Shifting tourism patterns are seeing Northern Europe gain market share over traditional destinations. Favourable exchange rates, combined with the burgeoning Nordic food scene, stunning natural scenery and increased flight options, are drawing more travellers to explore what the region has to offer.

The trend for so-called “cool-cations” – visitors choosing more temperate climates – has also led to notable increases in international overnight stays, according to a report from the European Travel Commission, which highlights year-to-date increases for Denmark (+38%), Norway (+18%) and Sweden (+9%), relative to 2019.

As a result, demand for accommodation is on the rise. 

“When compared to other European cities, we’re seeing significantly higher demand-to-supply ratios,” says Giesemann. “This shortage of available rooms represents opportunities for institutional investors and listed companies looking to restructure portfolios, reduce debt, free up cash and decrease risk. As a result, we’re seeing hotels activity and deals in the region begin to rise.”

The Nordic hospitality sector has benefitted from geopolitical shifts in favor of countries perceived to be highly secure, a reputation for quality and service, and strong focus on sustainability.

“Denmark in particular is increasingly popular with investors as an easy place to do business thanks to low bureaucracy, efficient government procedures and a supportive regulatory framework,” says Giesemann.

What’s more, as the commercial office market continues to give investors pause for thought, office-to-hotel conversions are becoming an attractive option for those seeking to rebalance their real estate portfolios.

Giesemann points to the fact that some established hotel operators have already snapped up vacant office blocks and are repurposing as hotels in sought after locations.

It’s not just leisure travellers that are boosting demand for hotel beds.

“The Nordic region had a different approach to the pandemic and saw a quicker hospitality rebound,” says Giesemann. “We’ve seen a corresponding resurgence of business travel fuelled by rising numbers of exhibitions and conferences.”

Some hotel operators have been quick to capitalize, attracting corporate guests by incorporating coworking spaces into their offerings.

As markets continue to face a degree of uncertainty, investors seeking homes for capital are still benefiting from discounted hotel trading rates when compared to the sector’s pre-pandemic levels.

“All the signs point to continued interest, with strong operational performance paired with the outlook of lower funding costs expected to selectively boost the total returns outlook in Nordic hotels,” says Giesemann.