CBRE has released its September 2024 edition of the CBRE Nordics Hotel Market Snapshot, the market-leading research report series focusing on the Nordic hotel market. In this article, CBRE’s Jussi Niemistö, Head of Research, Nordics, and Erik Myklebust, Head of Hotels, Nordics, share the key findings from the newly released hotel report.
Increased interest from international brands and operators in the Nordic luxury segment
The Nordic hotel market is dominated by domestic business travel in each country. This traffic is now back to where it was in 2019, after lagging for the past few years. Leisure traffic bounced back quickly after Covid-19 and has remained at high levels. Now, however, we see an increasing willingness of travelers to pay to stay in exclusive and luxury hotels, at ADR-levels we have not previously experienced in the region. When these price-insensitive leisure travelers and the existing business traffic collide, as it were, hotels are positioned for high profitability.
Data we have analyzed shows that a selection of a dozen luxury hotels across the Nordics delivered RevPAR levels for the period covered by this report of EUR 358, 14% higher than the equivalent period in 2023. On average, these hotels commanded an ADR of EUR 460 this summer. Looking at the two largest cities in the region, the RevPAR increase was even higher, with Stockholm at 21% and Copenhagen at 22%.
This is good news for the region’s hoteliers. We have already seen an increase in interest from international brands and operators focusing on the luxury segment, and property developers are right there with them. There is also a growing number of guests seeking out unique and exclusive regional experiences, and accommodation providers are set to follow: observe areas within the Arctic Circle in Finland, Norway and Sweden as good examples. Initiation of hotel development activity was quite slow during the pandemic years, so in many cities there is now a period in which supply growth will be muted. Since guests are arriving, we expect continued upward pressure on room rates, not only at the top of the market, and this will feed through to developer models and lead to more, exciting hotel openings in the future.
The macroeconomic backdrop has improved
Nordic hotel investment reached €318 million from Janurary through August in 2024, down 3.6% from the same period last year. While the number of transactions grew from 15 to 17, the deals have been smaller on average. The largest hotel transaction during the period was NREP’s acquisition of Comfort Hotel Karl Johan in Oslo, where CBRE advised the seller, CBRE IM. Elsewhere in Norway, Pellerin purchased 50% of Clarion Hotel The Edge in Tromsø, to take sole possession of the property. Njord Securities, with family office Glastad Holding and operating arm Heimr, acquired Savoy Hotel in Oslo and plan to refurbish and reposition the hotel. CBRE advised the seller, Entra. In Sweden, notable transactions in 2024 include Balder’s purchase of Hotel Karlatornet and Sinoma Fastighets AB’s acquisition of the property housing First Hotel G, both in Gothenburg.
The macroeconomic backdrop is more optimistic, with inflation falling to a three-year low at 2.2% in the Eurozone. Interest rate cuts have commenced, where the Swedish central bank have indicated additional cuts in 2024. While the Norwegian central bank is expected to keep interest rates higher for longer, investor sentiment seems to be more positive. Most available capital is targeting value-add opportunities, and appetite for core investments remains limited.
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Nordics
Erik Myklebust, Head of Hotels, Nordics
+47 995 75 275
erik.myklebust@cbre.com
Jussi Niemistö (M.Sc.Econ, CEFA), Head of Research, Nordics.
+35 8 40 537 5760
jussi.niemisto@cbre.com
Denmark
Erik Myklebust
erik.myklebust@cbre.com
Finland
Nadja McKenna
nadja.mckenna@cbre.com
Norway
Erik Myklebust
erik.myklebust@cbre.com
Petter Rødseth
petter.rodseth@cbre.com
Sweden
Robin Stenlund
robin.stenlund@cbre.com
Marcus Carlsson
marcus.carlsson@cbre.com
