The Dutch hotel industry is recovering well from the corona crisis, the somewhat ailing economy does not apply to hotels.

Hotel real estate has clearly presented itself as a stable and solid asset class, says Ewout Hoogendoorn of Horwath HTL during PROVADA 2023.

The hotel market came into two bad corona years after three stable years (2017 – 2019), but has recovered rapidly once travel restrictions were lifted.

Not only did occupancy rates return to 2019 levels in most places within the year, but room rates also showed a particularly strong recovery. The hotel industry thus showed itself to be more resistant to inflation than other asset classes. From the beginning of 2023, the average room rate has increased even more than the inflation correction.

The volume of hotel transactions is still much lower than in the years before the corona crisis, but here too the negative effect is less strong than for other asset classes.

The transaction volume in the first quarter of 2023 remained at the same level as in 2022, where other types of commercial real estate showed significant declines.

The number of newly opened hotels is significantly lower than in the years before corona. Due to the relatively scarce supply and the stable market, hotel real estate has acquired a strong position.

Whether institutional investors can benefit from the strong position of hotel real estate partly depends on the type of contract. Although institutional investors traditionally opt for fixed rental contracts, the corona period has shown that this form of contract is also not without risk.

It has become clear that when a hotel investor has in-house knowledge of the hotel market, he can achieve the best results with a hybrid rental contract or a management contract. The main reasons are that the investor has more influence on the hotel operation and shares in a higher return in good years..