Investment reaches £900m in Scottish hotels

The Scottish hotel market saw investment volumes reach £902m in 2018, driven by international investment.

The latest research from Savills shows 69% of the total investment spend in Scotland was accounted for by portfolios (£621m) while individual transactions accounted for close to £281m.

The average transaction size was £11m, with the largest transaction in the region during the year the £85m sale of Edinburgh’s Caledonian Waldorf Astoria to Twenty14Holdings.

The data shows international parties represented 76% of the market. French investors were found to be the most active, with £279m of deals across a mix of individual transactions and assets within a wider portfolio to account for 31% of total spend.

The group said Israeli investors were also “key players”, accounting for £109m of sales and 12% of total investment. Other non-domestic nationalities all transacting in Scotland in 2018 include Middle Eastern (9.4%), US (4.3%), Sweden (4.3%), Canadian (3.8%) and Indian (1%). Domestic investors accounted for 24% (£217m) of all hotel investment activity.

Other notable deals in 2018 include the sale of Jurys Inn, Edinburgh, to Fattal Hotels for £52m, and Swedish investors Pandox AB buying the Radisson Blu in Glasgow for £39m.  

Steven Fyfe, associate director in the hotels agency team in Scotland, said: “Buoyed by strong occupancy levels from leisure tourism, the ongoing inward investment of both domestic and overseas capital into Scotland’s hotels market demonstrates the strength of the sector despite ongoing Brexit uncertainty.

“Looking ahead, there is a positive outlook for Scotland’s hotels market. In Edinburgh the W Hotel, Edinburgh St James is nearing completion, complimenting a number of smaller hotels due to open in 2019/20, and there are plans for two significant hotel developments at Haymarket.  Meanwhile in Glasgow we are seeing the arrival of evermore developers and hotel brands such as Motel 1, Radisson Red and Dalata.”