Market Conditions in the Norwegian Hotel Industry an overview of market conditions in key areas in Norway as of 2014 Table of Contents 1. Hotelia AS 2. Norway in General 3. Hotel Industry in General 4. Real estate 5. Conditions in major cities of interest: i. Oslo ii. Gardermoen International Airport iii. Bergen iv. Stavanger v. Trondheim vi. Kristiansand vii. Tromsø 6. Summary 7. Contact Information Hotelia | Pg. 2 Behind Hotelia stands a team of experienced consultants with a long track record from hotel real estate and operations Services provided by Hotelia include feasibility studies, hotel market research reports, transactions, valuations, operator searches and general advisory services to hotel and travel industry clients We are specialized in the Nordic region, and base our advices on a wide experience and extensive network from this region openness // cooperation // integrity Hotelia | Pg. 3 Oslo, Bjørvika – “Barcode” NORWEGIAN HOTEL INDUSTRY OVERVIEW Norway About Norway Tromsø Ranked 4th in GDP per capita in 2012 GDP per capita 2014: $ 62,450 Bodø Trondheim Total population 5.166.000 (increased with 12.1% since 2005) Good infrastructure and communication: Multiple airports, at least one in each major city Extensive railroad network for train transportation Annual growth of 2% in domestic guest nights and 4.5% in foreign guest nights (after the shock of the financial crisis wore off in 2008) Stunning and dramatic scenery and landscape – listed as the world’s top tourist attraction by National Geographic Average daily rate (ADR1) for hotels have had an average annual growth of 1.9% (2000-2014) Ålesund Bergen Oslo Stavanger Growth: 2 % Kristiansand 1 Not adjusted for inflation Hotelia | Pg. 5 NORWEGIAN HOTEL INDUSTRY OVERVIEW Norway Tromsø – “Capital of the Arctic” 71,000 citizens in the city, 74,000 in the metropolitan region. Tromsø Bodø Trondheim - “Technological Hub” 180,000 citizens in the city, 275,000 in the metropolitan region. 30 km to Værnes Airport, with 4.4 million travellers. Bergen – Gateway to the fjords 275,000 citizens in the city, 410,000 in the metropolitan region. Starting point of Hurtigruten. 15 km to Flesland Airport, with 6 million travellers. Trondheim Ålesund Stavanger – Seat of the Oil Sector 131,000 citizens in the city, 330,000 in the metropolitan region. 15 km to Sola Airport, with 4.7 million travellers. Oslo - Capital of Norway 632,900 citizens in the city, 1.16 million in the metropolitan region. 50 km to Gardermoen International Airport, with 24 million travellers. Bergen Oslo Stavanger Kristiansand – “Summer city” 86,000 citizens in the city, 156,000 in the metropolitan region. Dyreparken is a Zoo and amusement park attracting tourists in the summer months. Kristiansand Hotelia | Pg. 6 NORWEGIAN HOTEL INDUSTRY OVERVIEW Hotel Industry in General In contrast to the popularity of management agreements in international hotel firms, Scandinavian hotel property owners favours rental agreements – often with one of the major brands Scandic (after having bought Rica Hotels), Thon and Choice (consisting of Quality, Clarion, Clarion Collection and Comfort) dominates the industry The hotels are mostly based in the mid-market, however, the major brands diversify across all three markets Figure updated September 2014 Hotelia | Pg. 7 NORWEGIAN HOTEL INDUSTRY OVERVIEW Real Estate Colliers International reports (H2 2014) the following regarding the Norwegian transaction market in real estate: “ The Norwegian transaction market has boomed lately after a slow start to 2014, and we believe that it is likely we will see the highest transaction volume since 2006. One essential factor that is contributing heavily to the high transaction volume is the return of the foreign investors to the Norwegian property markets. There is currently a lot of unrest globally, and consequently investors are reluctant to invest in several places such as the Middle East, Russia and South East Asia due to a complicated political climate. Contrary to these areas, Norway is perceived to be a very safe market with stable market conditions, which are important for several investors. Government bonds and bank interest rates are at all-time low levels, prompting investors to find alternative outlets for their capital. Consequently, we see that foreign investors, especially German investors, are much more aggressive in the Norwegian market compared to previous years, showing interest in buildings at yield levels far lower than what they have requested in the past. Furthermore, British and North American players are also keenly looking to Norway, and there have been several transactions involving these nationalities already in 2013 and 2014, where especially Madison and lately WP Carey have been active. For complete report, click here Hotelia | Pg. 8 Geiranger / Stryn - Norway HOTEL INDUSTRY PERFORMANCE IN THE MAJOR CITIES NORWEGIAN HOTEL INDUSTRY OVERVIEW Oslo – Capital City of Norway Development in key figures - Oslo 1 200 The hotel-market in Oslo City is relatively stable dominated by domestic business travellers. Nevertheless since 2009 the growth comes from leisure business. Last 5 years capacity growth is higher than growth in demand. 1 000 Average occupancy 69 % Capacity increased by 20.7 % and demand increased by 20.7 % since 2010 Oslo is underperforming in RevPAR2 due to uniformed mid market hotels and lack of weekend/leisure business 400 90% 80% 70% 800 60% 50% 600 40% 30% 20% 200 10% - 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 ADR Development in capacity - Oslo RevPAR Occ % Occ % average Guest nights per segment - Oslo 14 000 80 8 000 000 70% 12 000 70 7 000 000 60% 60 6 000 000 50 5 000 000 40 4 000 000 30 3 000 000 20 2 000 000 10 1 000 000 10 000 8 000 6 000 4 000 2 000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 # Rooms # Hotels 50% 40% 30% 20% 10% 0% 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Conferance Business 2 Leisure Norwegians Foreign Revenue per available room (ADR x Occ%) Hotelia | Pg. 11 NORWEGIAN HOTEL INDUSTRY OVERVIEW Oslo Airport, Gardermoen Development in key figures - Gardermoen Oslo Airport It is the second largest airport in Scandinavia with 24 million travellers, after Copenhagen. At present, Oslo Airport is expanding to meet the increasing demand. Gardermoen area has experienced an increase in capacity of almost 2000 rooms since 2006. Most of the hotels are congress & conference hotels. Gardermoen has become the largest conference hub in Norway including hosting a large portion of leisure business. Average occupancy 60 % RevPAR far below Oslo City (-22 %) The business is more volatile than Oslo City 1 200 80% 70% 1 000 60% 800 50% 600 40% 30% 400 20% 200 10% 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 ADR 14 3 000 12 2 500 10 8 2 000 Occ % Occ % average Guest nights per segment - Gardermoen Development in capacity - Gardermoen 3 500 RevPAR 1 000 000 90% 900 000 80% 800 000 70% 700 000 60% 600 000 50% 500 000 1 500 6 400 000 1 000 4 300 000 500 2 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 # Rooms # Hotels 40% 30% 200 000 20% 100 000 10% - 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Conferance Business Leisure Norwegians Foreign Hotelia | Pg. 12 Gardermoen (OSL) - Norway NORWEGIAN HOTEL INDUSTRY OVERVIEW Bergen – Gateway to the fjords Development in key figures - Bergen 1 200 Bergen is the “gateway to the fjords” attracts many tourists from across the world, and thus enjoy the highest occupancy of the major cities. The majority of tourists prefer the summer months. Hence, the capacity is often congested in these months. Average occupancy 69 % Highest RevPAR (driven by rate) compared to the major cities in Norway Historical low increase in room capacity. Several new projects are planned (capacity +40 % within 2018) 80% 70% 1 000 60% 800 50% 600 40% 30% 400 20% 200 10% 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 ADR 40 4 500 35 4 000 30 3 500 80% 1 600 000 70% 1 400 000 2 500 20 800 000 2 000 15 600 000 10 400 000 500 5 200 000 - 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 # Rooms # Hotels 60% 1 200 000 25 1 000 Occ % average 1 800 000 3 000 1 500 Occ % Guest nights per segment - Bergen Development in capacity - Bergen 5 000 RevPAR 50% 1 000 000 40% 30% 20% 10% 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Conferance Business Leisure Norwegians Foreign Hotelia | Pg. 14 NORWEGIAN HOTEL INDUSTRY OVERVIEW Stavanger – Europe's Oil & Gas capital Development in key figures - Stavanger 1 200 Stavanger is where the majority of Norway’s oil sector is located. The business segment is therefore highly represented, and the hotels charge a higher price. However, the recent oil price fall have cooled off the market. Average occupancy 65 % Trading at highest average rate (ADR) in Norway Heavy increase of capacity - 1000 new rooms in the pipeline Volatile market – depending on the oil business. 80% 70% 1 000 60% 800 50% 600 40% 30% 400 20% 200 10% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 ADR 25 2 500 Occ % Occ % average Guest nights per segment - Stavanger Development in capacity - Stavanger 3 000 RevPAR 20 900 000 80% 800 000 70% 700 000 60% 600 000 2 000 15 1 500 50% 500 000 40% 400 000 10 1 000 5 500 - 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 # Rooms # Hotels 30% 300 000 20% 200 000 10% 100 000 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Conferance Business Leisure Norwegians Foreign Unfortunately we do not have 2014 data yet. Hotelia | Pg. 15 NORWEGIAN HOTEL INDUSTRY OVERVIEW Trondheim – University City Development in key figures - Trondheim Norway’s largest University and research campus, Norwegian University of Science and Technology (NTNU), is located here. Trondheim is thus often referred to as Norway’s technological hub. Volatile occupancy – average 65 % Weakest RevPAR of the major cities 30 % increase in capacity since 2010 Leisure business is increasing 1 000 72% 900 70% 800 68% 700 600 66% 500 64% 400 62% 300 60% 200 58% 100 56% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 ADR Occ % Occ % average Guest nights per segment - Trondheim Development in capacity - Trondheim 30 3 500 RevPAR 1 200 000 100% 90% 3 000 25 2 500 20 2 000 15 1 000 000 80% 70% 800 000 60% 600 000 50% 40% 1 500 10 1 000 500 5 - 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 # Rooms # Hotels 400 000 30% 20% 200 000 10% 0% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Conferance Business Leisure Norwegians Foreign Hotelia | Pg. 16 NORWEGIAN HOTEL INDUSTRY OVERVIEW Kristiansand – Gateway to Denmark Development in key figures - Kristiansand Kristiansand is know as a “summer city”, attracting tourists in the summer months – especially to the Kristiansand Zoo and amusement park. Dependent on leisure business Average occupancy 57 % RevPAR 20 % below Oslo City 1 000 80% 900 70% 800 60% 700 600 50% 500 40% 400 30% 300 20% 200 10% 100 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 ADR Occ % Occ % average Guest nights per segment - Kristiansand Development in capacity - Kristiansand 1 800 20 1 600 18 1 400 16 14 1 200 RevPAR 600 000 100% 90% 500 000 80% 70% 400 000 60% 12 1 000 10 800 8 600 300 000 50% 40% 200 000 30% 6 400 4 200 2 - 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 # Rooms # Hotels 20% 100 000 10% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Conferance Business Leisure Norwegians Foreign Hotelia | Pg. 17 NORWEGIAN HOTEL INDUSTRY OVERVIEW Tromsø – The capital of the Arctic Development in key figures - Tromsø Tromsø has experienced a substantial increase in the holiday segment. This can be highly attributed to the popularity of “northern light hunting” in recent years. As a response to the increase in tourist mass, Tromsø have expanded its room capacity. Average occupancy 67 % RevPAR 6-7 % below Oslo City Capacity growth 50 % last 5 years 1 000 74% 900 72% 800 70% 700 68% 600 66% 500 64% 400 62% 300 60% 200 58% 100 56% 54% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 ADR 25 2 000 Occ % Occ % average Guest nights per segment - Tromsø Development in capacity - Tromsø 2 500 RevPAR 20 800 000 90% 700 000 80% 70% 600 000 60% 500 000 1 500 15 50% 400 000 1 000 10 40% 300 000 30% 200 000 500 5 - 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 # Rooms # Hotels 20% 100 000 10% - 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Conferance Business Leisure Norwegians Foreign Hotelia | Pg. 18 Lofoten - Norway NORWEGIAN HOTEL INDUSTRY OVERVIEW Summary of the hotel market conditions in the cities There is an overall growth in all regional capitals There seem to be a tendency in the oil sector to spread northwards, thus enhancing the northern regions’ ability for economic growth All the major city hotels perform well, but depend heavily on having a developed infrastructure nearby, such as an airport, train station or dock. Other outlying cities or areas are therefore performing worse The major brands stands for 30% of the hotels, but 63% of the available rooms (large hotels are favoured) The hotel industry performed marginally worse in 2014. Slow recovery from the financial crisis accompanied by an increase in capacity A weaker NOK might increase the inflow of tourists in 2015 There are opportunities in the budget and upscale markets for hotel investors Hotelia | Pg. 20 NORWEGIAN HOTEL INDUSTRY OVERVIEW Contact information Anders Vatne partner e-mail: [email protected] phone: +47 926 97 700 Geir Lundkvist partner e-mail: [email protected] phone: +47 928 87 708 Hotelia | Pg. 21 Hotelia AS | Inkognitogata 33 A | N-0256 Oslo | Norway | Tlf. +47 41 38 44 33 | [email protected] | hotelia.no | Org.nr. 998 811 910 MVA
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