London is Europe’s top hotel investment hotspot

George Sell By George Sell
12 November 2014 | Updated 12 November 2014

UK: London is the most attractive hotel investment destination in Europe, according to a new survey of senior hospitality industry figures by Deloitte.

UK: London is the most attractive hotel investment destination in Europe, according to a new survey of senior hospitality industry figures by Deloitte.
 
More than half (51%) of respondents to the survey rank the UK's capital ahead of Paris (33%), 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.  Continued low interest rates will reinforce traditional bank debt as the core financing option, albeit alternative lenders will be active and mezzanine debt is increasingly available, the survey found.
 
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.  Additionally, survey respondents anticipate continued investment appetite from private equity, whilst trophy assets will be dominated by high net worth individuals.
 
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."
 
He continued: "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.  It is easy to say in hindsight that these acquisitions were done at the right time, but real kudos should go to those who had the courage, got in and did deals even in the darkest days.  Now, many will be rewarded if they get out at the right time.  Some of those who missed the exit and held on, may also be rewarded."
 
"This appetite is not without its risks, however, and a lack of economic growth across the Eurozone along with global geopolitical issues and challenges are all concerns.  That said, we are likely to see yield compression in key European markets as a lack of product and high demand continues to underpin investment appetite," added van Marken.
 
www.deloitte.com

Be in the know.

Subscribe to our newsletter »
Subscribe

Thank you sponsors

Subscribe to our Newsletter »