MR 2018

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Copenhagen Property Market Report 2018

Booming Copenhagen hotel market

Total bednights in the city of Copenhagen 2017. 7.2 million Hotel transaction volume has never been higher, as new investors and operators continue to enter the market.

The Copenhagen hotel market continues to expand, resulting in a number of new developments and expansions. Having become more liquid, the hotel investment property market has seen yield compression due to mounting investor demand.

High-growth market The growth momentum in the Danish hotel market has been strong in recent years, in Copenhagen in particular. This is clearly reflected in hotel performance, KPIs, reporting exceptionally favourable developments in occupancy rates, average room rates (ADR) and revenue per available room (RevPAR). As both operators and investors have become fully aware of the favourable market trends, several new hotel operators plan to enter the Copenhagen market. Similarly, the market has seen several transactions involving existing hotel properties. Tourism drives demand Recent years’ hotel demand has been fuelled mainly by a marked increase in tourism, with leisure-related bednight growth being the main driver of occupancy rates ahead of a more moderate business-related bednight growth. With prospects of a sustained boom in tourism and strong trends in the global economy, there is no indication that demand will weaken short to mid term. In 2016, the number of bednights in Copenhagen proper totalled 6.93 million, equivalent to an almost 66% increase since 2009. We expect the 2019 figure to be some 7.7 million, corresponding to an increase of 84% since 2009. Apart from substantial domestic demand, visitors from the United States, the Great Britain, Italy and China are predominantly driving leisure-related hotel demand growth. Neighbouring countries in the Nordics, Norway and Sweden, account for a large market share, although demand seems to be weakening. From an operator or investor perspective, this shift in demand is worth bearing in mind when planning ahead. Demand value drivers are going up In the Copenhagen hotel market, several fundamental value drivers indicate sustained demand growth in the leisure segment in particular, including: