Vienna Hotel Market in Upswing Christie + Co predicts further growth

25 April 2008

A recent study carried out by international business property agents and advisors, Christie + Co, has found that the hotel market in Austria’s capital, Vienna, has experienced an upswing since 2002 and is expected to grow further over the next three years.

Between 2002 and 2007, the supply of hotel beds in Vienna rose by 21.3%, to reach a total of 44,000. Some 50% of the current stock is made up of four-star hotels, but the strongest growth - at 51% - was seen in hotels at the lower end of the market. Supply in the five-star segment has risen by 41% in the same five year period. An additional 15 hotel development projects, comprising a total of over 6,750 beds, are planned or under construction. With these projects due to be completed by 2011, Vienna’s bed capacity is expected to grow substantially in 2009 and 2010.

Occupancy rates and net average room rates for Viennese hotels are increasing. However, despite high average occupancy rates of 76%, Vienna’s average room rates of €112 are low when compared with neighbouring European hotel markets. RevPAR (revenue per available room) has increased by 25% since 2004, but remains below average at €85.

Over the past seven years, the upmarket hotel sector has seen the most transactional activity in Vienna, with the city’s Hilton and Le Méridien hotels selling twice during this period. Other notable single-asset deals include the Ana Grand Hotel Wien, the Arcotel Wimberger, the Hotel im Palais Schwarzenberg and the Palais Hansen, which is going to be converted into a 4-star hotel and re-opened in 2010.

Tourism is also on the increase, with the number of overnight stays in Vienna rising steadily since 2002. Last year more than four million people visited Vienna, an increase of over 30% when compared with 2002. As a result, the number of overnight stays has risen by 27%, to reach a figure in excess of nine million per annum. Germany continues to be the main source of demand for hotels in the city, generating approximately 1.9 million overnight stays per year. The local hotel market has also seen a surge of demand from Eastern European countries such as Bulgaria, Romania, Russia and Ukraine. A substantial amount is currently being invested in Vienna’s local economy and tourist attractions, which should result in a further influx of visitors.

Armin Bruckmeier, Head of Advisory and Valuation Services Germany & Austria, commented: “Vienna is a popular destination for business travellers and leisure tourists alike. Its proximity to other developing markets in Eastern Europe, means that Vienna is ideally located to capitalise on the growing demand for overnight stays generated from this region. We expect this demand to dictate an increase in hotel beds in 2008, but hotels in Vienna will be under increased pressure to perform well in 2009 and 2010.”

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For further information on this press release, please contact: Sarah Pflanz at Christie + Co. Tel: 020 7227 0795. sarah.pflanz@christie.com