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European hotel transaction volumes reached €18.6bn (£15.9bn) in 2018, a decrease of 14% on the previous year, but still the fifth highest level recorded, according to the annual ‘European Hotel Transactions’ report by HVS.
A total of 655 properties, averaging 156 rooms, changed hands in 2018 with the average price per key growing by 8% in 2018, reflecting the quality of the hotels that were sold, as well as a growth in values.
The year saw single asset transaction volumes fall 23% on 2017 levels to a new value of €9.5bn (£8.1), representing 51% of the total transaction volume. Sales included 271 individual hotels amounting to over 45,000 rooms.
Portfolio activity decreased on the previous year by just 3% to €9bn (£7.7bn), 49% of the total volume, with 58 transactions comprising over 380 hotels and over 56,000 rooms.
Reduced activity from Asian and European buyers was the main reason for the decrease, with high net worth individuals in particular, decreasing their investment in hotels in 2018 to €116m (£99m), compared with €554m (£476m) in 2017.
However, the group said the UK confirmed its “leading role” within Europe, reaching transaction volumes of €6.2bn (£5.3bn) in 2018, up 14% on the previous year’s €5.5bn (£4.7bn).
Nicolas Auer, analyst with HVS Hodges Ward Elliott, said: “The European hotel investment market continues to show rising popularity as an alternative asset class due to its strong yields. While 2018 may have seen an overall decrease in transactions it was compared to an exceptional 2017.
“Continued RevPAR growth across most of Europe helped support transaction levels in 2018 and despite the uncertainty surrounding Brexit, interest from overseas investors in UK hotels has remained very strong, demonstrating confidence in the future of the UK hotel market.”
