The investment volume into the CEE hotel sector grew by 66 percent y-o-y in 2016 to €1.2bn, with 46 transactions recorded in core CEE hotel investment markets, according to the most recent report by Cushman & Wakefield. Austria was the star performer with almost €800m transacted, accounting for 67 percent of the total investment volume. In other CEE markets, the total was lower than the €700m volume recorded in 2015 in 45 transactions, with a particular decline in Poland where the volume more than halved.
The Czech Republic accounted for 18 percent of the total CEE investment share. Most of the investment deals took place in Prague which accounted for seven transactions, including the Hilton Old Town, Park Hotel and Chopin Hotel. The sector reported growth across all key performance metrics. Occupancy rates returned or even surpassed the pre-crisis levels, reaching 72 percent on average up from 69 percent. As the cost of visiting the CEE region has gone up along with increasing hotel room rates, profits have been soaring. The average price per room reached €76.6 up from €73.6 in 2015. While the Eastern markets achieved double-digit growth in terms of revenue per available room, the more mature markets of Central Europe, including Prague and Warsaw saw growth of around 6 percent. Banks’ appetite for lending is reflected in the return of hotel development activity, with 2017 expected to deliver an additional 4,000 rooms across CEE capital cities. The markets with the greatest development prospects are Warsaw and Budapest. Prague is an exception with a limited pipeline due to planning constraints and only a few sites suitable for hotel development.
