IPD Pan European Hotel Performance

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1 IPD Pan European Hotel Performance Mark Clacy-Jones Vice President & Head of Applied Research, IPD / MSCI Hot.E Conference, London 17 th September Investment Property Databank Ltd. All rights reserved. ipd.com 1

2 IPD is a world leader in performance analysis for the owners, investors, managers, lenders on and occupiers of real estate. IPD provides critical business intelligence, including analytical services, indices and market information regarding performance and risks to the real estate industry worldwide. IPD is a subsidiary of MSCI Inc., a leading provider of investment decision support tools to investors globally Investment Property Databank Ltd. All rights reserved. ipd.com 2

IPD Global Coverage 2014 Investment Property

IPD Dataset IPD Hotel database growing as client interest in hotels grows Hotels to become fifth sector in IPD products (alongside Retail, Office, Industrial,

5 IPD Dataset IPD Hotel database growing as client interest in hotels grows Hotels to become fifth sector in IPD products (alongside Retail, Office, Industrial, Residential) IPD European Hotels 742 hotels = 12.6bn European Coverage increased 10% in 2013 Source: IPD 2014 Investment Property Databank Ltd. All rights reserved. ipd.com 5

6 IPD Pan European Performance 2013 Total return 6.6% Year end: 742 properties valued at 12.6 billion Income return 5.8% Capital growth 0.8% Source: IPD 2014 Investment Property Databank Ltd. All rights reserved. ipd.com 6

IPD Pan European Performance Local Currency Return % pa Year Source:

IPD Pan European Performance Local Currency Return Index Year Source:

Performance by Country 2013 Source: IPD, KTI 2014

Historical Outperformance by Country Source: IPD, KTI 2014

seeing slowly declining values Portugal & Finland see value rises in spite of economic downturn &

13 Capital Value Cycle by Country Range of outcomes through the economic cycle UK, Sweden & Switzerland lost value which has largely been regained Austria lost value with no sustained recovery yet Germany seeing slowly declining values Portugal & Finland see value rises in spite of economic downturn & real estate downturn Source: IPD, KTI 2014 Investment Property Databank Ltd. All rights reserved. ipd.com 13

14 Germany Performance Hotels outperform other German sectors in long term Hotels underperform retail in current cycle and industrial in previous cycle Source: IPD 2014 Investment Property Databank Ltd. All rights reserved. ipd.com 14

15 UK Performance Hotels clear outperformer among UK sectors in latest cycle Hotel performance in line with wider real estate market in previous cycle Source: IPD 2014 Investment Property Databank Ltd. All rights reserved. ipd.com 15

16 UK Performance Luxury hotel performance less volatile than budget & mid-range counterparts, significantly outperforming in downturn but underperforming as economy rebounds Variable lease hotel performance linked more closely to underlying economy than fixed lease hotels which react more to overall property market sentiment Source: IPD 2014 Investment Property Databank Ltd. All rights reserved. ipd.com 16

18 Conclusions Hotels are no longer considered the predominant alternative real estate type but a sector in their own right 2013 was another good year for hotels in the context of the wider real estate investment market with high performance (& low volatility of returns) UK was the clear winner in 2013 with capital declines in some major European markets Hotels are strong relative performer over time in both UK & Germany Mid-range & Budget hotels outperforming luxury as the UK economy rebounds UK data indicates variable leases miss out on positive real estate investment sentiment shocks but outperform over medium term compared to fixed leases Stable European returns generally underperform US & Australia but outperform in years of economic stress 2014 Investment Property Databank Ltd. All rights reserved. ipd.com 18

19 2014 Investment Property Databank Ltd (IPD). All rights reserved. This information is the exclusive property of IPD. This information may not be copied, disseminated or otherwise used in any form without the prior written permission of IPD. This information is provided on an "as is" basis, and the user of this information assumes the entire risk of any use made of this information. Neither IPD nor any other party makes any express or implied warranties or representations with respect to this information (or the results to be obtained by the use thereof), and IPD hereby expressly disclaims all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any of this information. Without limiting any of the foregoing, in no event shall IPD or any other party have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages. IPD An MSCI Brand Ninth Floor Ten Bishops Square London E1 6EG enquiries@ipd.com ipd.com / msci.com 2014 Investment Property Databank Ltd. All rights reserved. ipd.com 19

IPD Pan-European Annual Property Index

Index value (shaded area) Dec 200 = 100 IPD Pan-European Annual Property Index Results for the year to 31 st December 2013 250 35 30 25 200 150 100 50 0 2001 2002 2003 2004 Local Currencies Index EUR 2005