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
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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