In a testament to the resilience and recovery of the Dutch hotel market, Savills new ‘Beds’ report data reveals a remarkable rebound in tourism, surpassing pre-pandemic levels. The analysis illustrates that the Dutch hotel industry has experienced a robust recovery, with tourism numbers in 2022 and 2023 exceeding those of 2019. Despite the initial challenges posed by the pandemic, overnight stays and occupancy rates have bounced back, showcasing the sector's ability to adapt and thrive.

While Amsterdam faced a steeper decline than other Dutch cities during the pandemic due to its reliance on international tourism and business travel, it has now recovered to pre-covid levels. Average Room Rates (ARR) have surged post-pandemic, surpassing pre-crisis levels. The report indicates that increased wage and energy costs have not hindered profitability, as most costs have been successfully passed on to consumers through increasing room prices.

Environmental, Social, and Governance (ESG) factors are playing a crucial role in shaping the industry. The report highlights both positive and negative impacts, emphasising the need for sustainable practices and regulations. Notably, the rise in staycations is seen as a positive trend, balancing the negative environmental impact of increased flights.

Wendel Hulsebos, Valuer at Savills in the Netherlands, says: “A standout statistic in the report is the divergence between core hotels and other prime residential real estate since 2021. This deviation is highlighted by the Gross Initial Yields, which have seen a spread of 110 basis points. It suggests that while hotel investment volumes experienced a temporary dip in 2023, the hotel market has already made corrections in terms of pricing during the pandemic.

For real estate investors, this statistic indicates that the Dutch hotel market presents a unique investment landscape. The divergence in yields suggests that hotel properties may offer distinct advantages or opportunities compared to other types of prime residential real estate, as the sector is underappreciated. The strong recovery of the Dutch hotel market, coupled with the observed pricing trends, may signal potential value and favourable investment conditions for investors seeking to diversify their portfolios.”

While hotel investment volumes experienced a dip in 2023, the future outlook remains promising. The recovery of the Dutch hotel market, coupled with declining interest rates, is expected to attract increased institutional interest in 2024. The report suggests potential opportunities for private equity in distressed sales and highlights the sector's resilience, having corrected pricing during the pandemic.

Ruben Schuuring, Associate Director Hotel Investment at Savills in the Netherlands, says: “The overall outlook for the Dutch hotel market is optimistic, with a controlled growth trajectory expected, primarily influenced by municipal regulations. The scarcity created by restrictive policies, such as the 'hotel moratorium,' has its upside. It presents opportunities for pro-active asset management to monetise refurbishments and sustainability initiatives.”

Read the full report here.