Colliers Denmark Market Report 2024

85

HOTEL - COLLIERS MARKET REPORT 2024

New Copenhagen room supply expected to be absorbed

HOTEL INDUSTRIAL & LOGISTICS RETAIL RESIDENTIAL OFFICE

In 2007-2017, Copenhagen gained 4,500 new hotel rooms, but in the following five years from 2018-2022, the growth was almost 7,800 rooms. The expanded capac ity meant that even though 2023 saw a record number of overnight stays, more rooms were empty than before the coronavirus pandemic: in 2023, Copenhagen upscale (4-star) hotels recorded occupancy rates of around 70% compared to 75-80% in 2014-2018. The projected growth in the number of Copenhagen hotel rooms in 2023-2027 is just a third of the level of the previous five-year period according to market researcher Byggefakta. However, despite a large number of new rooms, high construction costs and increased interest rates, there is still activity among developers in the indus try. Anticipated openings in Copenhagen in 2024 include 25hours Hotel, part of French Accor Hotels, with a 128 room boutique hotel on Papirøen and British Edyn with 236 boutique hotel apartments under the Locke brand in Postbyen in Vesterbro. In general, there is healthy demand for Danish hotels among foreign chains. For example, American BWH Hotel Group is planning to open two Aiden hotels – in Holeby on Lolland with 132 rooms and in Odense with 170 rooms. The first Danish Aiden hotel opened in Herning in 2023.

In addition, Norwegian hotel investor Petter Stordalen will roll out his Hobo concept, which already exists in Sweden. Stordalen’s Strawberry group recently took over the management of the Copenhagen Admiral Hotel, which will be renovated for DKK 100 million.

New Copenhagen hotel rooms, number

2007-2017 2018-2022 2023E-2027E 4,500 7,750 ~2,300

Source: Byggefakta, Statistics Denmark, Colliers

Both 2022 and 2023 saw record numbers of tourists, which triggered rising occupancy rates after the corona years 2020 and 2021. Assuming that the trend of more tourists continues, we believe that the new room supply will be absorbed by the market in the coming years, with occupancy rates stabilising around pre-COVID-19 levels. However, the hotel industry is historically quite cyclical. If the recession in Germany spreads to other countries, it could result in fewer tourists and fewer business trav ellers, as companies are traditionally quick to cut back on travel when an economic downturn occurs.

Prospects of higher Copenhagen occupancy rates, but economic downturn is a wild card

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

18 Occupancy rates

19

20

21

22

23

E24

E25

Note: Occupancy rates measured in terms of annual hotel supply (beds) vs. annual hotel demand (beds) in Copenhagen proper (Københavns By). Source: Statistics Denmark, Colliers