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UK hotel transaction activity had a resurgence in 2024, with deal volumes tripling and returning to pre-pandemic levels at approximately £6.4bn, according to Christie and Co’s latest Business Outlook report.
The business property adviser said that this rise was principally linked to portfolios and to London making up 40% of transaction volume.
In addition, Christie and Co saw an 11% rise in deals agreed and 20% increase in completions in 2024, compared with the year prior.
In the context of the wider commercial real estate market, the report revealed that the European hotel sector is an outperformer and attracts “significant” attention from investors at all levels.
European hotel transactional volume in 2024 rose over 50% versus 2023, on par with pre-pandemic levels. Meanwhile, the UK led the market, making up 36% of total deal volume, followed by Spain and France.
The report reveals that market conditions in the UK improved particularly towards the end of the year, with solid trading performances, more liquidity and more certainty around interest rates finally being on a downward trend.
In addition, the recalibration of pricing and the softening of yields have been progressive since early 2023, and while Budget announcements made by the Labour government last autumn are likely to put pressure on operational margins during 2025, there was a 3.8% uplift in Christie and Co’s hotel price index for 2024 and the outlook for the sector remains positive.
Carine Bonnejean, managing director of hotels at Christie and Co, said: “Whilst there is continued uncertainty due to geopolitical risks across the globe and the recent budget announcements for the UK in particular, hotels remain in high demand for investors. 2024 saw a significant comeback of the UK transactional market which boosted European deal volumes.
“Whilst it is unlikely that similar levels of portfolio activity will be replicated in 2025, pipelines are way ahead of the same time last year, and single assets and small portfolios are being prepped for market. Some uncertainty is unavoidable as proven in recent years, but hotels are definitely an attractive investment option for all investor types.”
