Last week we were all dreaming of a summer holiday after governments across Europe indicated they would be opening up to tourists.
That still seems likely to be the case — barring any major pandemic-related setbacks — but a new report from global real estate advisor CBRE showed just how far we have to go until we return to what we experienced in 2019.
Hotel revenues are not forecast to recover to pre-pandemic levels until 2024 and who knows how bumpy a ride it is going to be until then. In the meantime local and perhaps regional tourism is going to help the industry get through this.
We’ve seen it in the UK with places like Devon and Cornwall getting booked up for this summer as British holidaymakers swap the likes of Santorini for St Ives. For those with a strong city footprint in their portfolio, things might remain tough. The fundamentals of travel and tourism remain strong but long-haul visitors from say the United States or China will taken longer to return.
Not only is demand going to take time to return but dealmaking will too. In the 12 months to Q4, CBRE estimated that hotel investment fell 75% to €6.6 billion. There’s a sense in the industry that everyone is playing a waiting game: sellers — thanks to government support — don’t need to sell and buyers aren’t willing to stump up any kind of premium. But as the financial help begins to unwind we will see things start to happen.
As Miguel Casas, Head of Hotel Investment Properties, Continental Europe at CBRE put it: “we expect deal flow to pick-up towards the second half of the year as capital continues to be raised for the hotel real estate sector and pricing expectations become more aligned.”