Hotspots accounted for the 52% of the total visitors. â» Andalusia's vacational hotspot 2017 (Jan-Oct) figures register
The Hotel Property Handbook Investment & Financing Keys Andalusia Snapshot
December 2017
Financial Advisory I Real Estate - Hospitality @ 2016 Deloite Financial Advisory
1
Javier García-Mateo, MRICS Partner Financial Advisory ‖ Real Estate
[email protected] Mob: +34 659 90 02 15
Jose María Espejo Senior Manager Financial Advisory ‖ Real Estate
[email protected] Phone: +34 918 232 692
Fernando Baldellou Partner Head of Financial Advisory – Hospitality
[email protected] Phone: +34 914 432 514
Leopoldo Parias
The Hotel Property Handbook Andalusia Snapshot @ 2016 Deloite Financial Advisory
Partner Financial Advisory
[email protected] Mob: +34 629894186
Jordi Schoenenberger Partner Hospitality Industry Leader
[email protected] Phone: +34 932 543 932 2
The Hotel Property Handbook Andalusia Snapshot
EXECUTIVE SUMMARY
2
► Andalusia is one Top 5 ranked destination in Spain;
2016 was a landmark year in terms of visitors accounting for c.18m visitors, +7% growth compared 2015. 2017 (JanOct) data suggests a potential deceleration with a modest growth of 2% for the same period in 2016. Vacational Hotspots accounted for the 52% of the total visitors.
Supply & Demand
► Andalusia’s vacational hotspot 2017 (Jan-Oct) figures registered an Average Stay of 3.8 days and 33m overnight stays. Vacational destinations are affected by a significant seasonality, with almost 80% of the hotel supply closed during low season months. ► During 2017, 10 new hotels have opened with c.800 rooms, while 3 Hotels have been refurbished accounting for +1,072 rooms.
1
► Andalusia’s Vacational destinations average RevPAR has grown +46% (2013-17) due to robust occupancy rate growth reaching 67% record breaking figure and ADR growth of +17%.
Market Overview Andalusia growth Key drivers
2016 vs 2017 ► Andalusian economy is expected to reach pre-crisis growth levels through mid-2018. Potential tourism deceleration could tailoff positive prospects.
► Andalusian provisional GDP growth for 2017 stands c.3% while a 2.6% growth is expected for 2018. Furthermore, Tourism GDP accounted for 13% of total GDP registering a 4% growth when compared with 2016 levels.
Tourism represented 12.5% of total Employment and achieved a 5% growth over 2016. Tourism employment amounted c.245k jobs during 2016, Malaga
► During 2017,
achieved the lions share with c.30% of the total tourism employment followed by Seville and Cadiz with 18.8% and 15.6% out of the total. @ 2016 Deloite Financial Advisory
► Andalusia’s Urban destinations average RevPAR has grown +55% (2013-17) boosted by occupancy rate growth reaching 72% and ADR upturns of +13%.
3 ►
►
►
►
Hotel Real Estate Investment Market
The EMEA region accounts for 27% of the total Hotel Real Estate Investment volume while Spain accounts for 12% In Spain, Hotel Investment volume increased by 27% in 2017YTD (€2,717m) and accounted for 31% of total nonresidential investment
Malaga Province registered 100% of the total Andalusian investment market figure of €320m (2017), representing a 12% share out of the total Spanish hotel investment volume. Sevilla & Malaga strong capital value (€k/room) growth of c.12.4% has been driven by the solid Tourism Strategy Plans implemented by each City Town Hall.
5
4 ►
Key Investment and Financing Drivers
High Liquidity for both Equity and Lending due to the improvement of KPIs throughout Spain.
►
Increasing financing demand for prime development projects, including refurbishment, repositioning and greenfield
►
Location, category, performance and hotel brand significantly impact on financing terms.
Key Factors
Full Due Diligence required to perform the optimal deal analysis:
► Financial Factors: Understanding of GOP vs. NOP.
► Business Performance: Analysis of market and income sustainability.
► Legal Factors: Analysis of all intervenient
contracts. Comprehensive legal risk analysis.
► Tax Factors: Analysis of tax risks and potential tax structuring alternatives.
► Technical Factors: Functional use (Back of
House vs. Front of House), equipment condition, legal compliance and the hotel design (BREEAM + LEED certifications). 3
The Hotel Market: 10 Year Bond 2016-2017
458 bps 458 bps
▼ 43 bps ▼17 bps ▲ 50 bps
363 bps 388 bps 516 bps
▼17 bps
€800k
(8.1%) (13.9%)
€600k
(6.2%) (4.0%) 1.7%
6.6%
13.9% (3.7%) (1.1%) 7.9%
€400k
11.0% 10.4% 12.4%
9.2% 3.2% €200k
4* €600k
€200k
-
Max. Min (2006-16) Source: HSV London
2015
2016
hotel Category
Córdoba
Granada
Málaga
Sevilla
Europe
Madrid
Munich
Milan
Barcelona
Amsterdam
€100k
4
Capital Value per room (2015-16)
0.5%
To take away:
repositioning and solid Tourism Strategy @ 2016 Deloite Financial Advisory Plans implemented by each City Town Hall.
▼17 bps
433 bps 388 bps 477 bps 538 bps
€400k
Malaga and Seville cities Capital Values (€/room) growth has been gaining momentum through 2015-2016. 2017 growth is expected break record breaking figures due to the strong effort on asset
▼ 34 bps
Capital Value per room Trend 2006-2016
Political and financial uncertainly in certain countries is favouring Spain
€800k
▼17 bps ▼17 bps
458 bps 458 bps
310 bps 547 bps 522 bps
Florence
Strength of the dollar (For American investors) and weakness of the Euro since 2014
▼17 bps
408 bps
▼65 bps ▼ 22 bps ▼ 22 bps ▲ 50 bps ▲ 50 bps
Rome
Returns expected in Spain through hotel investment are above the European average
1,67% 1,67% 1,67% 1,67%
▼4 bps
Geneva
1 2 3 4
Yielding Assets are more attractive than Investment Grade Bonds
0,92% 1,15% -0,22% -0,22% 2,12% 2,12% 0,34% 1,67% 2,12% 0,23% 1,67%
Zürich
Drivers increase in cross-border investments:
Capital Values Growth (%) 2015-2016
EXECUTIVE SUMMARY
Yield 2016 – Dif. 10 years bond
London
(1 March 2017)
Paris
The Hotel Property Handbook Andalusia Snapshot
Unitary Values Analysis (€/room)
Spanish Investment Market The Hotel Property Handbook Andalusia Snapshot
In 2017YTD the Hotel investment volume has exceed by 27% the investment volume of 2016. Hotel typology represents 31% of the total investment volume, while Andalusia represents the 12% share.
EXECUTIVE SUMMARY
Andalusia
€320m
Top 10 Spanish single asset transactions: # 1
Asset
Units
Ritz-C arlton Abama
Price (€m)
183 101 101 89 80 80 75 73 48 48
461
2 Hotel Villaitana
390
3 Jardin Tropical
390
4 Sol Príncipe
799
5 Hotel Silken
240
6 Hilton Diagonal Mar Barcelona (55%) 238 7
Ritz-C arlton Abama 50%
461
8 Sol Palmanova
653
9 Silken Puerta de América
315
10 AC Malaga Palacio
214
Hotels
Typology
Logistic
12,000
Vacational Vacational Vacational
Urban
674
Retail Shopping Centre
8,587 596
Offices
8,000
Vacational Vacational Vacational
Total Hotel investment volume in Spain as at 2017YTD: €2,717m A total pipeline investment volume of €800m is expected to be traded in Spain
5,313
6,000
4,000
2,000
-
150 1,460
1,467
8,845 1,143 1,993 571
1,263
4,470 2,242
3,189 279 1,056
3,151 2,087
644 750
591 687 576
88 544 571 365 519
2010
2011
2012
1,894
120 807 751
3,769
2,420
Hotel
2,297 2,702
867 607
932
2013
2014
2015
2,145
2016
2,717
31%
2017YTD
+27%
17%
@ 2016 Deloite Financial Advisory Short Term Medium Term Long Term
4,895
660
8%
75%
930
2,520
Urban
Source: Deloitte
Malaga region accounted for the 100% of hotel investment market
12,398
Retail High Street 10,000
Vacational Urban
11,845
Source: Deloitte Data Base and third party sources For more information see CHAPTER 3 (Investment Market)
100%
TOTAL
Source: Deloitte
5
Andalusia Investment Market: The Hotel Property Handbook Andalusia Snapshot
EXECUTIVE SUMMARY European Yields & Capital Values (2016): City
Country
Paris London Zürich Geneva Rome Florence Amsterdam Barcelona Milan Munich C openhagen Madrid Europe
France UK Switzerland Switzerland Italy Italy Netherland Spain Italy Germany Denmark Spain
Capital Value (€k per room) €644k €601k €506k €440k €394k €375k €371k €327k €318k €297k €276k €268k €267k
Lease Yield 2016 5,00% 4,25% 5,25% 5,00% 5,75% 6,00% 5,50% 6,00% 6,00% 5,00% 6,00% 6,25% 6,00%
Source: Deloitte Data Base
For more information see CHAPTER 4 (Key Investment and Financing Drivers) in the full report.
European
Investment Market
3 Spanish transactions are included within the Top 10 European deals. Amounting to €987m, these Spanish transactions account for 30% of the Deloite Financial Advisory Top @ 202016 investment volume
2016-2017YTD
Andalusia accounted for €320m of hotel investment volume in 2017YTD, which has represented the 12% of the Spanish market. Investment appetite for coastal and urban Andalusian destinations is expected to peak during 2018. Year
Q
2017 2017 2016 2017 2017 2017 2017 2016 2016 2016 2016 2017 2016 2016 2017 2016 2016 2016
2016 2016 2016 2016 2017 2017 2017 2017
Rooms
Price (€)
Málaga 4* Málaga 4* Málaga 5GL Málaga 4* Málaga 4* Málaga 4* Málaga 5* Almería 4* Málaga 4* Cádiz 4* Málaga 5* Málaga 5* Málaga Apt. 2* Málaga 4* Málaga 4* Málaga 4* Jerez 4* Huelva 2*
799 214 144 133 524 850 106 335 250 228 197 138 46 309 398 136 98 75
88,900,000* 64,900,000* 60,000,000 41,000,000 40,000,000 32,000,000 26,700,000 24,560,000* 22,850,000* 20,840,000* 20,000,000 13,480,000* 13,408,000 13,100,000 12,600,000* 9,970,000* 8,960,000* 2,300,000*
111,264* 223,832 416,667 308,271 76,336 37,647 251,887 73,313 91,400 91,404 101,523 97,681 291,478 42,395 31,658 73,309 91,429 30,667
Starmel HI Partners Lord Sugar NH Hotel Group n.d. Neinor Homes Dos Puntos Merlin Properties Merlin Properties Merlin Properties Grupo JALE Acciona n.d. Hoteles C Blue Sea Merlin Properties Merlin Properties Gestión Lepemar
London & Regional Prop. Blackstone Ayco Hispania - SOCIMI Logitravel HIG Internos Global Investors Foncière des Régions Foncière des Régions Foncière des Régions HI Partners n.d. Quartiers Properties Palia Hotels Portobello Foncière des Régions Foncière des Régions Seville Private investor
Granada Sevilla Almeria Cádiz Valencia Alicante Alicante Almería
34 40 505 165 192 126 90 131
undisclosed undisclosed undisclosed undisclosed undisclosed undisclosed undisclosed undisclosed
n.d. n.d. n.d. n.d. n.d. n.d. n.d. n.d.
Fontecruz Hoteles Fontecruz Hoteles Hoteles Hesperia BBVA Renting Sareb n.d. n.d. n.d.
Eurostars Hotel Company Eurostars Hotel Company Best Hotels Hotusa Senator Hotels & Resorts Port Hotels Port Hotels Senator Hotels & Resorts
Asset
Province
3Q 4Q 3Q 1Q 3Q 1Q 3Q 4Q 4Q 4Q 2Q 1Q 4Q 2Q 1Q 4Q 4Q 2Q
Sol Príncipe Portfolio Halley Málaga (2 assets) Byblos NH Málaga Pueblo Camino Real Valle Romano 430 Tourism Apt. Vincci Selección Posada del Patio Playacapricho Hotel Costa Park Barcelo Costa Ballena Golf & Spa Incosol Vincci Selección Estrella del Mar Centro Forestal Sueco Las Palomas Gran Cervantes by Blue Sea Tryp Alameda Tryp Jerez Marlin Hotel Antilla Playa
2Q 2Q 2Q 3Q 3Q 3Q 3Q 4Q
Eurostars Gran Vía Eurostars Sevilla Boutique Best Sabinal Monasterio de San Miguel Parque Central de Valencia Holiday Inn San Juan Beach Holiday Inn Elche Hotel Suites Puerto Marina
* Estimated Value
*
5* 4* 4* 4* 4* 4* 4* 4*
Source: Deloitte Data Base and third party sources For more information see CHAPTER 3 (Investment Market)
€/room
Vendor
Buyer
6
Vacational Hotspots performance Andalusia’s Vacational Hotspots RevPar increased by 49% on average from 2013 to 2017 YTD (oct 2017).
The Hotel Property Handbook Andalusia Snapshot
SPAIN’S GDP grew by 3.2% during 2016. Tourism accounts for 11.3% of Spain’s GDP
RECORD FIGURES 2016 75.6 million tourists came to Spain in 2016 spending €77.6k million
GROWTH
TOURISM COMPETITIVENESS Spanish Tourism industry acknowledged as the world’s most competitive EMPLOYMENT Tourism-related employments accounts for 12% of Spain’s employments
Andalusia
GEOPOLITICAL CONTEXT The Spanish Tourism Industry is benefiting from the current geopolitical CONSUMER context CONFIDENCE CCI has experienced an Uptrend since 2012 and is close to max. levels BUSINESS CONFIDENCE Tourism Business Confidence close to max. levels since 2016 BREXIT In contrast to previous estimates, 12% more UK tourists came to Spain during 2016
vacational destinations
current supply is in general terms obsolete and outdated.
To Take Away:
Both refurbishment and repositioning would be the key drivers of revenue increases in 2018. @ 2016 Deloite Financial Advisory
RevPar (€) Evolution by hotspot (2013=100)
EXECUTIVE SUMMARY
VACATIONAL Main vacational hotspots 165 160 155 150 145 140 135 130 125 120 115 110 105 100 100 95 2013
Andalusia vacational Hotspots
166
165 158 155
124
111 106110 105
119 117 115
137 137 130 126 124
149 146 142 140
150
148
145 138
136 135
135
129
123
125
127
123 118
115
113
121 114
113 111 108 107
105 100
105 95 2014
2015
2016
2017 (Jan-Oct)
2013
Catalonia Balearic Islands Avrg. Vacational dest.
Andalusía Community of Valencia Canary Islands
2014
2015
Costa de Almería Costa de la Luz de Huelva Costa Tropical
2016
2017 (Jan-
Oct) Costa de la Luz de Cádiz Costa del Sol
KPI’s evolution (2013 to 2017YTD)
ADR
+
Occupancy
=
RevPar
SPAIN - Vacational
+27%
+785bps
+41%
Andalusia Vacational Destinations
+17%
+1,323bps
+49%
For more information see CHAPTER 2 (Supply and Demand)
7
Urban Hotspots performance Andalusia’s Urban hotspots RevPar increased by 55% on average from 2013 to 2017 YTD (oct 2017).
The Hotel Property Handbook Andalusia Snapshot
“The Experience Revolution” Expectations survey
by Deloitte
2017 expectations Market evolution by segment Business 3%
Leisure 3%
62%
35%
67%
Much better than 2016
Similar to 2016
Better than 2016
Worse than 2016
28%
2%
Much worse than 2016
Andalusia’s urban destinations gaining momentum thanks to the solid Tourism Strategies and Suitability plans that are being implemented by the key cities Tow Halls.
To Take Away:
Strong Marketing strategies and loyalty programs are becoming 2016 Deloite Financial Advisory key@revenue drivers.
RevPar (€) Evolution by hotspot (2013=100)
EXECUTIVE SUMMARY
Urban Main urban hotspots 170 165 160 155 150 145 140 135 130 125 120 115 110 105 100 100 95 2013
Andalusia Urban Hotspots 154
150 145 133
138
129
125 125
111
118 114 114
120
108 104 101 2014
Madrid Bilbao Avrg. Urban destinations (Spain)
2015
2016
Barcelona Valencia
2017 (Jan-Oct)
170 165 160 155 150 145 140 135 130 125 120 115 110 105 100 100 95
166 168
147
144
141 139
132
130 130
128
121
119
116
111
106 105
2013
2014
2015
2016
Sevilla
Granada
Malaga
Córdoba
2017 (Jan-Oct)
Avrg. Urban destinations (Spain)
KPI’s evolution (2013 to 2017YTD)
ADR
+
Occupancy
=
RevPar
SPAIN - Urban
+20%
+1,392bps
+49%
Andalusia Urban Destinations
+13%
+1,227bps
+55%
For more information see CHAPTER 2 (Supply and Demand)
8
Spanish hotel new openings The Hotel Property Handbook Andalusia Snapshot
Significant hotel openings during 2017YTD
(Dec. 2017)
Andalusia
EXECUTIVE SUMMARY
Figures
Hotel openings trend (2010-17 YTD) (number of hotels and rooms)
2017 YTD openings by type of project:
New Openings
10 Hotels c.818 Rooms
Refurbishment
3 Hotels 1,072 Rooms
200
Spain
Andalusia
180
Chain/Brand Conversion
31 Hotels 3,840 Rooms
Ongoing Projects
2 Hotels 184 Rooms
12000
10000
160
Ongoing projects 11% New openings 20%
Ongoing projects 4% New openings 22%
140
6.907 120
5.396
100
Chain/Brand Conversion 51%
Refurbishment 18%
8000
5.745
Refurbishment 7%
5.697
5.120
4.973
6000
80
Chain/Brand Conversion 67%
3.124
60
4000
2.825
40
2000
20
Source: Censo Alimarket Hoteles (2017YTD – Dic. 2017)
82
62
68
57
56
34
54
50
-
The main chains’ priorities
0
2010
2011
are asset renovation, brand repositioning, innovation and sustainability in order to overcome
seasonality and foster client loyalty. @ 2016 Deloite Financial Advisory
2012
2013 New Hotels
Source: Censo Alimarket Hoteles
For more information see CHAPTER 2 (Supply and Demand)
2014
2015
2016
2017 YTD
# rooms
9
Financing Market
The Hotel Property Handbook Andalusia Snapshot
Yielding assets: Increasing lending demand due to the outstanding tourism industry performance
2013-14
EXECUTIVE SUMMARY MAIN DRIVERS FOR THE INCREASING LENDING DEMAND MACROECONOMIC ENVIRONMENT Improvement of fundamentals Monetary Policy: QE, low funding costs, etc. FINANCIAL SECTOR Restructuring of the Financial Sector P&L reconstruction REAL ESTATE INVESTMENT MARKET Excess of Liquidity: Increase in transactions Entry of new sponsors Alternative to the fixed income / bond yields
Main Conditions
Framework
Main Players
Traditional lenders are coming back
Senior Debt:
Yielding assets: gathering momentum @ 2016 Deloite Financial Advisory
2016
2017YTD
Credit Access Constraints
Financing Upturn
Institutional Investors / Debt Funds
Banking / Insurance Companies
Upfront Fee
150-250bps
125-175bps
100-150bps
90-135bps
Spread
225-400bps
200-250bps
175-225bps
150-225bps
LTV
(1)
Balloon
Development loans:
2015
(2)
45-50%
45-55%
50-60%
50-65%
60-80%
65-100%
70-100%
70-100%
(1) Sustainable LTV to deal with the debt service with high funding costs (A higher LTV will result in a greater debt service) (2) A Balloon is required to cover the high funding costs during the loan´s life (a lower balloon will result in a greater annual debt service). Estimated balloon for a 5-7 years loan.
Location, category, performance, type of operating contract (and mandatory period duration) and hotel brand significantly affect financing terms. Source: Deloitte For more information see CHAPTER 4 (Key Investment and Financing Drivers)
10
Main Players:
The Hotel Property Handbook Andalusia Snapshot
Equity
Main Chains
EXECUTIVE SUMMARY THE CORE PROFILE STILL DOMINATES THE MARKET:
2017
2016
More than 10,000 rooms in Spain
Value Added 4%
Value Added Core+ 10% 11%
Core+ 29%
Core 67%
NPLs portfolios
Core 79%
1,702 234 209
Source: Deloitte
Miguel Sanchez Hoteles
€m
€m Core Core+ Value Added
Local Players
Core Core+ Value Added
1,822 790 105
Debt
The Most active players are expected
to stay active in 2018: @ 2016 Deloite Financial Advisory
Source: Deloitte For more information see CHAPTER 4 (Key Investment and Financing Drivers)
11
The Hotel Property Handbook Andalusia Snapshot
WHAT IS
NEXT? @ 2016 Deloite Financial Advisory
12
Innovation The Hotel Property Handbook Andalusia Snapshot Sustainability
EXECUTIVE SUMMARY
Digital strategy
BREEAM & LEED
LEADING SUSTAINABILITY CERTIFICATIONS
Hotel Property
Customised experiences and LEED certifications are the most significant sustainability certifications worldwide. Both standards are regularly updated in line with the
Renovation
BREEAM
market.
@ 2016 Deloite Financial Advisory
Brand repositioning 13
The Hotel Property Handbook Andalusia Snapshot
Most significant value drivers for CEOs in 2017
EXECUTIVE SUMMARY #1 “Expectativas 2017
The Experience Revolution”
Income increase
Investment repositioning
#2
Operating margin improvement
#3
Talent and brand management
#4
Asset and capital efficiency
@ 2016 Deloite Financial Advisory
Select the two most significant drivers to improve capital and asset efficiency in 2017 35%
Optimise and invest in asset maintenance
33%
Systems investments
28%
Non-profitable asset sales
25%
Cash Management
23%
Funding sources renegotiation
17%
Accounts receivable and payable management
15%
Acquisitions
15%
Supplier and debtor management CapEx optimisation
7% 2%
14
Javier García-Mateo, MRICS Partner Financial Advisory ‖ Real Estate
[email protected] Mob: +34 659 90 02 15
Jose María Espejo Senior Manager Financial Advisory ‖ Real Estate
[email protected] Phone: +34 918 232 692
Fernando Baldellou Partner Head of Financial Advisory – Hospitality
[email protected] Phone: +34 914 432 514
Leopoldo Parias
The Hotel Property Handbook Andalusia Snapshot @ 2016 Deloite Financial Advisory
Partner Financial Advisory
[email protected] Mob: +34 629894186
Jordi Schoenenberger Partner Hospitality Industry Leader
[email protected] Phone: +34 932 543 932 15
@ 2016 Deloite Financial Advisory
16