The OperatorBeat survey was concluded over the last few months and includes responses from selected international and regional operators who are active/interested in the region.
2020 key takeaways:
1. Brussels among the top 5 most attractive markets in the Benelux region
In Belgium, transaction volume reached approximately EUR 82 million in 2020, down 88% from EUR 689 million in 2019. However, the transaction volume in 2019 was exceptionally high due to the purchase of two Centre Park properties by Aroundtown from Blackstone. Another reason for the notable decline in 2020, was the lack of assets on the market in Belgium, with owners waiting for stronger signs of market recovery before putting their properties for sale, despite the ongoing investors’ interest in hotel assets within European’s core markets, such as Brussels. Similarly, from the operators’ perspective, Brussels was among the top-5 most attractive markets in the Benelux region, according to the OperatorBeat survey.
2. Antwerp, Gent and Brugge among top 10 market by international operators
Other cities in the Belgium that were listed among top-10 market by international operators were Gent, Brugge and especially Antwerp – where there are several operators who are highly interested in this market.
3. Revenue per available room in declined in Brussels but less impacted than its neighbour
With regards to hotel market performance, according to STR data, the revenue per available room (RevPAR) in Brussels declined in 2020 by 77% to EUR 19.6. While this is a significant drop in performance, it was less impacted than Amsterdam (y-o-y decline by 79%) but more than overall Europe (-70%)
4. Impact of the pandemic on hotel occupancy
The main driver of performance decline was low hotel occupancy in 2020, with the annual average at only 19%. Throughout the year, the hotel occupancy fell to as low as 6% in April, due to government restrictions on hotel operations. As restrictions eased in the summer, occupancy picked up to 16% in July, before declining again amid the second wave and re- implementation of travel restrictions.
5. Delays or cancellations of several development projects
COVID-19 affected not only existing hotels but was also causing delays or even cancellations of several development projects across the Benelux region. This could be good news for hoteliers, as it is likely to constrain future supply growth and facilitate a faster market recovery. According to OperatorBeat survey, 22.7% of responded indicated that about half or more of their projects in BeNeLux region are not proceeding as planned.
6. Some ongoing projects are proceeding in Brussels and others are delayed
In Brussels, supply pipeline has been limited even before the virus outbreak. However, the few ongoing projects are proceeding, with Juliana-Brussels and Residence Inn By Marriott set open in 2021 and Corinthia Grand Palace Hotel Astoria Brussels on Rue Royal expected to open in 2022. Nonetheless, there are some early-stage development projects which are facing challenges and experiencing delays. According to OperatorBeat survey, the main reasons for projects not proceeding as planned in the BeNeLux region are:
a. Issues with dept funding (according to 38.5% of respondents);
b. Commercial terms have become unviable (according to 23.1% of respondents) and
c. Issues with equity funding (according to 15.4% of respondents).
7. Brussels' nights in paid accommodation expected to reach 2019 levels by 2024
In terms of recovery pace, according to the OperatorBeat survey, majority of respondents are expecting major regional cities in BeNeLux to recover earlier than capitals. Nevertheless, 68% of respondents expect Brussels to fully recover already in 2023, the remaining 32% of operators expects this in 2024. This is in line with forecast by Oxford Economics, that anticipates the nights in paid accommodation in Brussels to reach 2019 levels by 2024. This is underpinned by Brussels’ lower reliance on long-haul international markets (European and domestic markets accounted for 65% of overnight stays in Brussels in 2019 according to visit.brussels) and being at the heart of the European institutions.
Ed Fitch, Partner at Cushman & Wakfield explains: “Despite the current significant challenges for hotels in Brussels, investors and operators remain optimistic on its longterm prospects. We are continuing to see keen interest in the city and expectations of a relatively quick market recovery, once the pandemic is contained. This is underpinned by the strong market fundamentals of the Brussels hotel market, which has remained one of the most attractive markets in the region.”
If you need more information on the hospitality sector in Belgium please contact our expert team.