European Hotel Transactions Reach New Peak in 2013, Up 39% Over 2012, Says HVS Report
March 3, 2014 8:21am
The 2013 European Hotel Transactions article, published by HVS London to coincide with the International Hotel Investment Forum [Berlin, 3-5 March], reports that total transaction volume across Europe reached €7.7 billion in 2013, a 39% increase on the €5.6 billion recorded in 2012. The first quarter of 2013 accounted for more than half of the year's total transaction volume, totalling €4.2 billion.
"The European hotel industry has signalled positive trends throughout 2013. Most markets have seen occupancy and average rates grow with hotel transaction volume reaching its highest point since 2007. Financing for prime assets has become more readily available, both from domestic as well as overseas banks, changing the hotel investment landscape," commented report co-author Veronica Waldthausen, associate, HVS London.
The UK was, again, the most liquid market in Europe, with transaction volume reaching €3 billion, accounting for 39% of total sales, while The Netherlands had the greatest increase in transaction activity in Europe last year with volume totalling nearly €500 million, compared with €118 million in 2012.
Portfolio and corporate activity
Transaction activity was driven by portfolio deals in 2013, recording 48% growth on 2012 levels, totalling €3.3 billion. The most notable transactions included Constellation Hotels' acquisition of the Groupe du Louvre Portfolio (four hotels) from Starwood Capital for €700 million, ADIA's (Abu Dhabi Investment Authority's) purchase of 42 Marriott hotels in the UK for €640 million, and the purchase of the Malmaison and Hotel du Vin portfolio by private equity firm KSL for €234 million.
While portfolio transactions in the UK accounted for just under 60% of the total rooms sold in portfolio deals, this only translated into 48% of the volume, with an average price per room of €122,000. France ranked second at €1 billion, with a price per room of around €292,000. Germany's hotel investment market saw an increase in portfolio activity of almost 400% on 2012, reflecting the demand to invest in a stable and growing economy and where average daily rates have growth potential, given their low base compared with the rest of Europe.
Single asset transactions
Single asset sales accounted for 57% of total transaction volume in 2013, amounting to €4.4 billion, an increase of 32% on 2012. The sales price per room grew by 13%, averaging €208,000, reflecting an improvement in investor sentiment and the quality of assets coming on to the market.
In the UK, single asset sales totalled €1.4 billion, higher than any other European market. Some 60% of transactions were in the capital, including the sale of the InterContinental Park Lane to Constellation Hotels for €463 million (€1 million per room).
So who's buying?
In 2013 Middle Eastern buyers played a significantly larger part in the hotel transactions market. Capital from the region averaged some 12% of total volume in 2012, while in 2013 it reached 30%, growing in absolute terms from €646 million to €2.3 billion.
Transactions of single assets from high-net-worth individuals (HNWI) showed 70% growth in 2013 to €982 million, as investors, including those from the Middle East, displayed a growing interest in acquiring key assets throughout Europe.
Institutional investors, including sovereign wealth funds, accounted for approximately 42% of portfolio buyers and 19% of single asset purchasers. Hotel operators have shown an interest in purchasing strategic assets as part of their expansion plans, including Mandarin Oriental acquiring the Mandarin Oriental in Paris from their joint venture partner Société Fonciére Lyonnaise for €290 million, and The Dorchester Collection purchasing the Eden Hotel in Rome for €105 million from Starman.
Private equity companies such as Starwood Capital, Blackstone and AXA Real Estate Investment Managers demonstrate an on-going interest in hotels.
"We expect HNWIs and sovereign wealth funds from both Asia and the Middle East to continue to play an even more important role in the European real estate market as they seek to invest in prime assets," commented co-author Louise Fury.
"Additionally, North American investors - primarily private equity companies, real estate investors and institutional investors - will eye Europe as an attractive region with continuous growth potential and comparatively better value for money.
"The question now is whether there be enough assets available for sale to meet investor demand?"
2013 European Hotel Transactions, by Veronica Waldthausen and Louise Fury can be downloaded at http://www.hvs.com/article/6811/2013-european-hotel-transactions/?campaign=email
Tags: european hotel transactions,
Contact: Linda Pettit, Tilburstow Media Partners
+44 13 4283 2866 or +44 79 7378 9853
Contact: Veronica Waldthausen, Associate
Tel: +44 (0) 20 7878 7721 or Mob: +44 (0) 75 6810-8874
Contact: Louise Fury, Senior Editor
+44 (0) 20 7878 7750
Contact: Charles Human, Managing Director
+44 20 7878 7700
Key Takeaways: Hunter Hotel Conference
Digital Gold: Mining Guest Data for Revenue Generation
Reducing Utility Costs in Your Food & Beverage Department
Record €23.7 Billion Spent on Hotels in Europe in 2015 as Transactions Reach Highest Level Ever According to HVS
Europe's Hotels See Record Performance in 2015 with Madrid Recording Biggest Rise in Values Says HVS Hotel Valuation Index
Seven Steps to Food Cost Control
London to Gain 7,000 Hotel Bedrooms in 2016 While Demand Subdued Says Hotel Bulletin
Seven Key Takeaways | The Americas Lodging Investment Summit 2016 (ALIS)
Positive Operating Leverage Results in Another Year of Hotel Value Gains; Cap Rates Start to Rise
Budapest’s Hotel Sector Becomes One of the Fastest Growing in Eastern Europe, Says HVS Report
Demand for Hotel Acquisitions Across Europe Prompts Early Exit by Investors, Says HVS
Take Advantage of Free Cash! A User’s Guide to Energy Incentives
The Millennial Shift in Hotel Brands
Hostel Sector Set to Grow Across Europe as Sharing Economy Takes Hold, Says HVS
South Florida’s Hospitality Real Estate Continues to Climb: Hotel Values Are Stronger Than Ever
Four Key Takeaways: 2015 North America Tourism & Hospitality Investment Conference
Budget Hotels Make up Half of UK’s Development Pipeline as Popularity of Low-Cost Rooms Continues
Remarkable Boom In The South Florida Hotel Market
Spain's Hotels Market See Values Boosted as Performance Improves
Three Key Takeaways | 2015 Independent Lodging Congress
Please login or register to post a comment.