NHC QUARTERLY NORDIC HOTEL REPORT Second Quarter Copenhagen Stockholm Oslo Performance data supplied by Benchmarking Alliance for all three hotel markets All amounts are in Danish Kroner (DKK) for the Copenhagen hotel market, in Swedish Kroner (SEK) for the Swedish hotel market and in Norwegian Kroner (NOK) for the Norwegian hotel market Nordic Hotel Consulting, Denmark Office: Kildehøjvej 27, Birkerød, Denmark www.nordichotelconsulting.com
Highlights The Copenhagen hotel market thrived during Q2 with an increase in RevPAR of 11.7%, April being the strongest month. The Stockholm hotel market indicated fluctuations during the second quarter of the year, which resulted in a drop in occupancy, but upturns in ADR and RevPAR; April was also the month with the highest performance. The second quarter of 2012 was rather challenging for the Oslo hotel market as declines in all three key indicators were monitored. Stockholm outperformed both Copenhagen and Oslo in terms of final RevPAR results for Q2. Hotel developments taking place in all three Scandinavian capitals remained identical to the previous quarter. Hotel Market Analysis The following section offers an overview of the hotel market performances of the three Scandinavian capitals. Copenhagen As a general rule, the performance of the Copenhagen hotel market during proved to be heightened when compared against the results of Q2 2011, as shown with the graphs on the following page. If you, dear reader, are in passion of our previous quarterly reports, it is important to note that the data sample for the Copenhagen market used in this report (and onwards) is larger and more comprehensive. For the Copenhagen market, we have changed supplier, from STR Global to Benchmarking Alliance. As the Stockholm and Oslo data has historically been provided by Benchmarking Alliance, we made the decision in an effort to streamline our data and create conformity across data sets. 2
Not only did the Copenhagen hotel market perform better during Q2 than in Q2 2011, it increased its RevPAR by a strong 11.7%. This gain was driven by a similar growth trend in occupancy and in ADR, of 5.4% and 5.9% respectively. ADR and RevPAR experienced upturns throughout the quarter, whereas occupancy monitored a slight decrease of 0.3% in May, which is the sole decline recorded in Q2. April was the best performing month in terms of growth, with an increase of 20.9% in RevPAR; the midscale and budget segments mainly drove the high results in RevPAR, whilst June remained the strongest month with a RevPAR of 712DKK. The cruise season debuted on April 6 th ; 375 ships are scheduled to call in Copenhagen during the year. One of the busiest time periods is estimated to have occurred between June 3 rd and June 23 rd, where thousands of passengers and crew members passed through the port; a significant portion of passengers typically stays overnight in Copenhagen, either the night prior to their cruise and/or on the night of their return. Moreover, the Copenhagen Marathon, which took place in May 2012, attracted a record number of foreigners, i.e. approximately 2,000 foreign runners. The following table offers an overview of the hotel market performance in Copenhagen during Q2. 3
NHC Quarterly Nordic Hotel Report Q2 2012 Stockholm The trend for Stockholm for is dominated by increases in ADR and RevPAR and a slight drop in occupancy, with the month of April driving the only positive occupancy results in the quarter; the trend is illustrated with the following graphs. As an overall performance, the Stockholm hotel market performed well during the second quarter of 2012, with the month of April as the most solid month; all indicators displayed growth during that month. May showed signs of weakness with a decrease in occupancy and although ADR picked up, it was not enough to secure a positive RevPAR for the month. During the same month, the luxury segment showed the strongest performance, whereas the lower tiers lost RevPAR. As for the month of June, it followed a similar pattern to that of May with a rise in ADR, which was, as well, not enough to offset the drop in occupancy, resulting in a RevPAR decline for the month. Nordic Hotel Consulting, Kildehøjvej 27, DK- 3460 Birkerød, Denmark Phone: +45 45 82 11 70 Fax: +45 45 82 11 76 Web: www.nordichotelconsulting.com 4
The table below provides an overview of the hotel market performance in Stockholm during Q2.. Oslo 1 Q2 was a rather challenging quarter for the Oslo hotel market with declines throughout the three key indicators when compared to the period the previous year, which is demonstrated with the graphs below. The second quarter of 2012 showed decreases in all three key indicators, resulting in a 4.5%drop in RevPAR. All segments experienced declines in Q2, with the budget segment the hardest hit in terms of RevPAR, whereas the luxury and midscale segments monitored the same percentage change in RevPAR. A 6.1% increase in capacity throughout the second quarter is partly responsible for the dip in occupancy. 1 Oslo statistics is pulled from Benchmarking Alliance, which covers approx. 79% of hotels and 88% of rooms 5
In April, the upturn in ADR was offset by the downturn in occupancy, which resulted in a negative RevPAR of 1.0%. The midscale segment was the only segment that demonstrated an upturn in all three key indicators during the month, whereas the budget segment was the sole segment that experienced declines in the same key indicators. The variety of concerts taking place in Oslo in May was not able to counterbalance the results for the month. Indeed, the month of May definitely brought the Q2 results down with declines between 5.7% and 14.7% in all three indicators. The high results of May 2011 were partly attributed to the NorShipping Conference that took place during that month and as an outcome, the city was overbooked for a full week; the event did not take place again this year. Even though there was a decline in occupancy in June, it was still the sturdiest month, with a growth in RevPAR of 2.2%. The Port of Oslo expects 53 cruise ships and a total call of 163 between May and September 2012. It is estimated that approximately half of the passengers will require overnight accommodations. The table below proposes a snapshot of the hotel market performance in Oslo during Q2. New Developments Copenhagen There are currently four projects under development in Copenhagen, which would result in a 1,154-room increase in capacity. The 450-room extension at Radisson Blu Scandinavia is nevertheless still pending as the permit for the extension is yet to be approved. Nimb, with an average occupancy rate of 98%, of which 86% of guests being foreigners, plans to expand by 20 rooms, by overtaking the Herzegovina building located next door. Hotel D Angleterre saw its opening date being pushed back once again, with an uncertain plan opening in late 2012 to early 2013. The table on the following page thus shows the entry of new supply. 6
There are also rumoured hotel projects, including the following: Ø Innside Sol Melia, 177 rooms, possible opening year in 2013 Ø Hotel next to Copenhagen Airport, number of rooms and opening year to be determined In April, Scandic Copenhagen completed its renovation program, which covered all of its 486 rooms, conference facilities, lobby and restaurant. Palace Hotel Copenhagen opened its 5 th floor to the public, which corresponds to an additional 8 rooms available to guests, including a suite with a balcony overlooking the City Hall, making Palace Hotel Copenhagen the only hotel offering such a product in the neighbourhood. The DKK 80 million renovation of Marriott Copenhagen is almost finalized, with 3 floors out of 11 still to be completed. During Q2, Hilton Copenhagen, which was voted Best Business Hotel in Denmark by Business Destination Travel Awards 2012, opened the doors to its four recently renovated floors, which were inspired by H.C. Andersens paperclips from his trip to Jylland in 1859. The remaining renovations, including rooms, conference facilities, public areas, should be completed by August 2012. The 470-room renovation taking place at Radisson Blu Scandinavia is still on-going. The project is inspired by spring and autumn designs, which will be completed by December 2012. Stockholm In the next three years, Stockholm will see its supply increase by 2,500 rooms, as there are currently eleven different hotel projects in the works. In April, Omena Hotel Stockholm opened its doors and it offers 251 rooms to its guests. Comfort Hotel Stockholm completed its 94-room extension during Q2. Furthermore, All Seasons Stockholm, which will soon become Ibis Styles, extended its property with 8 additional rooms. The table below showcases the expected new hotel developments in Stockholm. Other hotel projects discussed for 2015 and thereafter are still in the planning process. All together, the Stockholm hotel market has quite a large pipeline of non-confirmed projects, which can be expected to materialize, with the strong growth of travel and tourism in the region. 7
NHC Quarterly Nordic Hotel Report Q2 2012 Oslo Comfort Hotel Grand Central opened its doors in April, offering 178 rooms to its guests. With regards to Thon Hotel Linne, it is expanding with a new conference centre, in addition to a 57-room extension; the developmentis expected to be completed by summer of this year. The Thief is expected to open in the first quarter of 2013, with construction costs reaching approximately 60M, or 500K per key. Smart Hotel, which is a budget hotel, will open in the centre of the city with a planned opening in the summer of 2013. Finally, Lars Wenaas will develop the two Rezidor brands, Radisson Blu and Park Inn, under the same roof, for a combined total of 351 rooms. Scandinavian Capitals Comparisons The following graphs provide an overview of the hotel performance of the three Scandinavian capital cities against each other during the second quarter of 2012. As the currency differs from one country to the other, a comparison in euro is employed. Nordic Hotel Consulting, Kildehøjvej 27, DK- 3460 Birkerød, Denmark Phone: +45 45 82 11 70 Fax: +45 45 82 11 76 Web: www.nordichotelconsulting.com 8
Copenhagen is definitely the capital city with the highest achieved occupancy during ; however, it is the city with the lowest ADR, which resulted in the lowest RevPAR out of the three cities. Although Stockholm did not perform the best in terms of occupancy, it undeniably surpassed Copenhagen and Oslo in terms of ADR, which resulted in the highest achieved RevPAR during the second quarter. As for Oslo, it achieved the weakest performance in terms of occupancy, but still managed to perform better than Copenhagen, as its final RevPAR results are slightly higher than what Copenhagen was able to realise. 9
About NHC Nordic Hotel Consulting is the leading hotel consultancy in the Nordics and has offices in Copenhagen, Århus, Oslo and Stockholm. In order to satisfy an increasing demand, an investment advisory division was created in 2012 and in 2011, the NHC Asset Management division was also established. The NHC Group thus encompasses Consulting, Investment Advisory and Asset Management. NHC has since 2004 carried out a range of assignments including feasibility studies, appraisals, operator search, contract negotiations, investment- and transaction advisory and more in the Nordics and Europe. For additional information on NHC, please refer to our website: www.nordichotelconsulting.com. Copyright This report is the property of NHC and may not be reproduced in parts or whole prior to the written consent of NHC. Disclaimer NHC does not guarantee the accuracy of the data presented in this report and cannot be held liable here for any analysis, opinions or decisions derived from reading this report as it is solely at the responsibility of the reader to draw up conclusions. NHC cannot be held liable for any outcome of analysis, opinions and decisions formed based on the information presented in this report. Contact Karine Bourget Hotel & Leisure Consultant Nordic Hotel Consulting Mobile: + 45 28 56 52 96 kb@nordichotelconsulting.com www.nordichotelconsulting.com NHC Offices Denmark Kildehøjvej 27 3460 Birkerød Denmark +45 45 82 11 70 Norway Skoleveien 2 N-1400 SKi Norway +47 908 83 686 Sweden Sveavägen 17, 14 th floor S 111-57 Stockholm Sweden +46 733 502 444 www.nordichotelconsulting.com It is now possible to subscribe to our newsletter via our website. 10