London accounted for half of all UK hotel transactions in 2016

Investment into the London hotel market accounted for over 50% of all hotel transactions in 2016, according Savills.

Volumes transacted in London reached £2bn, up on the 45.2% share of the market in 2015, while investment into the UK hotel market as a whole totalled £3.9bn in 2016 as robust demand continued to drive activities.

Savills noted that “resilient” levels of demand resulted in the deal count exceeding 220 during the year, above the 195 reported in 2015 and even ahead of previous peaks in 2006.

Overall investment volumes were down from £8.1bn in 2015 , but Savills said both 2014 and 2015 were “exceptional” years due to portfolio activity – the 2016 year-end transaction volumes of £3.9bn were only 3.6% below the long term average.

Marie Hickey, commercial research director at Savills, said overall volumes were always expected to be down in 2016 due to lower portfolio activity.

“What is key is that deal count actually increased in 2016 proving investor demand and activity has remained strong across both the London and regional markets, in spite of the result of the EU referendum,” she added.

Savills highlighted that London’s increasing share of the market was helped by a number of large deals, including the £350m acquisition of the former War Office by the Hinduja Group and Obrascon Huarte Lain for hotel redevelopment and the £300m purchase of the Hilton DoubleTree Tower of London by Gulshan Bhatia.

In terms of market share, overseas investors were the most active in the sector accounting for 29.2% of transactions during the year, with volumes at £1.1bn.

Meanwhile, increased level of activity from private individuals and property companies was seen throughout the year, with transaction volumes by these groups increasing by 152% and 65% respectively.