Hotel values for the majority of the key European cities have grown during 2013, according to the 2014 European Hotel Valuation Index (HVI) published this week by global hotel consultancy HVS London. Hotel values are expected to continue to increase as the lending environment becomes more favorable and the economic recovery increases demand.
The European HVI monitors annual percentage changes in the values of typically 4- and 5-Star hotels in 33 European cities. An index is calculated ranking each market relative to a European average, as well as an average value per room for each market.
Most hotel markets had a slow start in 2013 but saw improvements in Q2 with strong third and fourth quarters. Consequently, during 2013 two-thirds of the hotels in the cities surveyed experienced a growth in value, compared with only about half in 2012.
“Cash-rich investors such as real estate trusts, institutional investors, and high-net–worth individuals continue to be key players,” says Sophie Perret, HVS London director and co-author of the report, “but a gradual, cautious return of bank lending has been observed, although there have been no material changes in loan to value ratios. It is at least a good sign that banks are, again, becoming comfortable with hotel real estate.”
Dublin continued its strong growth from 2012 with investors showing renewed interest following its economic recovery. Other successes were seen in Barcelona and Lisbon with 6 percent growth in room value. Geneva, normally a relatively stable market, saw a decline in value of 5.4 percent, although the city remains the fourth most valuable city in terms of room value.
Other cities this year’s HVI earmarks for growth are Tallinn, owing to its continued strong performance; and Dublin; as well as more subdued growth for the main Eastern European markets including Prague, Bratislava, Bucharest, and Sofia.
