Hotels

In 2024, the volume in the hotel real estate investment market was approximately €400 million, which represents an increase of more than 65% compared to the previous year. Investors have exchanged their hesitant attitude towards hotel investments, which arose after the corona period, for a little more optimism. After a difficult start in 2024, the volume of hotel investments picked up in the second half of the year. Due to the growing interest from private investors and a more favourable entry point for private equity, CBRE expects a higher traded volume – from €450 to €500 million – by 2025. This volume could rise further if some large deals currently up in the air are completed.

Trends and developments

• The number of tourist overnight stays in the Netherlands in 2024^[12] was more than 4% higher than in 2023, with stronger growth in the number of domestic tourists than foreign tourists. Growth is expected to accelerate, with more than 10% annual increase in inbound overnight stays between 2024 and 2026, driven in part by a resurgence in business travel.
  
  
• In 2023, rising costs could still be passed on in higher room rates, but in 2024 this compensation was no longer possible. The average room rate fell by almost 2% and even by 3% in cities such as Amsterdam, Rotterdam, The Hague, and Breda. Despite an increase in average occupancy from 72.6% to 73.4%, revenue per available room (RevPAR) fell by 0.8% on average. This resulted in a deterioration in gross profit margin for many hotels, mainly due to a significant 11% increase in personnel costs in the hospitality sector. Effective cost management is crucial for operators to keep costs and profit margins under control in 2025.
  
  
• The expected increase in tourism and demand for hotel stays will put upward pressure on room rates and occupancy in the coming years. This is particularly the case in cities where the municipality has a restrictive attitude towards new hotel developments, such as in Amsterdam, The Hague, Maastricht, and Utrecht.
  
  
• The government's proposed VAT increase from 9% to 21% on hotel stays, which may take effect on 1 January 2026^[13], creates uncertainty about the turnover development of Dutch hotels in the medium term. It is unclear whether operators can fully pass on this increase to guests. In 2024, hotels in Amsterdam were already affected by an increase in the tourist tax to 12.5% of the room rate, partly because of this the room rates in the capital city fell by 3%.
  
  
• In 2024, private investors and private equity were active in the hotel investment market with various purchases. Investors see the potential of hotels, while the impact of the pandemic on tourism is increasingly fading into the background. With falling interest rates and expected lower initial yields, the current market is an excellent entry point for opportunistic investors, especially in value-add products. In addition, boutique hotels and extended stay hotels remain popular among investors.

Analysis of hotels

Hotel investments are typically based on real estate or share transactions. In portfolio deals or platform transactions, real estate is usually also an important component, but it can be difficult to accurately estimate the size of it. After all, the value of the real estate is directly related to the operating performance. Fattal Hotel Group purchased such a platform in the summer of 2024, and bought twelve hotels in Amsterdam, The Hague, Rotterdam, Groningen, Eindhoven, and Maastricht – for a total price of €300 to €350 million. This transaction is not included in the investment volume, because it was in fact a merger. The hotels will now operate under the Leonardo Hotels brand.