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In the next 3 years, 277 hotels with 63,680 rooms are on the cards across Central and Eastern Europe.
In line with current market dynamics, there was a shift from large investment deals to smaller, mainly privately owned value-add hotels.
The formerly empty development pipeline due to the pandemic standstill picked up again in 2021 and 2022, with some significant hotel constructions and openings expected in 2023.
The hotels in cities like Vienna, Prague, Budapest, and Krakow have seen a strong recovery in demand and record-breaking ADR levels
In the near future financing will be more and more connected with ESG criteria which are becoming one of the most critical factors in EU taxonomy.
ESG is not only a Corporate Social Responsibility issue, but it also has a real impact on hotel values. According to a survey, the assets with the highest credentials are expected to command a value premium of between 4.5% to 7.3%, depending on nature of the investment.
There is a very high chance that hotel owners will face increasing scrutiny related to ESG status during their next dispositions. While 3 years ago, only a minority of investors incorporated ESG into their transaction DD, this has changed fundamentally over the last two years. In a survey conducted by Cushman & Wakefield, over 70% of respondents confirmed that they conduct ESG related DD during their acquisitions and another 12% of investors suggested that they are currently working on adding this step into their transaction process.
ESG has become a liquidity factor for hotel real estate. While only a minority of investors have specific minimum ESG requirements, many have certain preferences. For example, less than third of respondents in a survey said that they require a minimum green building rating (such as BREEAM or LEED) and/or a minimum level of EPC certificate, although nearly 70% of investors will seek it.
There is no other hotel investment conference focusing on the region
Sources: Business Outlook 2023_Hotels & International (Christie & co)
Investor Survey: ESG Directly Impacting Hotel Transactions (Cushman & Wakefield)