Stockholm Hotel Report 2020 Cover Photo: Hotel Frantz, Mathias Nordgren Photo on This Page: Invest Stockholm, Jeppe Wikström Foreword
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Stockholm Hotel Report 2020 Cover photo: Hotel Frantz, Mathias Nordgren Photo on this page: Invest Stockholm, Jeppe Wikström Foreword This report was finalised before the global spread of the coronavirus (Covid-19). The consequences of the spread, combined with the restric- tions and recommendations from authorities and governments aiming to reduce the spread of infection, have had dramatic consequences for both travellers and hotels. Demand for hotel rooms in Stockholm and throug- hout Sweden has fallen sharply during March. Today, there is great uncertainty regarding the effects the coronavirus will have on global travel. Historically, the demand of hotel rooms has quickly recovered after various types of crises. Overall, however, there is a significant risk that the growth up to 2024 will not be as good as forecasted in this report Omslagsfoto: XXXXXXX Photo: Invest Stockholm, Henrik Trygg Summary • There is a strong demand for hotel rooms in Stockholm County and the growth rate in occupied rooms has increased over the last 10 years. • Despite a strong expansion of the hotel room capacity during 2017, the occupancy rate in the county has stabilized at record levels. • The potential growth in occupied rooms is increasing at a high rate, which means that the occupancy rate, average price and RevPAR in Stockholm City are forecasted to have a strong development until 2024. • Annordia's assessment is that there is a potential demand that could carry an additional 2,000 rooms, apart from the already planned rooms, by 2024 with an occupancy rate in Stockholm city of approx- imately 71 percent. • Leisure guests have accounted for 70 percent of the growth in occupied rooms over the past decade. In the City of Stockholm, leisure guests now occupy a majority of all hotel rooms. • Nordic operators such as Scandic and Nordic Choice Hotels dominate the county's room supply. • Average daily rates and RevPAR have developed weaker than in the rest of the country, which is partly due to the large expansion of hotel room capacity. • There is a limited pipeline of hotel projects in central Stockholm in the coming five-year period, while the growth in hotel room supply will be relatively large in the county outside of the city. • The relatively weak supply growth in the city is partly due to the fact that it is currently more profitable to invest in offices, for example, be- Photo: Bank Hotel, Danger Österlin cause of historically high office rents. 6 STOCKHOLM HOTEL REPORT 2020 STOCKHOLM HOTEL REPORT 2020 7 Contents 12 14 32 38 1. Introduction 2. Supply 5. Forecast 2020-2024 6. Stockholm Business Alliance 12 More people are traveling 14 Weak growth in central Stockholm 32 Introduction 38 SBA municipalities in a context 12 Background 16 Hotels develop more distinct concepts 32 The potential growth in demand 39 Planned changes to supply 17 Geographic distribution 33 Stockholm is relatively cheap 18 Hotel classification 34 Rising occupancy rates 18 Breakdown by price range 35 Strong growth in ADR and RevPAR 35 Existing conditions for hotel investments 20 28 42 46 3. Demand 4. Future supply 7. Hostels, holiday villages and 8. P2P rentals campsites 20 Strong hotel market in Stockholm 28 Limited pipeline in central Stockholm 46 Professionalisation of the services 42 Supply 21 High growth in occupied rooms 28 New actors in the county 47 Supply and demand in central Stockholm 42 Guest nights and room revenue 23 Continuously high occupancy rates 29 Continued growth in Solna and Sigtuna 48 Rates and revenue 44 Foreign guests 23 Varied growth in ADR 29 Planned changes to supply 48 P2P rental and the hotel market 45 Average rate 24 Weak growth in RevPAR 45 Closing comment 24 Unchanged seasonality 27 Stable share of foreign guests 50 52 9. Largest operators in the Definitions county 52 Hotel classification 50 Nordic operators dominate 50 Biggest brands Photo: Miss Clara, Beatrice Graalheim 10 STOCKHOLM HOTEL REPORT 2020 STOCKHOLM HOTEL REPORT 2020 11 1. Introduction THE DEMAND FOR HOTEL ROOMS HAS INCREASED RAPIDLY IN STOCKHOLM, SWEDEN AND EUROPE FOR A LONG TIME. IN STOCKHOLM, THE NUMBER OF ROOMS SOLD HAS RISEN FROM 4,200 PER DAY 1980 TO 16,700 PER DAY 2019. More people are traveling The increased demand for hotel rooms is a conse- The number of arrivals of foreign tourists to Swedish quence of increased travel both internationally and airports amounted to 4.9 million in 2018, an increase nationally. A large part of people who are traveling of 135 percent over the past 10 years. There is also a have to sleep somewhere and often it is in a hotel. For big potential for continued growth. A simple calcula- example, the number of guest nights at hotels in the tion shows that if the countries in Europe which EU totaled over two billion in 2019, which was just in 2018 had a lower level of per capita GDP, was at over 500 million more than ten years before. the same level as Sweden, the number of hotel guest The two most important factors behind the strong nights in the EU would be over a billion more. growth in travel and demand for hotel rooms are the increased trade and wealth. More trade within and Background between countries increases the need for business This report is produced in light of Stockholm's strong meetings, which in turn increases the number of busi- growth as a tourist destination and the increased de- ness travelers with demand for hotel rooms. The fact mand for accommodation. Every two years, Invest that international trade gives rise to business travel can Stockholm publishes a comprehensive account of be illustrated with the number of arrivals of foreign all existing and planned accommodation options in business travelers to Swedish airports, which was Stockholm city and county. about 2.4 million in 2018. This report also provides a forecast of hotel Increased wealth gives rise to more leisure travel, room demand between the years 2020-2024 in the especially by tourists. The relationship between the City of Stockholm, as well as an overview of the 56 level of GDP per capita and the number of guest municipalities within the Stockholm Business Alli- nights in hotels per capita in Europe is very strong. ance (SBA). This report is produced by Annordia on behalf of Invest Stockholm. Invest Stockholm is the City of Stockholm's invest- ment promotion agency whose main task is to contribute to increased sustainable growth by attracting investments and establishments to the Stockholm region. Invest Stockholm is also marketing Stockholm as an attractive city under the brand Stockholm - the Capital of Scandinavia, and provide services to the business community. The services aim to improve the conditions of running, starting and establishing companies in Stockholm and the region. Photo: Invest Stockholm, Jeppe Wikström Photo: Invest Stockholm, Jeppe Wikström 12 STOCKHOLM HOTEL REPORT 2020 STOCKHOLM HOTEL REPORT 2020 13 2. Rooftop bars have become more common in the design of new hotels during the last years. The trend can be partly attributed to the increasing market share of the leisure segment, and that Supply it gives hotels an edge compared to established competitors. THE STRONGER POSITION OF THE LEISURE SEGMENT ON Photo: Winery Hotel STOCKHOLM’S HOTEL MARKET DURING THE PAST YEARS IS REFLECTED IN THE RECENTLY OPENED HOTELS, WHERE INCREASED EFFORTS ARE MADE TO PROVIDE A SPECIAL GUEST EXPERIENCE. 40% OF THE COUNTY'S CAPACITY INCREASE DURING THE LAST TWO YEARS HAS BEEN IN THE LONG STAY SEGMENT. ABOUT 65 PERCENT OF THE Weak growth in central Stockholm There are currently 177 hotels and almost 23,700 during the forecast period. In 2019, five new hotels ROOMS HAVE BEEN ADDED IN THE COUNTY OUTSIDE OF THE CITY. rooms in the City of Stockholm. The corresponding opened in the City of Stockholm, with a total of figures for Stockholm County excluding the city are about 500 rooms. The most recently opened hotels 169 hotels and about 15,100 rooms. In total, the room are Blique by Nobis, The Sparrow Hotel (formerly T2.1: HOTELS THAT HAVE OPENED IN THE COUNTY DURING 2018-2019 capacity in the county amounts to approximately Hotel Drottning Kristina), Hotel Frantz (formerly 38,700 rooms distributed across 346 hotels. The supply Hotel Anno 1647), Hotel Gamla Stan and the win- HOTEL MONTH ROOMS SEGMENT MUNICIPALITY in the City of Stockholm has increased by approxima- dowless hotel Zzz Dreamscape Hotel, see table T2.1. tely 7,000 hotel rooms since 2010, corresponding to an The year before, Bank Hotel opened in premises pre- STOCKHOLM HOTEL APARTMENTS BROMMA FEB 2018 53 LONG STAY STOCKHOLM average annual increase of approximately 3.8 percent. viously occupied by a bank on Arsenalgatan in central HOTEL POINT JUL 2018 40 SELECT SERVICE STOCKHOLM The previous decade, between 2000 and 2009, the ci- Stockholm. Bank Hotel and Zzz Dreamscape Hotel BANK HOTEL AUG 2018 115 FULL SERVICE STOCKHOLM ty's supply increase was approximately 4,700 rooms, are the only two hotels that have opened within the equivalent to an annual increase of about 3.7 percent. CBD (Central Business District) in the past two years. APARTDIRECT GRÖNDAL OCT 2018 24 LONG STAY STOCKHOLM Thus, the growth rate in room supply in the City The limited increase in capacity can be partly attri- COMFORT HOTEL KISTA NOV 2018 194 SELECT SERVICE STOCKHOLM of Stockholm has remained stable for a long period. buted to the high office rents in Stockholm's inner BEST WESTERN PLUS GROW HOTEL NOV 2018 176 FULL SERVICE SOLNA In the last two years, the capacity increase in city, with record levels touching 10,000 SEK per squ- STOCKHOLM HOTEL APARTMENTS SOLLENTUNA DEC 2018 60 LONG STAY SOLLENTUNA the City of Stockholm has been low compared to are meter.