Hotel

The recovery of the hotel industry has continued. Occupancy rates are more or less back to historical averages, while room rates have continued to rise and are now well above pre-pandemic levels.

General

The strong development in room rates, combined with normalized occupancy levels, has resulted in a Revenue Per Available Room (RevPAR) significantly above 2019 levels. In Norway, RevPAR for the first half of 2024 is nearly 30 percent higher than the same period in 2019, according to data from Benchmarking Alliance. Compared to the same period last year, RevPAR is 7 percent higher in H1 2024.

This trend is also observed globally. Global RevPAR remained high through the first five months of 2024, with a 13.2 percent increase over 2019 levels. However, while results remain solid, hotel demand has started to cool in many markets, as the strong post-pandemic growth has slowed over the past three months, partly driven by lower consumption, especially in the U.S.

Average occupancy pre-pandemic / Average occupancy LTM

It appears that the pandemic has altered our travel and work habits. The number of leisure trips has stabilized at a higher level than before the pandemic in the Norwegian market, while business travel has decreased. Whether this is a permanent change remains uncertain. International tourists have largely returned, and after a period of unusually high numbers of Norwegians at domestic hotels, this has now normalized.

Increase in RevPAR Norway and Oslo
May-oct 2019 vs. 2023

Occupancy per room, percent – Oslo vs. Norway

Transaction Market

While the commercial real estate transaction market slowed significantly in 2023, the volume of hotel transactions increased compared to previous years. In the first half of the year, only one hotel transaction was recorded, but several hotels and hotel portfolios are expected to enter the market, and we anticipate strong activity in the second half of the year.

Revenue per room in NOK (RevPAR) – Oslo vs. Norway

Outlook

A soft landing is expected in both the Norwegian and international economies, which is generally positive for the hotel and tourism industry. Going forward, several factors make Norway a relatively attractive country to travel within and to, thereby setting the stage for a favorable outlook for the hotel industry in Norway in the coming years.

We expect activity in the transaction market to pick up in 2024, and we anticipate that hotels will remain attractive to investors, both in Norway and globally.