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UK hotel investment soars in first four months of 2022

Portfolio hotel transactions have increased in volume compared to last year, accounting for almost 65% of the sector’s total investment activity

UK hotel transaction volumes have reportedly exceeded £1.5bn in the first four months of 2021, up approximately 40% from the total investment volume reached in H1 2021, according to global property consultancy Knight Frank. 

Transactional activity has been relatively evenly split across the UK, with London securing approximately £750m of hotel transactions and the UK regions attracting over £800m.

Additionally, portfolio hotel transactions have increased in volume compared to last year, accounting for almost 65% of the sector’s total investment activity, representing over 4,200 rooms. 

Knight Frank said the sale of The Pig Hotel Group, the Inn Collection Group and Chardon Hotels all contributed to the regional UK activity. The £420m sale of Point A Hotels as well as Frogmore and C1 Capital’s joint venture to acquire three hotels for £150m provided a “significant boost” to London’s transactional activity.

The consultancy added that there has been continued robust activity by private equity investors, deploying over £1bn into UK hotels. 

Philippa Goldstein, senior analyst for hotels and leisure at Knight Frank, said: “2022 presents some unique factors, such as assessing the impact of the removal of the VAT reduction, high inflation, post Covid-staffing shortages and judging where hotels will stabilise their future trading performance.

“Despite these significant challenges, the latest available trading data for the period to the end of March 2022, confirms that the sector continues to make a robust recovery. With investors taking a long-term view, buoyed by the upturn in the cycle, investment levels are expected to remain strong throughout 2022.”

Henry Jackson, head of hotel agency and partner at Knight Frank, added: “A wealth of capital remains to be deployed and well-performing assets in prime destinations, or those that offer a real-estate play, remain highly sought after. 

“With sterling having depreciated to $1.26 (£1.01), its lowest level since June 2020, UK hotel real estate is set to become notably cheaper for some overseas capital. In particular, US investors are likely to remain for a second consecutive year, the greatest source of overseas hotel investment into the UK, having invested over £850m in 2021.”

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