Colliers Denmark Market Report 2025

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HOTEL - COLLIERS MARKET REPORT 2025

Herman K, Copenhagen K

Hotel investment market

In recent years, investment activity in the Danish hotel segment has been slow, partly because of the COVID-19 pandemic, which raised investor concerns about a poten tial structural change in travel activity, and subsequently because of interest rate hikes. Consequently, invest ments in the segment have been driven by value-add capital. However, in 2024, investor demand for hotel investments reignited. This development is driven by solid and con tinuously improving underlying hotel operations and a favourable outlook for travel activity. Domestic and inter national players alike show demand, including institu tional investors, who are now showing mounting interest in the hotel market. Institutional capital has never been completely absent. One example is Archer Hotels, funded by Dutch and Singapore-based pension funds. Investors continue to favour fixed leases with a minimum of 10 years’ non-terminability and leases with a minimum rent and a variable revenue component. Nevertheless, we are seeing cases where specialised hotel investors in particular are now willing to take on more of the operat ing risk, often by entering into hotel management agree

ments. Operators typically choose to enter into agree ments with investors they already have a good working relationship with. Despite the growing interest, the Danish hotel transac tion volume reached a meagre DKK 676 million in 2024, highlighting that investors have remained guarded while the market has slowly stabilised. However, we are optimistic about the hotel market’s development in 2025. We expect the favourable hotel KPIs to continue, supported by growth in overnight stays and an increase in average room rates (ADR). In addition, improved operational performance may allow for better lending terms from mortgage banks, which have previously been averse to hotel investments. We therefore expect stronger transaction activity and downward pressure on yield requirements, especially for hotels let on long leases where interest rates play a sig nificant role.

Overall, the Danish hotel market therefore has a solid basis for renewed investor demand.