Secondary cities in the Netherlands now primary markets for hotel investment

A room at the Hotel Indigo The Hague – Palace Noordeinde. Photo credit: IHG

Amsterdam isn't the only city in the Netherlands to draw investor interest. Other Dutch markets are now in the mix as investors seek out yield-growth opportunities. 

In March, Malaysian investor YTL acquired the Marriott Hotel The Hague for an undisclosed price that is thought to be around €60 million. The deal marks YTL's entrance into mainland Europe. 

The Hague, in particular, has grown in popularity, driven by investors wary of Europe’s primary locations as they search for value and returns. 

The Marriott Hotel The Hague will retain its branding under the new ownership.

Will Duffey, co-head of European transactions, JLL’s Hotels & Hospitality Group, said: “This is our client’s first transaction in continental Europe and we are delighted to have been able to demonstrate the strength of the Dutch market and identify an asset that delivers on their hotel investment strategy. The Netherlands as a whole has recently experienced a surge of investor activity in the hotel space owing to economic stability, market transparency and a flourishing tourism sector. Hotel assets in sound secondary markets, like The Hague, are, and will continue to provide, safe-haven destinations for investors’ capital.”

Further Growth

YTL was the latest in a recent spate of hotel groups targeting The Hague, which, in February, welcomed the first Hotel Indigo in The Netherlands. Tom Rowntree, VP brand management – luxury and boutique brands, IHG, Europe, remarked that part of the idea around opening an Indigo property in The Hague was centered around travelers looking for stays beyond the beaten tourist path. "We are pleased to unveil our first Hotel Indigo in The Netherlands in The Hague—bringing tourists to a less known yet extraordinary city," he said.

The past month has also seen EasyHotel Group confirm the opening of its latest franchise hotel in the Netherlands, at The Hague Scheveningen Beach, one of Holland’s most popular seaside resorts. Marriott International, too, has a new Moxy in its pipeline, describing The Hague as a “key destination”. 

JLL said that hotel transaction volumes in the Netherlands in 2017 more than doubled on 2016’s figures, reaching approximately €1.8 billion. In 2017, RevPAR grew by more than 12 percent in The Hague, driven by an increase in the average hotel occupancy of the city, from 67 percent to 72 percent.

Colliers International reported that The Hague was seeing stronger growth in overnight stays than the national average, commenting: “As a result of the limited supply and rising prices in Amsterdam, investors are switching to different locations in the Netherlands, with cities such as Rotterdam and The Hague currently attracting increased interest from these investors and developers. More and more travelers are also choosing to visit such alternative destinations in order to avoid the congested capital and see something new. 

“This is contributing to profits for hotels in those cities, making it even more attractive for investors to shift their focus to these other locations. Because international investors in particular have experience with different concepts and brands, they bring this experience with them, and more and more new branding concepts are entering the market outside Amsterdam.”

Looking at supply in The Netherlands, the broker warned, “It is striking that the number of hotel rooms is growing at a slower pace than the number of overnight stays. Although hoteliers are seeing occupancy rates and room rates rising as a result, this is not benefitting tourism: a shortage is looming and in the event of a lack of availability, tourists will choose alternative destinations.”

Build it and they will come.

Katherine Doggrell is an editor at Hotel Analyst, the U.K.-based news analysis service for hotel investors.