Investment Trends

Hotel investment activity in CEE-6 remained limited in H2 2022 due to the climate of uncertainty (incl. the Russian war in Ukraine, rising energy and other costs, and general recession concerns). This prompted investors to adopt a wait-and-see approach for most of 2022. Looking ahead, 2023 transaction activity is expected to pick up as investors need to deploy capital while some owners are considering the disposal of their non-core assets to address their liquidity needs.

Investment Trends— Photo by Cushman & WakefieldInvestment Trends— Photo by Cushman & Wakefield
Investment Trends— Photo by Cushman & Wakefield

Prime Yields

Limited transactional evidence within recent months has restricted transparency on the yield shift. Certain deals have seen an upward movement, primarily driven by the increased cost of capital. The interest rates are expected to moderate throughout 2023, which should allow for the stabilization of yield levels.

Nature of Investments— Photo by Cushman & WakefieldNature of Investments— Photo by Cushman & Wakefield
Nature of Investments— Photo by Cushman & Wakefield

Market Performance

Hotels across the CEE-6 region recorded robust RevPAR growth in 2022, with most markets nearing 2019 levels. Thanks to record-high ADR, Budapest achieved the highest RevPAR in the region, followed by Prague and Bucharest. Going forward, hotels across most CEE markets are expected to remain an effective hedge against inflation, and revenue growth will help compensate for the increasing expenses.

Supply

The capital cities in CEE-6 saw a moderate supply growth in 2022, with new openings totalling 18 hotels with 2,420 rooms, while 6 hotels with 1,145 rooms closed for re-positioning. A more robust pipeline is expected in 2023, with 25 new hotels (3,187 rooms), including several re-openings, such as the Intercontinental Athenee Palace in Bucharest and Almanac X Prague.

Demand

Demand is on a solid path to recovery, with room nights occupied for the CEE-6 up 111.5% compared to 2021. While robust improvements were recorded inoccupancy, pre-pandemic levels have yet to be regained in CEE markets (except for Warsaw), primarily due to the Russian war in Ukraine dissuading travellers from visiting the region. Also, corporate and MICE demand has yet to recover, but there are signs of major improvements for 2023.

Source: C&W, STR

About Cushman & Wakefield

Cushman & Wakefield (NYSE: CWK) is a leading global commercial real estate services firm for property owners and occupiers with approximately 52,000 employees in nearly 400 offices and 60 countries. In 2023, the firm reported revenue of $9.5 billion across its core services of property, facilities and project management, leasing, capital markets, and valuation and other services. It also receives numerous industry and business accolades for its award-winning culture and commitment to Diversity, Equity and Inclusion (DEI), sustainability and more.

For additional information, visit www.cushmanwakefield.com

David Nath
Head of Hospitality CEE and SEE
+420 776 168 555
Cushman & Wakefield