UK dominates record €23.7 billion European hotel transactions in 2015

European hotel transaction volume reached its highest ever level in 2015, topping €23.7 billion (£18.4 billion) – an increase of 66% on the previous year, with the UK alone accounting for almost half of all transactions.

The figures were published in the annual European Hotel Transactions report by HVS and its brokerage and investment services division HVS Hodges Ward Elliott.

The year outperformed pre-downturn levels driven by an extremely active portfolio transactions market. Investors from Europe accounted for €10.9 billion worth of transactions with activity from the Middle East up 140% to €4.4 billion, and that from North America up 46% to €5.5 billion.

“Investors were attracted by continued RevPAR growth in hotels across most major European markets while the opportunity to achieve higher investment yields than other property types kept hotels an attractive investment class.

Of the €23.7 billion spent on hotels, portfolio volume accounted for €14.6 billion, more than double that of 2014, while single asset volume reached €9.1 billion, a 21% hike on the previous year.

The UK was the strongest driver of transaction activity during 2015, accounting for 48% of total volume, with London seeing 63% of all single asset transactions.

Significant deals in the capital during 2015 included the sale of the Ace hotel London Shoreditch by Starwood Capital for €206 million (€800,000 per room), the sale of the Holiday Inn London Kensington Forum for €540 million (€596,000 per room), and the purchase of the St Ermin’s hotel by the Chen family’s Sunrider International for €213 million (€700,000 per room).

Spain saw a rise in deal activity, recording a transaction volume of €2 billion, double that of 2014 demonstrating the full recovery this market has undergone. Germany registered the second highest number of hotel sales, with transaction volume more than doubling compared with 2014.

Report co-author Adrian Ruch, HVS Hodges Ward Elliott senior associate, said: “Despite current economic woes and increased volatility in the stock markets, there is no immediate end in sight for interest in the hotel sector as underlying operating fundamentals are trending upwards.

““We would expect strong investor demand to continue with no immediate slowdown, particularly given that the fourth quarter of 2015 accounted for one-third of the year’s total transaction volume.”

It is thought given the UK’s recent dominance within the European transaction landscape, attention this year is likely to shift to other markets such as Germany, France and Benelux.”