Europe -  Stockholm, Sweden

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Stockholm is the economic, financial and business centre of Sweden, as well as a leading regional player, particularly in the emerging Baltic markets and within the EU. Although Sweden opted out of the European Monetary Union (euro), Stockholm’s main trading partners are all European. The offices around Hamngatan and Sergelstorg control one of the most powerful economies in Europe. As such, the city ranks as a leading financial centre in the Nordic countries with a prevalence in areas such as innovation, technology, availability of capital and quality of life.

The service sector is dominant in the city and, as such, professional, scientific and technical companies account for around a quarter of the private businesses in the Greater Stockholm area, employing more than 13,000 people. The biggest employers in Stockholm are telecommunications company Ericsson, household goods company Electrolux, construction company Skanska, car and engine manufacturer Volvo and electricity provider Vattenfall. Other leading employers include the three main banks – SEB, Swedbank and Handelsbanken – and construction company NCC.

Stockholm is attractive as both a tourist destination and a city for business. However, Stockholm is commercial in nature: it is broadly recognised that business travellers account for 60% of the total demand in the city. Nevertheless, the number of nights from leisure visitors has increased significantly in the past few years, whilst guest nights from business travellers has risen more slowly.

Stockholm is one of the markets that was significantly impacted by currency dynamics in 2018, as reflected in our index. Although the city recorded a 2% value increase in local currency, it was classified as the second worst performing market in euro terms. The central bank of Sweden’s decision to maintain a negative interest rate of 0.25% in 2018 further weakened the Swedish krona against the euro. The complications recently faced in creating a government have resulted in some political instability in the country and may have impacted Sweden’s international reputation. A substantial number of new hotels entered the market in 2017 and 2018; however, RevPAR levels have remained stable, affording Stockholm its long track record and solid growth in business and leisure demand.

Owing to the scarcity of land and the predominance of operating lease arrangements, Stockholm remains a market with high barriers to entry for international players, and thus lacks internationally branded, high-end luxury hospitality products. Consequently, a vast majority of the current supply is operated by Nordic brands and a similar trend is seen in the pipeline, dominated by local operators with 12 hotels (2,000 rooms) expected to enter the market over the next two years.

In terms of transactions, the most recent were the 70-room Hoom and Home Hotel Sollentuna at €9 million (€128,000 per key) in December 2018, the 91-room Part-Time Home Ritmallen 2 at €30.1 million (€330,000 per key) in November 2018 and the 153-room Hoom and Home Hotel Järfälla at €17.8 million (€116,000 per key) in May 2018. Overall, the market recorded a value decrease of 4.3% in euro (+2.2% in local currency) compared to 2017 levels.

The widespread impact of the coronavirus (COVID-19) has had an unprecedented impact on hotels and hotel values worldwide. Consequently, the latest HVI analysis may no longer reflect the most current measure of lodging industry strength or the hospitality investment market.

In each of our offices across the globe, we are working tirelessly to analyze the impact of recent events and provide timely insights to help you navigate these uncharted waters. Because it is unclear how long the pandemic will last or how long related restrictions will be in place, we are updating our analyses on a weekly basis using the most current data.

Additionally, examination of value trends in prior cycles can provide useful information. Historical patterns, together with an understanding of the market’s current expectations for the eventual recovery of the industry and its performance, can provide insights on the likely trajectory of decline and recovery for hotel values.

For the Latest Information and Analysis on the Impact of COVID-19Click Here

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For more information, please contact:

Sophie Perret, MRICS, MBA
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Magali Castells
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