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Transaction volumes in the UK hotel market reached £6.1bn in 2014, an increase of 55% on 2013 and the highest level since 2006, according to real estate advisor Savills.
The firm cites renewed investor confidence in regional markets as a key driver behind the overall growth, with 71% of deals taking place outside the capital.
However, the London hotel market remains strong, particularly in value terms, with Savills reporting that 60% of single asset transaction volumes were in the city last year.
Savills also highlighted an increased appetite for portfolios with deals involving multiple assets accounting for 53% of hotel investment in the UK in 2014, equating to £3.2bn. Major portfolio transactions last year included LRG’s sale of 21 Holiday Inn hotels to Kew Green from a guide price of £70m.
Martin Rodgers, hotels director at Savills, said: “Investor demand returned with gusto in 2014 and we expect it to remain strong in the year ahead. In London, the demand and supply imbalance will put downward pressure on yields while regional activity is likely to be fuelled by the break-up of portfolio purchased in recent months.”
