According to the European Hotel Transactions report published this week by HVS, European hotel transaction volume totaled a record $26 billion in 2015, an increase of 66 percent from the year before. The UK was the strongest performer, accounting for a total of 48 percent of transactions, with Spain and Germany also posting positive numbers.
Investors from Europe accounted for $11.96 billion worth of transactions, while the Middle East accounted for $4.83 billion (up 140 percent from 2014), and North America for $6.04 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,” says the report’s co-author, HVS associate Dayk Balyozyan.
Of the $26 billion spent on hotels, portfolio volume accounted for $16.02 billion, more than double that of 2014, while single asset volume reached $9.99 billion, a 21 percent hike on the previous year.
London saw 63 percent of all single asset transactions, with significant deals including the sale of the Ace Hotel London Shoreditch by Starwood Capital for $226 million (roughly $878,000 per room), the sale of the Holiday Inn London Kensington Forum for $592.55 million ($654,000 per room), and the purchase of the St Ermin’s Hotel by the Chen family’s Sunrider International for $233.7 million ($768,120 per room).
Spain recorded a transaction volume of $2.19 billion, double that of 2014, and Germany registered the second highest number of total hotel sales, with transaction volume more than doubling since 2014.
“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,” says report co-author Adrian Ruch, HVS Hodges Ward Elliott senior associate.
He adds: “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. However, 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.”
To download a full copy of the 2015 European Hotel Transactions report, click here.
