A continued influx of foreign capital into the UK hotel sector in 2014 is forecast on the back of increased activity last year.
Total transaction volume for 2013 passed the £3 billion mark – a six-year high – according to analysis by Deloitte.
Hotel transaction activity across the UK totalled around £0.8 billion in the second half of 2013, 66% higher than the same period the previous year.
London continues to account for around three quarters of all deals for hotels, the report shows.
The first half of 2013 was dominated by portfolio deals – the sale of the Principal Hayley portfolio to Starwood Capital, the acquisition by ADIA of 42 Marriott-operated hotels and the acquisition of Malmaison and Hotel du Vin by KSL.
The final six months of the year saw a shift back towards single asset deals, which represented 65% of transaction volume. The only notable portfolio sale in the second half of 2013 was the acquisition of the 1,200-room Menzies portfolio by Topland.
London continued to dominate single hotel sales, driven by an “almost insatiable” for properties, including the the £90 million debt disposal of the Radisson Blu Portman to London & Regional and a £88 million deal between private equity firm Carlyle Group and Shiva Hotels for the re-development of Millennium Bridge House as a hotel.
Activity outside the capital continued to be mainly driven by distressed sales and included two disposals in York for a total of £24 million – Park Inn and Ibis – as well as the acquisition of the Novotel Cardiff for £12 million by the Greater Manchester Pension Fund.
Deloitte global head of hospitality Nick van Marken said: “The spotlight has returned to hotels as an investment class, underpinned by a clear market recovery and improved macro-economics.
“The many portfolio deals that closed in H1 laid a fantastic base and the Hilton IPO at the end of the year underpinned the increasingly positive market sentiment.”
Looking at the prospects for the market in 2014, van Marken added: “We expect to see the completion of a number of deals early this year; including that of De Vere Venues.
“Sovereign wealth funds, specialised investment groups and private equity will remain the dominant buyers in 2014, and we expect the continued influx of foreign capital.”
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