IPD Pan European Hotel Performance

IPD Pan European Hotel Performance Mark Clacy-Jones Vice President & Head of Applied Research, IPD / MSCI Hot.E Conference, London 17 th September 2014 2014 Investment Property Databank Ltd. All rights reserved. ipd.com 1

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. 2014 Investment Property Databank Ltd. All rights reserved. ipd.com 2

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

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

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

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

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

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

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

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