Borivoj Vokrinek, Head of Hospitality Research & Strategic Advisory, EMEA at Cushman & Wakefield, said: “While economic and geopolitical concerns remain, raised capital needs to be deployed and the hotel real estate sector is gaining popularity among investors, being the only asset class in Europe with growing transaction volumes. The increased allocation of capital towards hotels has been driven not only by recent positive performance trends and adjustments in pricing, but also long-term structural changes such as the shift from spending on goods to experiences, and a growing global population with more income and time to travel.”
Czech Republic Hotel Market Summary
In the Czech Republic, hotel investment reached EUR 35.2* million in H1 2024, which is 25% below H1 2023 and 92% below H1 2019. Despite the overall low transaction volumes, interest in Prague remains high, supported by improved financing due to stabilized interest rates. The low transaction volumes are primarily attributed to a gap between seller and buyer pricing expectations.
In H1 2024, two properties were transacted, totalling 197 keys. The average deal size was EUR 18 million, equating to EUR 180,000 per room. These transactions included one property in Prague (Hotel Cechie, part of the Novy Karlin acquisition) and one in Spindleruv Mlyn. Both properties were categorized as upper-midscale, and all buyers were from the Czech Republic. However, Prague continues to attract international investors.
Looking ahead, more activity is expected with large properties like Hilton and Four Seasons on the market. Yields in Prague stabilized and range between 6.0%-7.0% depending on income type, location and hotel status. Performance recovery in Prague showed significant improvement, with RevPAR growth of 14.8% compared to H1 2023, leading the CEE region. Occupancy rates improved by over 5 percentage points to 69.5%. ADR growth was 5,8% compared to H1 2023. Hotel profitability in Prague reached a gross operational profit percentage of 44,1%, the highest in the CEE region. This is result of improving demand, as Prague Airport experienced a 24% increase in passenger numbers in the first half of 2024. Also, the addition of Luxury assets, such as W Hotel Evropa (153 rooms), Fairmont Golden Prague (297 rooms), and U Sixtu Hotel (100 rooms) in 2024-2025, should further drive leisure demand and improve Prague’s image as a luxurious destination.
“Prague hotel market continues to be of a great interest for both international as well constantly increasing domestic investors who are appreciating significant growth in recent performance recovery with being a leading market compared to other CEE capitals as well constantly improving accessibility to debt financing. Together with well optimized and highest GOP margins in the region I am certain we have enough ingredients to witness a significant boost of hotel transactions activity in Prague hotel market in H2 2024 as well as entire 2025,” said David Nath, Partner, Head of Hospitality CEE & SEE, Cushman & Wakefield.
1 A contingency of 5% is assumed for transactions in the last 12 months, as some deals are revealed with notable delay.
2 5% contingency is assumed for transaction volumes in the last 12 months, as some deals are revealed with notable delay.
Source link : https://www.cushmanwakefield.com/en/czech-republic/news/2024/09/european-hotel-deal-volumes-surge-to-five-year-high
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Publish date : 2024-09-23 07:00:00
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