the percentage
cap rates in key gateway change in value on the
markets had a halo effect on previous year as well as the
yields for secondary markets index itself.
with strong performance and
promising outlooks.

EUROPEAN HOTEL VALUATION INDEX 2016 | PAGE 2

ATHENS SEES DOUBLE-FIGURE VALUE GROWTH IN 2015

European and Regional Performance

It is challenging to summarise all that Looking into individual European regions, we
happened in 2015. Last year witnessed oil note that 2015 was a particularly good year
prices falling to unexpected levels; terrorist for the Eastern European market, which was
attacks right at the heart of Europe; the able to bounce back from declining values in
migrant crisis; the slowdown of the Chinese 2014 to reach a 5% increase in room values
economy... but against this rather gloomy and match the European average for the
background, the hotel world was living year. Northern and Southern Europe saw the
in a sort of parallel reality: record hotel biggest growth in 2015 and surpassed that
transactions, record performance data, and of Western Europe, which had the strongest
generally a very upbeat mood. value per room growth in 2014.

Year-on-Year Change
IN VALUES PER ROOM BY REGION 2006-15

ϭϱ͘Ϭй

ϭϬ͘Ϭй EŽƌƚŚĞƌŶ ƵƌŽƉĞ

^ŽƵƚŚĞƌŶƵƌŽƉĞ
ϱ͘Ϭй tĞƐƚĞƌŶƵƌŽƉĞ

Ϭ͘Ϭй ĂƐƚĞƌŶƵƌŽƉĞ
Ɖ
ƵƌŽƉĞ
Ͳϱ͘Ϭй

ͲϭϬ͘Ϭй

Ͳϭϱ͘Ϭй

ͲϮϬ͘Ϭй

ͲϮϱ͘Ϭй

ͲϯϬ͘Ϭй
ϮϬϬϲ ϮϬϬϳ ϮϬϬϴ ϮϬϬϵ ϮϬϭϬ ϮϬϭϭ ϮϬϭϮ ϮϬϭϯ ϮϬϭϰ ϮϬϭϱ

^ŽƵƌĐĞ͗,s^ʹ>ŽŶĚŽŶKĨĨŝĐĞ EŽƚĞ͗ĂƐĞĚŽŶĞƵƌŽĐĂůĐƵůĂƚŝŽŶƐ

EUROPEAN HOTEL VALUATION INDEX 2016 | PAGE 3

 Hotel Values
PERCENTAGE CHANGE IN HOTEL VALUE IN EURO

'ZϷ 'ZϷ
ϮϬϬϲ ϮϬϬϳ ϮϬϬϴ ϮϬϬϵ ϮϬϭϬ ϮϬϭϭ ϮϬϭϮ ϮϬϭϯ ϮϬϭϰ ϮϬϭϱ ϭϵϵϳͲϮϬϭϱ ϮϬϬϲͲϮϬϭϱ
ϭ DĂĚƌŝĚ ϭϮ͘ϴ Ϯ͘Ϭ Ͳϭϲ͘ϴ Ͳϭϴ͘Ϯ Ͳϳ͘ϰ Ϯ͘ϲ Ͳϲ͘ϴ Ͳϱ͘ϲ ϭϰ͘ϯ ϭϰ͘Ϯ ͲϬ͘ϭй Ͳϯ͘Ϭй
Ϯ ƵďůŝŶ ϲ͘ϱ ͲϮ͘ϱ Ͳϭϴ͘ϲ ͲϮϬ͘Ϯ Ͳϱ͘ϰ ϲ͘ϭ ϱ͘ϱ ϲ͘ϲ ϭϯ͘Ϯ ϭϯ͘ϰ Ϭ͘ϳй ͲϬ͘ϵй
ϯ ŝƌŵŝŶŐŚĂŵ ϱ͘ϰ ͲϬ͘ϱ ͲϮϮ͘ϳ Ͳϭϯ͘ϭ ͲϭϮ͘Ϭ Ͳϲ͘ϳ ϯ͘ϯ Ϭ͘ϲ ϭϭ͘Ϭ ϭϮ͘ϵ ͲϬ͘ϳй Ͳϯ͘ϲй
ϰ ƚŚĞŶƐ Ϯ͘ϲ ϰ͘ϳ ͲϮ͘ϱ
Ϯ͘ϱ Ͳϭϰ͘Ϭ
ϭϰ͘Ϭ ͲϮϵ͘ϯ
Ϯϵ͘ϯ ϱ͘ϵ ͲϮϯ͘ϴ
Ϯϯ͘ϴ ϳ͘ϲ ϱ͘ϵ ϭϮ͘ϲ Ͳϭ͘ϱй
ϭ͘ϱй Ͳϰ͘ϴй
ϰ͘ϴй
ϱ DĂŶĐŚĞƐƚĞƌ ϲ͘Ϯ Ͳϭ͘Ϯ ͲϮϭ͘ϵ ͲϭϮ͘Ϯ Ͳϰ͘ϰ Ϭ͘Ϯ ϯ͘ϴ Ϭ͘Ϯ ϭϯ͘ϱ ϭϭ͘ϲ Ϭ͘ϯй Ͳϭ͘ϳй
ϲ >ŝƐďŽŶ ϭϰ͘ϵ ϭϭ͘ϵ Ͳϭϭ͘ϴ Ͳϭϰ͘Ϭ ͲϮ͘ϳ ϭϭ͘ϭ ͲϭϬ͘Ϭ ϲ͘Ϭ ϭϬ͘ϯ ϭϭ͘ϭ ϭ͘ϲй Ϭ͘ϴй
ϳ ĂƌĐĞůŽŶĂ ϳ͘Ϯ ϱ͘ϱ Ͳϭϵ͘ϰ Ͳϭϱ͘Ϭ ϯ͘ϯ Ϯ͘ϰ ϭ͘ϯ ϱ͘Ϭ ϲ͘ϯ ϭϬ͘ϵ ϭ͘ϰй ͲϬ͘ϱй
ϴ ƌĂƚŝƐůĂǀĂ Ͳϱ͘Ϭ ϯ͘Ϭ Ͳϭϱ͘Ϯ Ͳϭϴ͘ϴ Ͳϭϱ͘ϵ ϰ͘Ϭ Ͳϲ͘Ϯ Ϭ͘Ϭ Ͳϲ͘ϯ ϭϬ͘ϳ ŶͬĂ Ͳϱ͘ϰй
ϵ ĚŝŶďƵƌŐŚ ϭϮ͘Ϭ ϭ͘ϳ ͲϮϳ͘ϭ Ͳϳ͘ϲ Ϯ͘ϴ ϭ͘ϳ ϰ͘ϱ Ϯ͘ϱ ϳ͘ϯ ϭϬ͘ϳ ϭ͘Ϭй Ͳϭ͘Ϭй
ϭϬ DŝůĂŶ ϭϮ ϯ
ϭϮ͘ϯ Ͳϭ͘ϳ
ϭϳ Ͳϭϯ͘ϲ
ϭϯ ϲ Ͳϭϯ͘Ϭ
ϭϯ Ϭ ͲϭϮ͘ϰ
ϭϮ ϰ ϯϵ
ϯ͘ϵ Ͳϰ͘ϭ
ϰϭ ϯϲ
ϯ͘ϲ ϱϳ
ϱ͘ϳ ϭϬ ϭ
ϭϬ͘ϭ Ϯ Ϭй
Ϯ͘Ϭй ͲϮ͘ϴй
Ϯ ϴй
ϭϭ WƌĂŐƵĞ ϭ͘ϰ Ͳϱ͘ϰ ͲϮϭ͘Ϭ ͲϮϬ͘ϯ ϭ͘ϲ ϯ͘ϳ ϰ͘ϳ Ϭ͘Ϭ ϱ͘ϳ ϵ͘ϰ Ϯ͘Ϭй Ͳϯ͘Ϭй
ϭϮ ƵĐŚĂƌĞƐƚ Ͳϰ͘ϵ ϴ͘ϭ ͲϮϭ͘ϰ ͲϮϮ͘ϵ Ͳϴ͘Ϭ ϰ͘ϲ Ͳϲ͘ϲ Ϭ͘ϰ ϱ͘ϵ ϵ͘ϯ ŶͬĂ Ͳϰ͘ϭй
ϭϯ ŽƉĞŶŚĂŐĞŶ ϭϭ͘ϰ ϭ͘Ϭ Ͳϲ͘ϰ ͲϮ͘Ϯ ͲϬ͘ϵ ϰ͘ϭ ͲϬ͘ϱ ϰ͘ϵ ϵ͘ϭ ϴ͘ϵ Ϯ͘Ϭй ϭ͘ϵй
ϭϰ ^ƚŽĐŬŚŽůŵ ϭϭ͘Ϯ ϴ͘ϯ Ͳϲ͘ϵ Ͳϵ͘ϰ ϯ͘Ϭ ϴ͘ϳ Ͳϱ͘ϰ Ϭ͘Ϯ ϭ͘ϱ ϴ͘ϳ ϭ͘ϱй Ϭ͘ϳй
ϭϱ &ƌĂŶŬĨƵƌƚ ϱ͘ϵ Ͳϲ͘ϰ Ͳϳ͘ϵ ͲϬ͘ϭ ϭϵ͘ϰ ϲ͘ϵ Ϯ͘ϰ ϰ͘ϳ Ϯ͘Ϯ ϴ͘ϲ Ϯ͘ϱй ϯ͘Ϭй
ϭϲ
ϲ ŵƐƚĞƌĚĂŵ
Ě ϭϲ͘ϱ
ϲ ͲϬ͘ϴ
Ϭϴ Ͳϭϰ͘ϵ
ϵ Ͳϭϲ͘Ϭ
ϲϬ ϭϬ͘ϰ
Ϭ ϲ
ϲ͘ϰ ͲϮ͘ϴ
Ϯϴ ϰ͘ϴ
ϴ ϴ͘ϲ
ϴϲ ϴ͘ϲ
ϴϲ Ϯ͘ϲй
Ϯ ϲй Ϭ
Ϭ͘Ϭй
Ϭй
ϭϳ ĞƌůŝŶ ϱ͘Ϯ ͲϬ͘ϳ Ϭ͘Ϯ ͲϬ͘ϴ ϰ͘ϰ ͲϮ͘ϲ Ϯ͘ϲ ͲϬ͘ϰ ϲ͘ϯ ϴ͘ϭ ϯ͘Ϯй ϭ͘ϴй
ϭϴ ƵĚĂƉĞƐƚ ϰ͘ϴ Ͳϭ͘Ϯ Ͳϭϳ͘ϭ Ͳϭϲ͘ϴ ͲϬ͘ϴ ϰ͘Ϭ ͲϬ͘ϱ Ϯ͘ϱ ϳ͘ϱ ϴ͘Ϭ Ϭ͘ϭй ͲϮ͘Ϭй
ϭϵ ^ŽĨŝĂ ϵ͘ϭ ϭϮ͘ϰ Ͳϭϲ͘Ϭ ͲϮϳ͘ϭ Ϭ͘ϱ Ͳϵ͘Ϯ Ϭ͘ϯ Ͳϲ͘ϴ ϳ͘ϭ ϳ͘ϱ ŶͬĂ Ͳϰ͘ϯй
ϮϬ ,ĂŵďƵƌŐ Ϭ͘ϴ Ͳϲ͘ϯ Ͳϯ͘Ϯ ͲϮ͘ϱ ϰ͘ϰ ϲ͘ϯ ͲϬ͘ϯ Ϯ͘Ϯ ϲ͘ϳ ϱ͘ϯ ϭ͘ϰй ϭ͘ϯй
Ϯϭ sŝĞŶŶĂ ϭϭ͘Ϯ ϲ͘ϱ Ͳϱ͘Ϯ Ͳϭϴ͘ϰ Ͳϭ͘ϳ ϯ͘Ϭ Ϯ͘ϲ Ͳϰ͘ϴ ϳ͘ϯ ϱ͘ϯ ϭ͘ϱй ͲϬ͘ϵй
ϮϮ ZŽŵĞ ϳ͘ϴ Ͳϰ͘ϯ Ͳϭϳ͘ϲ ͲϭϬ͘Ϯ ϭ͘ϵ ϲ͘Ϭ ͲϮ͘ϰ Ϯ͘ϯ ϯ͘ϳ ϰ͘ϱ Ϭ͘ϰй ͲϮ͘ϭй
Ϯϯ DƵŶŝĐŚ ϳ͘ϴ ϯ͘ϰ Ͳϳ͘Ϭ ͲϭϬ͘Ϯ ϭϰ͘ϳ ϰ͘ϲ ϴ͘ϯ ϲ͘ϳ ϳ͘ϴ ϯ͘ϳ ϯ͘ϵй ϯ͘ϯй
hZKW ϴ͘ϵ Ϯ͘ϱ ͲϭϬ͘ϵ Ͳϭϯ͘ϰ ϭ͘ϱ ϲ͘Ϯ Ϭ͘ϲ Ϭ͘ϲ ϯ͘ϭ ϯ͘ϲ Ϭ͘ϵй Ϭ͘Ϭй
Ϯϰ ƌƵƐƐĞůƐ ϳ͘ϴ ϲ͘ϭ ϭ͘ϳ Ͳϭϭ͘ϴ Ϭ͘ϭ ϯ͘ϳ Ͳϭ͘ϱ ϭ͘ϱ ϰ͘Ϭ ϯ͘ϱ ϭ͘ϳй Ϭ͘ϳй
Ϯϱ >ŽŶĚŽŶ ϭϭ͘ϳ ϱ͘ϱ ͲϮϯ͘ϭ Ϭ͘ϵ ϴ͘ϰ ϭϮ͘Ϭ ϲ͘ϱ Ϭ͘Ϭ ϴ͘ϱ Ϯ͘ϵ ϭ͘ϴй ϭ͘ϵй
Ϯϲ tĂƌƐĂǁ ϭϰ͘ϳ ϭϬ͘Ϯ Ͳϰ͘Ϭ Ͳϭϴ͘Ϯ ϱ͘ϭ ϴ͘ϳ ϱ͘ϳ Ͳϲ͘ϰ Ͳϳ͘Ϭ Ϯ͘ϰ Ͳϭ͘ϰй ͲϬ͘ϴй
Ϯϳ ƺƌŝĐŚ ϭϬ͘ϭ ϳ͘ϲ ϱ͘ϲ Ͳϰ͘ϱ ϭϮ͘ϭ ϭϭ͘ϭ Ͳϱ͘ϭ ϭ͘ϵ ϲ͘ϲ Ϭ͘ϵ ϯ͘ϵй ϯ͘ϵй
Ϯϴ 'ĞŶĞǀĂ ϳ͘ϲ ϱ͘ϰ ϭϳ͘ϯ Ͳϵ͘ϲ Ͳϭ͘ϰ ϭϯ͘ϭ Ͳϯ͘ϱ Ͳϱ͘ϰ ϲ͘ϱ Ϭ͘ϵ Ϯ͘ϵй Ϯ͘ϯй
Ϯϵ WĂƌŝƐ ϵ͘Ϭ ϲ͘Ϭ Ͳϱ͘ϵ Ͳϯ͘ϲ ϰ͘Ϯ ϭϬ͘ϵ ϰ͘ϲ ϭ͘ϳ ϰ͘ϵ ͲϬ͘ϱ Ϯ͘ϵй Ϯ͘ϰй
ϯϬ ^ƚWĞƚĞƌƐďƵƌŐ ϲ͘ϵ ϭ͘ϯ ͲϮϱ͘Ϭ Ͳϰϳ͘ϲ ϵ͘Ϯ ϭϭ͘ϯ ϭϭ͘ϱ ϰ͘ϵ Ͳϯϭ͘ϲ ͲϮ͘ϲ ŶͬĂ ͲϭϬ͘ϯй
ϯϭ /ƐƚĂŶďƵů ϭϬ͘ϵ ϴ͘Ϯ ϭϬ͘ϴ Ͳϴ͘Ϭ ϱ͘ϴ ϭ͘ϲ Ϭ͘ϯ Ͳϭϭ͘Ϭ Ͳϵ͘ϵ Ͳϴ͘ϵ ͲϬ͘Ϯй Ͳϭ͘ϱй
ϯϮ DŽƐĐŽǁ ϮϬ ϲ
ϮϬ͘ϲ Ϯϭ
Ϯ͘ϭ Ͳϰ͘ϴ
ϰϴ Ͳϯϴ͘ϴ
ϯϴ ϴ ϰϮ
ϰ͘Ϯ ϯϴ
ϯ͘ϴ ϭϭ ϲ
ϭϭ͘ϲ Ͳϰ͘Ϯ
ϰϮ Ͳϯϳ͘ϵ
ϯϳ ϵ Ͳϭϯ͘Ϯ
ϭϯ Ϯ ͲϮ͘ϵй
Ϯ ϵй ͲϭϬ͘ϰй
ϭϬ ϰй
^ŽƵƌĐĞ͗,s^ʹ>ŽŶĚŽŶKĨĨŝĐĞ ϷŽŵƉŽƵŶĚŶŶƵĂů'ƌŽǁƚŚZĂƚĞ

Local Hotel Values

PERCENTAGE CHANGE IN HOTEL VALUE IN LOCAL CURRENCY

ϮϬϬϲ ϮϬϬϳ ϮϬϬϴ ϮϬϬϵ ϮϬϭϬ ϮϬϭϭ ϮϬϭϮ ϮϬϭϯ ϮϬϭϰ ϮϬϭϱ
ŝƌŵŝŶŐŚĂŵ ϱ͘ϭ ͲϬ͘ϭ ͲϭϬ͘Ϯ ͲϮ͘ϱ Ͳϭϱ͘ϯ Ͳϱ͘ϰ ͲϮ͘ϲ ϰ͘Ϭ ϱ͘ϲ ϭ͘ϳ
ƵĐŚĂƌĞƐƚ Ͳϳ͘ϴ Ϯ͘ϰ Ͳϭϯ͘ϯ Ͳϭϭ͘Ϯ Ͳϴ͘ϲ ϳ͘Ϯ Ͳϯ͘ϴ ͲϬ͘ϱ ϲ͘ϲ ϵ͘ϯ
ƵĚĂƉĞƐƚ ϭϬ͘ϯ Ͳϱ͘ϱ Ͳϭϳ͘ϭ Ͳϳ͘Ϯ ͲϮ͘ϳ ϭϮ͘ϯ Ͳϯ͘ϭ ϲ͘ϳ ϭϬ͘Ϭ ϵ͘ϱ
ŽƉĞŶŚĂŐĞŶ ϭϭ͘ϰ ϭ͘Ϭ Ͳϲ͘ϯ ͲϮ͘ϯ ͲϬ͘ϵ ϰ͘Ϯ ͲϬ͘ϯ ϰ͘ϵ ϵ͘ϭ ϴ͘ϵ
ĚŝŶďƵƌŐŚ ϭϮ͘Ϯ ϭ͘ϳ Ͳϭϱ͘ϯ
ϭϱ͘ϯ ϯ͘ϲ Ͳϭ͘Ϭ
ϭ͘Ϭ ϯ͘ϭ Ͳϭ͘ϱ
ϭ͘ϱ ϲ͘Ϭ Ϯ͘ϭ ͲϬ͘ϯ
Ϭ͘ϯ
'ĞŶĞǀĂ ϭϰ͘ϭ ϱ͘ϰ ϭϯ͘Ϯ Ͳϭϯ͘ϵ Ͳϵ͘ϵ ͲϮ͘ϱ ͲϮ͘ϭ Ͳϯ͘ϯ ϱ͘ϱ ͲϭϮ͘ϭ
/ƐƚĂŶďƵů ϭϴ͘Ϯ ϴ͘Ϯ ϭϳ͘ϳ ϰ͘ϳ Ͳϰ͘ϲ ϮϬ͘ϴ ͲϬ͘ϰ ͲϮ͘ϰ ϯ͘ϵ Ͳϱ͘ϴ
>ŽŶĚŽŶ ϭϭ͘ϵ ϱ͘ϱ ͲϭϬ͘ϳ ϭϯ͘ϭ ϰ͘ϰ ϭϯ͘ϰ Ϭ͘ϰ ϯ͘ϰ ϯ͘Ϯ Ͳϳ͘ϯ
DĂŶĐŚĞƐƚĞƌ ϲ͘ϯ Ͳϭ͘Ϯ Ͳϵ͘ϯ Ͳϭ͘ϲ Ͳϳ͘ϵ ϭ͘ϲ ͲϮ͘Ϯ ϯ͘ϲ ϴ͘Ϭ Ϭ͘ϱ
DŽƐĐŽǁ ϭϵ͘ϳ ϭϰ͘ϯ Ͳϲ͘Ϭ Ͳϭϰ͘ϴ Ͳϱ͘ϯ Ͳϭϯ͘ϱ ϴ͘ϯ Ϯ͘ϭ ͲϮϰ͘Ϭ ϭϮ͘ϵ
WƌĂŐƵĞ Ͳϱ͘ϳ
ϱϳ Ͳϱ͘ϰ
ϱϰ ͲϮϵ͘Ϭ
Ϯϵ Ϭ Ͳϭϱ͘ϲ
ϭϱ ϲ ͲϮ͘ϳ
Ϯϳ Ϭϴ
Ϭ͘ϴ ϳϮ
ϳ͘Ϯ ϰϰ
ϰ͘ϰ ϭϬ ϵ
ϭϬ͘ϵ ϴϯ
ϴ͘ϯ
^ŽĨŝĂ ϵ͘ϲ ϭϮ͘Ϯ Ͳϭϲ͘Ϯ ͲϮϳ͘ϭ Ϭ͘ϱ Ͳϵ͘ϭ Ϭ͘ϯ Ͳϲ͘ϴ ϳ͘ϭ ϳ͘ϱ
^ƚWĞƚĞƌƐďƵƌŐ ϯ͘ϲ ϯ͘ϴ ͲϮϭ͘ϳ Ͳϯϲ͘ϯ ͲϬ͘ϵ ϭϮ͘ϲ ϴ͘ϯ ϭϭ͘ϴ Ͳϭϲ͘ϯ Ϯϲ͘ϳ
^ƚŽĐŬŚŽůŵ ϭϬ͘ϵ ϴ͘Ϯ Ͳϱ͘ϰ Ϯ͘ϰ Ͳϳ͘ϰ Ϯ͘ϴ Ͳϴ͘ϵ ͲϬ͘ϳ ϳ͘ϭ ϭϭ͘ϵ
tĂƌƐĂǁ ϭϭ͘ϯ ϳ͘ϭ Ͳϭϭ͘ϭ Ϭ͘ϵ ϭ͘ϭ ϳ͘ϰ ϴ͘Ϭ Ͳϲ͘ϰ Ͳϳ͘ϰ Ϯ͘ϱ
ƺƌŝĐŚ ϭϭ͘ϴ ϭϮ͘ϯ Ϯ͘Ϭ Ͳϵ͘ϭ Ϯ͘ϱ Ͳϰ͘Ϯ Ͳϯ͘ϳ ϰ͘Ϯ ϱ͘ϳ ͲϭϮ͘ϭ
^ŽƵƌĐĞ͗,s^ʹ>ŽŶĚŽŶKĨĨŝĐĞ

EUROPEAN HOTEL VALUATION INDEX 2016 | PAGE 4

 Hotel Valuation Index
2006-15

ϮϬϬϲ ϮϬϬϳ ϮϬϬϴ ϮϬϬϵ ϮϬϭϬ ϮϬϭϭ ϮϬϭϮ ϮϬϭϯ ϮϬϭϰ ϮϬϭϱ
ϭ WĂƌŝƐ ϯ͘Ϯϲϳ ϯ͘ϰϲϯ ϯ͘Ϯϱϵ ϯ͘ϭϰϮ ϯ͘Ϯϳϰ ϯ͘ϲϯϮ ϯ͘ϳϵϴ ϯ͘ϴϲϭ ϰ͘ϬϱϮ ϰ͘ϬϯϬ
Ϯ >ŽŶĚŽŶ ϯ͘ϰϬϬ ϯ͘ϱϴϴ Ϯ͘ϳϲϬ Ϯ͘ϳϴϲ ϯ͘Ϭϭϴ ϯ͘ϯϴϬ ϯ͘ϱϵϵ ϯ͘ϱϵϵ ϯ͘ϵϬϰ ϰ͘Ϭϭϴ
ϯ ƺƌŝĐŚ Ϯ͘ϮϭϬ Ϯ͘ϯϳϳ Ϯ͘ϱϭϬ Ϯ͘ϯϵϳ Ϯ͘ϲϴϲ Ϯ͘ϵϴϰ Ϯ͘ϴϯϯ Ϯ͘ϴϴϲ ϯ͘Ϭϳϳ ϯ͘ϭϬϲ
ϰ 'ĞŶĞǀĂ Ϯ͘ϭϱϴ Ϯ͘Ϯϳϱ Ϯ͘ϲϲϵ Ϯ͘ϰϭϰ Ϯ͘ϯϳϵ Ϯ͘ϲϵϬ Ϯ͘ϱϵϳ Ϯ͘ϰϱϳ Ϯ͘ϲϭϲ Ϯ͘ϲϯϵ
ϱ ZŽŵĞ Ϯ͘ϳϮϵ Ϯ͘ϲϭϬ Ϯ͘ϭϱϬ ϭ͘ϵϮϵ ϭ͘ϵϲϳ Ϯ͘Ϭϴϱ Ϯ͘Ϭϯϰ Ϯ͘ϬϴϮ Ϯ͘ϭϱϵ Ϯ͘Ϯϱϳ
ϲ ŵƐƚĞƌĚĂŵ Ϯ͘ϬϬϬ ϭ͘ϵϴϰ ϭ͘ϲϴϵ ϭ͘ϰϭϵ ϭ͘ϱϲϳ ϭ͘ϲϲϳ ϭ͘ϲϮϬ ϭ͘ϲϵϴ ϭ͘ϴϰϰ Ϯ͘ϬϬϮ
ϳ DŝůĂŶ Ϯ͘ϰϰϵ Ϯ͘ϰϬϴ Ϯ͘ϬϴϬ ϭ͘ϴϬϵ ϭ͘ϱϴϱ ϭ͘ϲϰϳ ϭ͘ϱϳϵ ϭ͘ϲϯϲ ϭ͘ϳϮϵ ϭ͘ϵϬϰ
ϴ DƵŶŝĐŚ ϭ͘Ϯϵϯ ϭ͘ϯϯϴ ϭ͘Ϯϰϯ ϭ͘ϭϭϲ ϭ͘Ϯϴϭ ϭ͘ϯϰϬ ϭ͘ϰϱϭ ϭ͘ϱϰϴ ϭ͘ϲϳϬ ϭ͘ϳϯϭ
ϵ ĂƌĐĞůŽŶĂ ϭ͘ϳϮϮ ϭ͘ϴϭϳ ϭ͘ϰϲϱ ϭ͘Ϯϰϱ ϭ͘Ϯϴϳ ϭ͘ϯϭϳ ϭ͘ϯϯϰ ϭ͘ϰϬϬ ϭ͘ϰϴϵ ϭ͘ϲϱϭ
ϭϬ ĚŝŶďƵƌŐŚ ϭ͘ϳϰϯ ϭ͘ϳϳϯ ϭ͘Ϯϵϯ ϭ͘ϭϵϱ ϭ͘ϮϮϴ ϭ͘Ϯϰϵ ϭ͘ϯϬϱ ϭ͘ϯϯϴ ϭ͘ϰϯϳ ϭ͘ϱϵϬ
ϭϭ ŽƉĞŶŚĂŐĞŶ ϭ Ϯϰϰ
ϭ͘Ϯϰϰ ϭ Ϯϱϲ
ϭ͘Ϯϱϲ ϭ ϭϳϲ
ϭ͘ϭϳϲ ϭ ϭϱϬ
ϭ͘ϭϱϬ ϭ ϭϰϬ
ϭ͘ϭϰϬ ϭ ϭϴϳ
ϭ͘ϭϴϳ ϭ ϭϴϮ
ϭ͘ϭϴϮ ϭ ϮϰϬ
ϭ͘ϮϰϬ ϭ ϯϱϮ
ϭ͘ϯϱϮ ϭ ϰϳϮ
ϭ͘ϰϳϮ
hZKW ϭ͘ϱϵϲ ϭ͘ϲϯϳ ϭ͘ϰϱϴ ϭ͘Ϯϲϯ ϭ͘ϮϴϮ ϭ͘ϯϲϭ ϭ͘ϯϲϵ ϭ͘ϯϳϳ ϭ͘ϰϮϬ ϭ͘ϰϳϭ
ϭϮ /ƐƚĂŶďƵů ϭ͘ϲϱϵ ϭ͘ϳϵϱ ϭ͘ϵϵϬ ϭ͘ϴϯϭ ϭ͘ϵϯϴ ϭ͘ϵϲϴ ϭ͘ϵϳϱ ϭ͘ϳϱϳ ϭ͘ϱϴϯ ϭ͘ϰϰϮ
ϭϯ ^ƚŽĐŬŚŽůŵ ϭ͘ϯϬϴ ϭ͘ϰϭϳ ϭ͘ϯϭϵ ϭ͘ϭϵϲ ϭ͘Ϯϯϭ ϭ͘ϯϯϴ ϭ͘Ϯϲϱ ϭ͘Ϯϲϴ ϭ͘Ϯϴϳ ϭ͘ϯϵϵ
ϭϰ DĂĚƌŝĚ ϭ͘ϴϯϰ ϭ͘ϴϳϮ ϭ͘ϱϱϲ ϭ͘Ϯϳϯ ϭ͘ϭϳϵ ϭ͘ϮϭϬ ϭ͘ϭϮϳ ϭ͘Ϭϲϰ ϭ͘Ϯϭϲ ϭ͘ϯϴϵ
ϭϱ &ƌĂŶŬĨƵƌƚ ϭ͘Ϭϯϱ Ϭ͘ϵϲϵ Ϭ͘ϴϵϮ Ϭ͘ϴϵϮ ϭ͘Ϭϲϰ ϭ͘ϭϯϴ ϭ͘ϭϲϱ ϭ͘ϮϮϬ ϭ͘Ϯϰϳ ϭ͘ϯϱϱ
ϭϲ
ϲ ƵďůŝŶ
ďůŝ ϭ͘ϰϰϯ
ϯ ϭ͘ϰϬϳ
Ϭ ϭ͘ϭϰϲ
ϲ Ϭ͘ϵϭϱ
Ϭϵ Ϭ͘ϴϲϱ
Ϭ ϴϲ Ϭ͘ϵϭϴ
Ϭϵ ϴ Ϭ
Ϭ͘ϵϲϴ
ϵϲϴ ϭ͘Ϭϯϯ
Ϭϯϯ ϭ͘ϭϲϵ
ϲϵ ϭ͘ϯϮϲ
ϯϮϲ
ϭϳ ,ĂŵďƵƌŐ ϭ͘ϭϴϬ ϭ͘ϭϬϱ ϭ͘ϬϳϬ ϭ͘Ϭϰϯ ϭ͘Ϭϴϵ ϭ͘ϭϱϴ ϭ͘ϭϱϰ ϭ͘ϭϳϵ ϭ͘Ϯϱϴ ϭ͘ϯϮϱ
ϭϴ ĞƌůŝŶ ϭ͘Ϭϭϰ ϭ͘ϬϬϳ ϭ͘ϬϬϵ ϭ͘ϬϬϬ ϭ͘Ϭϰϰ ϭ͘Ϭϭϳ ϭ͘Ϭϰϯ ϭ͘Ϭϯϵ ϭ͘ϭϬϰ ϭ͘ϭϵϯ
ϭϵ sŝĞŶŶĂ ϭ͘Ϯϳϯ ϭ͘ϯϱϱ ϭ͘Ϯϴϱ ϭ͘Ϭϰϵ ϭ͘Ϭϯϭ ϭ͘ϬϲϮ ϭ͘ϬϵϬ ϭ͘Ϭϯϴ ϭ͘ϭϭϰ ϭ͘ϭϳϰ
ϮϬ WƌĂŐƵĞ ϭ͘ϱϭϵ ϭ͘ϰϯϳ ϭ͘ϭϯϱ Ϭ͘ϵϬϰ Ϭ͘ϵϭϵ Ϭ͘ϵϱϯ Ϭ͘ϵϵϳ Ϭ͘ϵϵϳ ϭ͘Ϭϱϰ ϭ͘ϭϱϯ
Ϯϭ ƌƵƐƐĞůƐ ϭ͘ϬϰϮ ϭ͘ϭϬϱ ϭ͘ϭϮϱ Ϭ͘ϵϵϮ Ϭ͘ϵϵϯ ϭ͘ϬϮϵ ϭ͘Ϭϭϰ ϭ͘ϬϮϵ ϭ͘Ϭϳϭ ϭ͘ϭϬϵ
ϮϮ DĂŶĐŚĞƐƚĞƌ ϭ͘Ϯϱϵ ϭ͘Ϯϰϰ Ϭ͘ϵϳϭ Ϭ͘ϴϱϯ Ϭ͘ϴϭϱ Ϭ͘ϴϭϳ Ϭ͘ϴϰϳ Ϭ͘ϴϱϬ Ϭ͘ϵϲϰ ϭ͘Ϭϳϲ
Ϯϯ tĂƌƐĂǁ ϭ͘ϬϵϬ ϭ͘ϮϬϮ ϭ͘ϭϱϰ Ϭ͘ϵϰϰ Ϭ͘ϵϵϯ ϭ͘Ϭϳϵ ϭ͘ϭϰϭ ϭ͘Ϭϲϵ Ϭ͘ϵϵϰ ϭ͘Ϭϭϳ
Ϯϰ ƵĚĂƉĞƐƚ ϭ͘ϭϭϱ ϭ͘ϭϬϭ Ϭ͘ϵϭϯ Ϭ͘ϳϲϬ Ϭ͘ϳϱϰ Ϭ͘ϳϴϰ Ϭ͘ϳϴϬ Ϭ͘ϴϬϬ Ϭ͘ϴϲϬ Ϭ͘ϵϮϵ
Ϯϱ >ŝƐďŽŶ Ϭ͘ϴϲϬ Ϭ͘ϵϲϮ Ϭ͘ϴϰϵ Ϭ͘ϳϯϬ Ϭ͘ϳϭϬ Ϭ͘ϳϴϵ Ϭ͘ϳϭϬ Ϭ͘ϳϱϯ Ϭ͘ϴϯϬ Ϭ͘ϵϮϮ
Ϯϲ DŽƐĐŽǁ Ϯ͘ϰϳϯ Ϯ͘ϱϮϱ Ϯ͘ϰϬϯ ϭ͘ϰϳϭ ϭ͘ϱϯϯ ϭ͘ϱϵϭ ϭ͘ϳϳϱ ϭ͘ϳϬϭ ϭ͘Ϭϱϳ Ϭ͘ϵϭϳ
Ϯϳ ŝƌŵŝŶŐŚĂŵ ϭ͘ϭϰϲ ϭ͘ϭϰϬ Ϭ͘ϴϴϭ Ϭ͘ϳϲϲ Ϭ͘ϲϳϰ Ϭ͘ϲϮϵ Ϭ͘ϲϱϬ Ϭ͘ϲϱϰ Ϭ͘ϳϮϲ Ϭ͘ϴϮϬ
Ϯϴ ^ƚWĞƚĞƌƐďƵƌŐ Ϯ͘ϭϭϬ Ϯ͘ϭϯϴ ϭ͘ϲϬϰ Ϭ͘ϴϰϬ Ϭ͘ϵϭϳ ϭ͘ϬϮϭ ϭ͘ϭϯϵ ϭ͘ϭϵϱ Ϭ͘ϴϭϳ Ϭ͘ϳϵϲ
Ϯϵ ƚŚĞŶƐ ϭ͘ϭϵϵ ϭ͘Ϯϱϱ ϭ͘ϮϮϯ ϭ͘Ϭϱϭ Ϭ͘ϳϰϯ Ϭ͘ϳϴϳ Ϭ͘ϱϵϵ Ϭ͘ϲϰϱ Ϭ͘ϲϴϯ Ϭ͘ϳϲϵ
ϯϬ ƵĐŚĂƌĞƐƚ ϭ͘Ϭϴϲ ϭ͘ϭϳϱ Ϭ͘ϵϮϯ Ϭ͘ϳϭϮ Ϭ͘ϲϱϱ Ϭ͘ϲϴϱ Ϭ͘ϲϰϬ Ϭ͘ϲϰϯ Ϭ͘ϲϴϭ Ϭ͘ϳϰϰ
ϯϭ ƌĂƚŝƐůĂǀĂ ϭ͘Ϭϵϵ ϭ͘ϭϯϮ Ϭ͘ϵϲϬ Ϭ͘ϳϴϬ Ϭ͘ϲϱϲ Ϭ͘ϲϴϮ Ϭ͘ϲϰϬ Ϭ͘ϲϰϬ Ϭ͘ϲϬϬ Ϭ͘ϲϲϰ
ϯϮ ^ŽĨŝĂ Ϭ͘ϵϭϱ ϭ͘ϬϮϵ Ϭ͘ϴϲϰ Ϭ͘ϲϯϬ Ϭ͘ϲϯϯ Ϭ͘ϱϳϱ Ϭ͘ϱϳϳ Ϭ͘ϱϯϳ Ϭ͘ϱϳϱ Ϭ͘ϲϭϴ
^ŽƵƌĐĞ͗ ,s^ >ŽŶĚŽŶ KĨĨŝĐĞ
^ŽƵƌĐĞ͗,s^ʹ>ŽŶĚŽŶKĨĨŝĐĞ EŽƚĞ͗ ĂƐĞĚ ŽŶ ĞƵƌŽ ĐĂůĐƵůĂƚŝŽŶƐ
EŽƚĞ͗ĂƐĞĚŽŶĞƵƌŽĐĂůĐƵůĂƚŝŽŶƐ

Winners and Losers

In 2015, Europe experienced a sixth almost no change in value from last year.
consecutive year of hotel value growth. This is testament to 2015’s remarkable
However, most markets are still below their performance.
previous peak, with some exceptions such as
Despite changes in value, Paris remains the
Paris, London, Copenhagen, Amsterdam and
strongest market of the index this year. In
the German cities.
fact, the top ive spots remained unchanged,
Whilst Madrid, Dublin, Birmingham and though London and Paris are now really neck
Manchester were already part of the value and neck. There are also limited changes
growth winners last year, Lisbon was at the bottom of the list, as strong 2015
replaced by Athens this year. Exceptionally, performers like Athens are climbing from a
this year only four cities have experienced low base and will need time to return to peak
decreases in value (the same four worst levels. Whilst Copenhagen is now above the
performers of last year’s HVI), resulting in European average, Istanbul has declined from
Geneva being one of this year’s ‘losers’ with 9th place in the ranking in 2014 to 12th this
almost 1.0% growth in value, and Paris with year.

EUROPEAN HOTEL VALUATION INDEX 2016 | PAGE 5

 Top and Bottom Five
PERCENTAGE CHANGE IN HOTEL VALUE IN EURO

ϭϰ͘Ϯй ϭϯ͘ϰй ϮϬϭϱ

ϭϮ͘ϵй ϭϮ͘ϲй
ϭϭ͘ϲй

Ϭ ϵй
Ϭ͘ϵй

ͲϬ͘ϱй
ͲϮ͘ϲй

Ͳϴ͘ϵй
Ͳϭϯ͘Ϯй

^ŽƵƌĐĞ͗,s^ʹ >ŽŶĚŽŶKĨĨŝĐĞ

CHANGES IN VALUE
Strong Performers
Impressively, Madrid keeps the highest W Hotel and the Four Seasons (both in 2018),
value growth position in Europe for the are testimony to the ongoing appetite and
second consecutive year. The city continues promise for this key Spanish city.
its recovery following years of decline, yet
And the Celtic Tiger keeps on roaring: with
there is more potential to grow as RevPAR
one of the strongest RevPAR increases in
is still signi icantly below its previous
Europe in 2015 as evidence of strong investor
peak. Whilst Madrid’s hotel supply has not
appetite for this city, Dublin again maintains
changed signi icantly in the last year, an
its privileged position. Visitation to Ireland
increase of almost 10% in visitors has led
increased strongly in 2015, and anecdotal
to growth in occupancy and even greater
evidence and hotel performance also point to
growth in average rate. The strengthened
strong demand. This, coupled with a limited
economy encourages growth both from
pipeline (for the moment at least), keeps the
domestic travellers, which represent about
momentum going for this market. Having said
half of total visitors, and international
that, the city is expecting an additional 5,000
demand, which is critical for a market that
rooms to enter the market in the next ive
relies heavily on corporate and meeting,
years. Tiger, keep it up!
incentive, conference and exhibition (MICE)
demand. Madrid made it to the top three of Birmingham and Manchester also keep
the International Congress & Convention on counting their lucky stars and, by the
Association’s popularity index in 2015. same token, are maintaining the interest
On account of the overall growth of the of investors. In these two thriving UK
market, hotel transactions in Spain have secondary cities, average rates were the
increased substantially in the last two years, main drivers behind very solid RevPAR
with a focus on Barcelona and Madrid. The growth in 2015, both assisted by a successful
purchases in Madrid of the iconic Ritz, the Rugby World Cup. Birmingham has seen
Hostal Pereda and the Holiday Inn Bernabéu increased visitation levels, driven by effective
in 2015, as well as the planned opening of the promotion as a major event destination in

EUROPEAN HOTEL VALUATION INDEX 2016 | PAGE 6

MANCHESTER CONTINUES TO ATTRACT MORE LEISURE DEMAND
CHANGES IN VALUE

Challenged Markets
All in all, 2015 was a very positive year
for the European hotel market, which
experienced value growth and recoveries for
many cities. This led to the rather unusual
situation whereby cities with low growth are
classi ied as ‘challenged’ markets. This is the
case for Geneva, with 0.9% growth in values,
but classi ied as the ifth worst performing
market. This is the result of the unpegging of
the euro/Swiss franc in January 2015, which
directly impacted tourism visitation and thus
overall hotel performance in Switzerland.
The proximity of Geneva to France resulted
the UK. A £600 million redevelopment of in many tourists visiting Geneva staying
the city’s New Street railway station and overnight in France, which meant lower
an extension of the runway at Birmingham RevPAR in 2015. Although economy and
Airport in 2015 are expected to help increase midscale hotels still face competition from
its connectivity. Currently, there are 11 hotels France, the recent strengthening of the euro
at various stages of planning or construction against the Swiss franc is expected to help
in Birmingham. drive demand for the city.
In the meantime, investors continue to have Paris has had a challenging 2015: despite
a strong appetite for Manchester, with an a reasonable recovery from the Charlie
additional 800 rooms added to the city in Hebdo attack in January, the 13 November
2015, and seven more hotels expected over atrocity further hindered year-end results.
the next two years. From its former life as Our view is that recent events are only likely
an engine room of the Industrial Revolution, to dent the perception of this city as both
the city’s new persona is that of an art and a tourist and investor hotspot for a limited
culture city, attracting more leisure travellers. amount of time and to a minimal degree.
Backed up by a strong sporting heritage The attractiveness of Paris from so many
and annual events such as the Christmas different angles will surely rapidly outweigh
markets, Manchester is a clear example of the security concerns. However, these attacks are
successful reinvention of a city. certainly a reminder of the increased urgency
for the hotel industry to be prepared to tackle
There was another return from the ashes, as
‘Black Swan’ events such as these.
Athens shows double- igure value growth
in this year’s index; strong RevPAR recovery,
albeit from a very low base (and still miles
DUBLIN ENJOYED ONE OF THE STRONGEST REVPAR
away from peak years), is the result of both INCREASES IN EUROPE
a subdued pipeline and the strong return
of visitors to the country and its capital
(passenger numbers to Athens surpassed
those of 2007). From an investor perspective,
there is clear upside potential in this market,
provided they are comfortable with the levels
of economic and political stability going
forward... However, the strong fundamentals
of this city point to a certain recovery, such
as is already shaping other Mediterranean
markets in our index.

EUROPEAN HOTEL VALUATION INDEX 2016 | PAGE 7

MADRID HAS HIGHEST VALUE GROWTH IN HVI. AGAIN. Until not long ago, Istanbul (and Turkey
as a whole) was the darling of investors.
No longer. Though recognised as a popular
tourism destination, Istanbul has been a
troubled market in recent years, irstly owing
to economic challenges and more recently
to terrorism attacks in the city and across
the country, which damaged consumer
con idence. The end of 2015 also marked
political disputes between Russia and Turkey,
and resulted in Russian sanctions over
Turkish goods and raw material, hurting the
overall economy. With Russia the second
strongest source country for Turkey’s
tourism, the pain is likely to continue well
into 2016 – and possibly beyond. Although
Turkey’s economy is expected to experience
In 2014, Moscow and St Petersburg some growth, investors still view the
experienced severe losses in room values country’s investment potential as risky. The
owing to political turmoil, international healing process might require more time yet.
sanctions, currency devaluation and
falling oil prices, which affected hotel
performance. If only we could give better Most and Least
news this time. Since then, however,
the picture has been mixed. Both cities, Volatile Cities
especially St Petersburg, have seen some The volatility index is a tool to assess (to
recovery in terms of visitation and hotel a certain extent) the luctuation in value
occupancies, as the devalued rouble boosted and the overall risk associated with a hotel
domestic travel. The stronger increase in investment. Hotels are not only a capital-
occupancy in St Petersburg was due to intensive type of asset, but they also might
the city’s attractiveness to international be affected by external factors such as
and domestic leisure guests alike. On the micro and macro market issues (oversupply,
other hand, Moscow is mainly a MICE- and recessions, natural disasters and so forth).
business-driven city and, given the ongoing Any of these factors could have an impact on
dif iculties faced by the country, the market the pro itability of the business; thus, it is
recorded slower growth in occupancy. critical to be able to quantify the overall level
Average rates are still fragile, with both cities of risk associated with a hotel investment. A
experiencing drops over last year. Over the good indicator of investment risk is volatility,
last few months, the worsening decline in which provides a measure for variation
oil prices hurt forecasts of GDP growth and in asset prices over time. Higher volatility
consumption, and EU sanctions over Russia implies higher risk. We have therefore
have been prolonged until July 2016, which included a volatility index, which calculates
doesn’t help. On the positive side, the country the standard deviation of the annual capital
will be hosting the FIFA World Cup football appreciation/depreciation in value divided
championships in 2018 and cities such as by the average value (Europe) over the same
Moscow are currently developing their period. For example, Prague has a volatility
infrastructures to accommodate the increase index of 94%, which means that hotel values
in tourists. St Petersburg’s airport has been are 94% more volatile than the value of a
reconstructed while regional authorities are typical hotel in Europe. A higher level of
building roads for the World Cup that should volatility would be more acceptable in cases
improve links between city neighborhoods. where the returns are also high. A market
In total, it is estimated that around with the highest negative volatility would in
US$10 billion will be invested in the country fact be the most stable market, as it would
in light of the tournament. We consider it change even less than the average (Europe).
dif icult to see any material improvement in
values for anywhere other than the two main
Russian cities.

EUROPEAN HOTEL VALUATION INDEX 2016 | PAGE 8

ST PETERSBURG IS THE MOST VOLATILE MARKET SURVEYED

Understanding the HVI

The HVI is a hotel valuation benchmark developed by
HVS. It monitors annual percentage changes in the
values of typically four-star and ive-star hotels in 32
major European cities. Additionally, our index allows us
to rank each market relative to a European average. All
data presented are in euro, unless otherwise stated.
The methodology employed in producing the HVI is
based upon actual operating data from a representative
sample of four-star and ive-star hotels. Operating data
from the STR Global Survey were used to supplement
our sample of hotels in some of the markets. The data
are then aggregated to produce a pro forma for a typical
200-room hotel in each city. Using our experience of
real-life hotel inancing structures gained from valuing
hundreds of hotels each year, we have determined
The following chart shows the ive most and
valuation parameters for each market that re lect both
ive least volatile European cities over ten
short-term and longer-term sustainable inancing
years (2006-15) in local currency (to remove
models (loan to value ratios, real interest rates and
the impact of currency luctuation). equity return expectations). These market-speci ic
valuation and capitalisation parameters are applied to
MOST AND LEAST VOLATILE CITIES
the EBITDA less FF&E Reserve for a typical upscale hotel
ZĂŶŬ DŽƐƚsŽůĂƚŝůĞ /ŶĚĞdž ZĂŶŬ >ĞĂƐƚsŽůĂƚŝůĞ /ŶĚĞdž in each city. In determining the valuation parameters
ϭ ^ƚWĞƚĞƌƐďƵƌŐ ϭϵϳй ϯϮ ĞƌůŝŶ Ͳϰϱй relevant to each of the 32 cities included in the European
Ϯ ƚŚĞŶƐ ϭϮϳй ϯϭ ,ĂŵďƵƌŐ ͲϮϵй HVI, we have also taken into account evidence of actual
hotel transactions and the expectations of investors with
ϯ WƌĂŐƵĞ ϵϰй ϯϬ ŽƉĞŶŚĂŐĞŶ ͲϮϮй
regard to future changes in supply, market performance
ϰ ^ŽĨŝĂ ϵϬй Ϯϵ WĂƌŝƐ ͲϮϮй
and return requirements. Investor appetite for each
ϱ ƵďůŝŶ ϴϵй Ϯϴ ƌƵƐƐĞůƐ ͲϮϭй city at the end of 2015 is therefore re lected in the
ƵƌŽƉĞ Ϭй capitalisation rates used and investment yields.
EŽƚĞ͗ǀŽůĂƚŝůŝƚLJŝƐĞdžƉƌĞƐƐĞĚŝŶƌĞůĂƚŝŽŶƚŽƚŚĞŽǀĞƌĂůůƵƌŽƉĞĂŶĂǀĞƌĂŐĞ
^ŽƵƌĐĞ͗,s^ʹ>ŽŶĚŽŶKĨĨŝĐĞ
The HVI assumes a date of value of 31 December 2015.
Values are based on recent market performance, but the
capitalisation rates re lect the expected future trends
Most of the cities featured in the table are in performance, competitive environment, cost of debt
similar to those presented in last year’s HVI. and cost of equity. As our opinion of value remains an
However, we note the shift in position of opinion of Market Value, we have attempted to remove
all aspects of distress when analysing transactions
So ia to the fourth most volatile market and
and assessing the opinions of value. The parameters
the entry of Dublin as the ifth most volatile
adopted assume a reasonable level of debt and investor
market.
sentiment. Conversely, the values reported may not
Given their recent setbacks, St Petersburg, therefore bear comparison with actual transactions
Athens and Prague are still the most volatile completed in the marketplace. However, this is the best
markets, although they are slowly recovering approach to retain the integrity of the HVI as a rolling
from their recent economic performance. annual index.
On the other hand, Berlin, Hamburg and The HVI allows comparisons of values across markets
Copenhagen are again the most stable and over time by using the 1993 average European
markets. value of €173,737 per available room (PAR) as a base
(1993=1.000). Each city’s PAR value is then indexed
relative to this base. For example, if the index for Paris
was 4.000 (€694,948/€173,737), the value of a hotel
in Paris would be four times higher than the European
average in 1993.

EUROPEAN HOTEL VALUATION INDEX 2016 | PAGE 9

Outlook
2015 was a vintage year for the hotel investment to continue, at least in the short
industry in Europe (and further a ield). term.
Despite an undercurrent of concern for 2016,
In addition to this, OTAs, consolidation and
we consider ‘cautious optimism’ should do
Airbnb continue to drive the debate, and
the trick this year. Yes, the context might be
will certainly carry on keeping us on our
challenging, but there is still abundant equity
toes during the course of 2016 as we try
in most markets, and debt is still inexpensive.
to anticipate the impact of all these trends
Hence, pension funds, sovereign wealth
on hotels, be they branded or independent,
funds and private equity investors should
urban or resort, boutique or MICE-oriented.
still ind European hotel real estate attractive
compared to other forms of investment. Generally speaking, there is a prevalent
feeling that the hotel industry could reach
We envisage this to be a strong year in terms
the peak of the current investment cycle in
of transactions (unlikely though to reach the
the next few years, and hence a somewhat
levels of 2015), but also mired in potential
different investment climate might be waiting
challenges. Strong performance recovery
for us in 2017 and beyond. Clever investors
across most of the cities in our survey in
will need to keep eyes wide open and remain
2014-15 is likely to lead to more modest
vigilant in this ever-changing arena.
occupancy and rate growth in key markets,
though secondary cities still have some – HVS –
ground to cover to return to peak levels. Also,
although values per room remain, on the
whole, around 8-10% lower than those of the
2006-07 peak, expecting a recovery to those
levels seems, at best, unrealistic, given the
current economic environment. Geopolitical
instability in parts of Europe, immigration,
the threat of de lation and sluggish economic
growth are all very real concerns nowadays.
Regardless, some investors’ horizons have
shortened, driven by strong demand for hotel
acquisitions; this trend to early exit might
continue as long as strong demand remains,
resulting in a sustained number of assets
available for transaction.
The increase of interest rates also looms in
Europe, and is already on its way in the USA,
which foretells the end of cheap money. And
what will happen with Asian and Middle
Eastern investment? Quite controversial
views can be found in that regard. On the
Chinese side of the equation, whilst some
view the de lation of the renminbi and its
new global pro ile (it is now part of the IMF
basket of currencies) as a clear opportunity
for a Chinese investment boom in Europe
as investors seek to safely park their money
away from their home country, others worry
that the economic slowdown in China might
instead dampen investment. In the short
term, the former seems more probable.
Likewise for Middle Eastern investment:
despite declining oil prices, substantial oil
reserves should allow for overseas real estate

EUROPEAN HOTEL VALUATION INDEX 2016 | PAGE 10

INDEX RANKING | PERCENTAGE CHANGE IN VALUE

EUROPEAN HOTEL VALUATION INDEX 2016 | PAGE 11

 About HVS About the Authors
HVS, the world’s leading consul ng and services organisa on focused on Constance Biria is a consulting
the hotel, mixed-use, shared ownership, gaming and leisure industries, & valuation analyst with the HVS
celebrated its 35th anniversary in 2015. Established in 1980, the company London of ice. Before graduating
performs 4,500+ assignments each year for hotel and real estate owners, with an MSc in Management
from London Business School,
operators and developers worldwide. HVS principals are regarded as
Constance received a double
the leading experts in their respec ve regions of the globe. Through
BSc (Hons) in International
a network of more than 35 offices and more than 500 professionals, Hospitality Management and
HVS provides an unparalleled range of complementary services for the Finance from Glion Institute of Higher Education.
hospitality industry. Prior to joining HVS in 2015, she gained exposure
www.hvs.com. in European luxury hotel operations and also
worked in commercial banking and consulting.
Superior results through unrivalled hospitality Recent assignments at HVS include hotel feasibility
studies, valuations and market overviews for
intelligence. Everywhere. European and African markets.

With offices in London since 1990, HVS London serves clients with Sophie Perret is a director at
the HVS London of ice. She
interests in the UK, Europe, the Middle East and Africa (EMEA). We have
joined HVS in 2003, following
appraised some 4,000 hotels or projects in more than 50 countries in all
ten years’ operational
major markets within the EMEA region for leading hotel companies, hotel experience in the hospitality
owners and developers, investment groups and banks. Known as one of industry in South America and
the foremost providers of hotel valua ons and feasibility studies, and for Europe. Originally from Buenos
our ability, experience and rela onships throughout Europe, HVS London Aires, Argentina, Sophie holds a
is on the valua on panels of numerous top interna onal banks which degree in Hotel Management from Ateneo de
finance hotels and por olios. Estudios Terciarios, and an MBA from IMHI (Essec
Business School, France and Cornell University,
For further informa on about the services of the London office, please USA). Since joining HVS, she has advised on hotel
investment projects and related assignments
contact Sophie Perret, director, on +44 20 7878 7722 or
throughout the EMEA region, and is responsible for
sperret@hvs.com.
the development of HVS’s business in France and
the French-speaking countries, as well as Africa.
Sophie completed an MSc in Real Estate Investment
and Finance at Reading University in 2014, and is
in the process of becoming a RICS certi ied
surveyor.

Additional input: Simon Hulten, Analyst

HVS.com HVS London | 7-10 Chandos St, London W1G 9DQ, UK

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