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European hotel transactions up 58% year-on-year, says HVS

Transactions in the European hotel sector have seen a big increase with volume reaching €12bn in the year to date, according to Charles Human, HVS managing director, speaking yesterday at the Hotel Investment Conference Europe at London’s Jumeirah Carlton Tower.

Introducing a session on private equity, Human painted a positive outlook of today’s hotel investment sector, outlining the fact there had been a 58% year-on-year volume increase.

The UK, he said, had seen the biggest number of deals, with €6.8bn-worth, representing 55% of total European volume. Some €5.2bn had been portfolio deals, with well over €1bn still pending.

Spain was the second best performing country, with hotel investment growing 93% year-on-year, totalling €1.1bn, around 9% of total European volume.

“The market is stronger than it was a year ago with the upturn driven largely by continued recovery combined with increased liquidity,” said Human. “We are now seeing much more interest from investors in the hotel sector and we expect this to continue.

“Since the start of 2014, around 20% of total group-owned or managed UK hotel stock has changed hands. That could rise to nearly 30% by the end of the year,” he said.

“The all-Europe average hotel cap rate stood at 6.1% last year and has decreased to 5.9% this year, indicating continued yield compression, while PE funds accounted for 25% of all European purchases in 2014. The ratio is up to 35% this year – the most active investor category and predominantly driven out of the US.”

Asian buyers have accounted for around 15% of all acquisitions since the start of 2014.

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