The UK remains the most active hotel investment market with a total volume of around €1.9 billion in 2010, according to a new study.
The report by Hotel consultancy HVS London that transaction activity across Europe last year more than doubled to reach a value of €6.5 billion – up from €3.1 billion the previous year.
Around 17 hotels were sold in London last year with a total value of nearly €1.5 billion, confirming the capital’s status as one of the most sought-after of the European hotel markets.
The annual European Hotel Transactions Report finds that the market is showing signs of improvement.
The much awaited distressed selling of assets by banks remains on hold. Only four of the single asset transactions in 2010 were out of administration or receivership.
But private equity groups have yet to re-emerge as key investors in the hotel sector because of the difficulty in achieving the required returns in today’s market.
Transaction activity was dominated by high-net-worth individuals, institutional investors and hotel investment companies, accounting for 72% of volume, according to the report.
Activity in the UK was followed by Scandinavia at around €1.2 billion with France at €772 million, Spain €680 million and Germany at almost €200 million.
Report author Charles Human, who chaired a session at the International Hotel Investment Forum in Berlin, discussed when the hotel investment market is likely to return to normality.
Buyer interest in the European market has clearly increased over the past six months, he said, with deal volume expected to further recover in 2011.