London tops European rankings as preferred hotel investment destination

London is the most attractive hotel investment destination in Europe, according to a new survey of senior hospitality figures by Deloitte, ahead its European Hotel Investment Conference. 

Over half (51%) of respondents rank the UK capital ahead of Paris (33%), which was followed by Barcelona (30%) and Amsterdam (23%). However, views appear mixed on value with 52% considering London to be overvalued whilst 45% cite it as fairly valued.

European hotel transaction activity is expected to be dominated by international investors underpinned by North America (58%), China (53%) and the Middle East (52%) in 2015.

According to the study, against the backdrop of a stagnant European economy, upscale hotels (33%) are the preferred product segment. However, midscale (25%) and budget (22%) are also attracting interest.

Nick van Marken, global head of hospitality at Deloitte, said: “There is significant appetite for hotels in Europe and the UK in particular. In recent months, US private equity buyers have taken advantage of low interest rates and a strong uptick in sentiment.

“After the trough of 2009, a number of deals were done, in the UK in particular, and some of these may well come back to the market. Despite both a good number of portfolios and single assets having completed, there are still opportunities to be had.

“Some valuations from two or three years ago have more or less doubled, so a number of buyers have done very well.”

Outside London, respondents favour Scottish cities as those of most interest in the UK in 2015. Edinburgh (60%) and Aberdeen (38%), followed by Manchester (33%) and Bath (19%) are considered most attractive.

They anticipate a focus on the improvement of profitability (52%), rebranding or repositioning (49%), major capital expenditure programmes (44%) and expansion (33%) to be the main strategies adopted by UK hotel owners in 2015.

Image courtesy of VisitEngland/Diana Jarvis