Hotel

The hotel industry has rebounded significantly faster than anticipated since the onset of the pandemic. Since the last shutdown in Norway at the beginning of 2022, Norwegian hotels have experienced solid growth. Occupancy rates are more or less back to historical averages, while room prices have risen significantly and are well above pre-pandemic levels.

General

After a significant decline during the pandemic, occupancy rates at Norwegian hotels are once again almost normalised. Room rates were also reduced when the pandemic broke out, but not as much as one might expect. Since the summer of 2021, room rates have increased, and since the beginning of 2022, room rates have been above pre-pandemic levels. Strong growth in room rates and occupancy rates nearly returning to pre-pandemic levels have resulted in revenue per available room (RevPAR) currently exceeding the equivalent period in 2019.

Average occupancy pre-pandemic and average occupancy LTM, percent

The number of leisure trips is now higher than before the pandemic, while business-related travel is lower. Whether business-related travel will remain permanently lower than before is difficult to say, but it is not inconceivable that the pandemic has permanently changed our travel and work habits.

International tourists have largely returned, and the proportion of Norwegians at Norwegian hotels is around normal levels after being unusually high following the lifting of COVID restrictions.

However, the proportion of Chinese tourists in Norway has remained unusually low due to travel restrictions imposed by Chinese authorities. But from August 2023, travel restrictions to Norway have been lifted, and thus the number of Chinese tourists is likely to increase significantly in the future.

Increase in RevPAR Norway and
Oslo
June to November 2023 vs. 2019

Occupancy per room, percent – Oslo vs. Norway

Transaction Market

Activity in the commercial real estate transaction market slowed significantly in 2023, but the volume of hotel transactions is in line with previous years' averages and up compared to the low volume recorded in 2022.

This aligns well with observations internationally. According to JLL, transaction volume is down 50 percent globally and 52 percent in Europe, while the volume of hotel transactions is down 35 percent globally and 26 percent in the European market.

Although there are globally low volumes of hotel transactions so far in 2023, there is solid activity with a high number of completed transactions. Hotels being sold are largely individual properties, while portfolios and large transactions are more or less absent in today's market, contributing to lower volumes.

Revenue per available room (RevPAR) – Oslo vs. Norway

Outlook

Hotel industry turnover is likely to slow in the short term due to weaker economic growth both in Norway and internationally. However, increased travel activity from China may counteract this trend. Looking ahead, several factors make Norway a relatively attractive country to travel to, which should bode well for the hotel industry in Norway in the years to come.

We expect activity in the transaction market to pick up during 2024, and we anticipate hotels to be attractive to investors, both in Norway and globally. Read our latest hotel analysis.