Horwath HTL and Dutch bank ABN AMRO have released the Dutch Hotel City Index 2019, a ranking of the top 15 cities in the Netherlands for hotel investors.
The report comes on the heels of increasingly restrictive hotel policies in a range of cities that offer fewer opportunities for new hotel developments. For investors of existing hotels and developments, this can result in reduced competition and a more stable market, noted Horwath HTL.
The four major Dutch cities (Amsterdam, Rotterdam, The Hague and Utrecht) and Haarlemmermeer make up the top five cities for hospitality investment.
According to the report, Haarlemmermeer advanced to third place, which Horwath credited to high demand for hotel rooms. Amstelveen has made it onto the index for the first time, which can be credited to several large hotels opening in the city that drove the number of beds up sixfold over three years.
Utrecht, on the other hand, declined three places in the ranking compared to last year and due to several large hotels opening within a short period, the short-term projections are slightly less positive, noted the report, Leiden and Enschede also dropped in the rankings primarily due to the low scores in supply and demand factors, it added
The Index shows Amsterdam again has the best prospects. The city's restrictive hotel policy will most likely limit the growth of hotel supply from 2020 onward, while demand will continue to rise. To meet demand, investors are seeking opportunities in the periphery, the reported indicated.
After Amsterdam, the average occupancy rate in Haarlemmermeer was the highest in the country in 2018. The growth in occupancy percentages in Utrecht increased, and the RevPAR remained a fraction higher than in Haarlemmermeer. The supply of hotel rooms will grow approximately 70 percent in Utrecht, and 20 percent in Haarlemmermeer.
Hotels in Rotterdam showed an increase in average room rates in 2018. Here, current hotel developments will add 33 percent to the supply of rooms. Rotterdam's "strong potential" for investment is confirmed by the number of new businesses being established throughout the city, although The Hague has the most new businesses opening. The hotels in that city have a similar performance of demand indicators as Rotterdam, although the growth in demand is slightly less in The Hague, which will likely continue throughout 2019.
Horwath HTL noted investors are eyeing Amstelveen and Almere more often partly because both cities show a strong growth in GDP.
Supply and Demand
Horwath HTL expects both supply and demand to keep growing throughout The Netherlands this year, with room growth continuing at "a rapid pace" in the major Dutch cities.
Hotels in Amsterdam achieved the highest average room rate last year at €162), an increase of 5.2 percent compared to 2017. The Amsterdam market showed a 2 percent growth in average occupancy rate, while the hotel policy will limit the increase of hotel supply, according to the report.
Demand has outgrown supply in Utrecht, which presents an opportunity for hotel development, noted the report. Due to a €6 increase in average room rate, the revenue per available room (RevPAR) in Rotterdam increased by approximately 10 percent in 2018.
At the start of 2019, the tourist tax increased from 5 percent to 6 percent in Utrecht and from 6 percent to 7 percent in Amsterdam. As a result, the municipality of Amsterdam expects to generate €105 million additional income in 2020.
In the Hague and Haarlem, hotel guests are expected to pay an additional euro per person per night. The increase in tourist tax could suppress the growth of demand factors in various cities.