Hotel Developments in the Netherlands: Bubble or Boost?
According to Savills research report 'Spotlight Hotels: Hotel developments in major cities in the Netherlands: bubble or boost?’ the current pipeline of over 6,400 hotel rooms in the Randstad area in the Netherlands is not sufficient to meet increasing visitor demand over the coming years. Even in case of a defensive growth scenario, there is still a shortage of more than 4,500 rooms in the major Dutch cities. Assuming a more realistic scenario the shortage could be up to 13,000 rooms. Tourists and hotel investors are increasingly moving to other cities in the Randstad, such as Rotterdam, Utrecht and The Hague, as supply in Amsterdam is particularly low.
Stable visitor streams
Overnight stays and the number of hotel guests in 2019 increased by 8.1% and 5.1% year-on-year. Amsterdam still attracts the highest number of visitors, but The Hague, Rotterdam, the Amsterdam and Utrecht Metropolitan Area are also seeing an uptake in tourists. The expectation is that visitor streams will continue to grow, due to an increase in Asian visitors and the fact that cross-border tourism is becoming much more readily available to a wider demographic. It should be noted that 2020 is expected to potentially show slightly lower growth due to the developments around the coronavirus.
Jordy Kleemans, Head of Research & Consultancy at Savills in the Netherlands, says: “The growing number of visitors outside Amsterdam is partly the result of the restrictive hotel development policies in the main capital. Due to the relatively limited supply in Amsterdam, visitors are ‘forced’ to spend the night elsewhere. Good transportation networks and short distances within the Randstad Region are allowing smaller hotel markets to increasingly serve as an overflow area to absorb growth.”
Bas Wilberts, Head of Alternative Investment at Savills in the Netherlands, adds: “Room rates will rise further with increasing investor interest due to above average occupancy rates in combination with the continuing growth of visitor streams. This investor appetite is also the result of strategic considerations in the allocation of investments, with hotels being an attractive alternative to sectors that are currently underperforming, such as retail. In addition, the hotel sector has matured in recent years; not only in Amsterdam, but also in other cities. Therefore, investors are increasingly willing to invest in hotels throughout the Randstad region."