You want to sell your hotel? Then it is good to know what the takeover market in the field of hotels looks like. A number of large hotel chains in the Netherlands are stirring in the takeover market, which could lead to considerable consolidation in the coming years.
After incredibly tough years in 2020 and 2021, a period of recovery is beginning for the hotel industry in 2022 and 2023. The number of consolidations is more or less stable, after major players bought up a large number of smaller hotels several years ago to achieve full national coverage. Despite the outlook, there will be several challenges around the corner, such as price increases due to inflation, staff shortages and the war in Ukraine.
There are many ways to value a business. A common method of expressing the value of a business is "a factor x gross annual profit." This factor is also called multiple and another designation for gross annual profit is EBITDA (Earnings Before Interest Taxes Depreciation and Amortization).
In the hospitality, leisure and tourism sector - to which a hotel belongs - an indicative range of EBITDA multiple of 2.9 to 4.0 is currently used, according to the Brookz Takeover Barometer. The average EBITDA multiple across all SME sectors is 4.90.
The valuation of a business is often the starting point for negotiations between buyer and seller. The outcome of these negotiations is the final sales price. So valuation and price are two different quantities. Besides valuation, the price is also determined by possible scarcity in the market, bargaining power of the parties, the strategic value of the business for the buyer and possible synergy effects for the buyer (cost savings, purchasing advantages).
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Do you want to buy a business or sell a business in the Hospitality, Tourism & Recreation sector? With this Brookz Sector Monitor we want to present buyers and sellers with facts, figures and an outlook that provide insight into the number of transactions, the value development of businesses and the latest trends and developments in the Hospitality, Tourism & Recreation sector. Because in any buying or selling process, thorough preparation provides peace of mind, overview and structure.
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The hotel sector was hit hard by government measures due to the corona crisis. The number of overnight stays fell by 17 million to over 24 million, according to ABN Amro; in percentage terms, group accommodations were hit hardest. The good news: after 2022, the sector even expects to exceed pre-crisis levels.
In figures, the number of hotels looked as follows in 2024(CBS):
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A number of trends and developments will inevitably cause changes in the coming years, but also offer hotels many growth and acquisition opportunities:
Pricing and experience are becoming increasingly important. Today's consumer wants the highest quality product at the most competitive price. He only wants to pay more for a unique product that creates a special memory or experience. Reviews have also become increasingly important in the booking process in recent years. Consumers tend to base their booking decision on them.
For hoteliers who are not distinctive enough now, it is important to make choices, according to ABN Amro. By doing so, these hoteliers avoid being unable to withstand an unexpected dip in tourism and/or the economy. Hoteliers are trying to score more direct bookings through website improvements and loyalty programs; now about a third go through online travel agencies. On those bookings, a hotel remits about 18 percent.
Those who understand how profitability and loyalty come together for the best bottom line results can more effectively design their loyalty program accordingly. To then invest with perks in increasing the loyalty of profitable guests and n not in the return of guests who show insufficiently profitable behavior.
Visits to hotels will be considerably more expensive in the near future. The price of commodities has risen, gas and electricity prices have tripled, and bills are running high. A price increase is not a choice, according to Koninklijke Horeca Nederland, but consumers will therefore have to be prepared for fluctuations in prices even in the hospitality industry.
