• Strong recovery for European hotel transactions with deals worth €16.4bn
  • Year sees record average sale price per hotel room for single assets at €260,000
  • London tops hotel transaction top 5 with Barcelona, Stockholm, Berlin and Madrid

03 May 2022, London: Last year was one of strong recovery for European hotel transactions with €16.4bn-worth of deals, twice that of 2020, according to the latest European Hotel Transactions report from global hotel consultancy HVS and its brokerage and investment services division HVS Hodges Ward Elliott.

The report reveals that 322 European hotel transactions took place during 2021 involving 494 properties and 79,000 rooms. While total volume in 2021 doubled that of 2020, it fell nearly 40% short of 2019 levels on account of significantly fewer portfolio transactions. Sale prices per hotel room were generally higher, however, due to rising demand from potential buyers of single assets.

The UK, accounting for 30% of total transaction volume, saw deals totalling €4.9bn, up 146% on 2020 levels. Over half of these deals involved properties in London, making the UK capital the hottest market in Europe with €2.6bn-worth of transaction activity. Barcelona at €770m, Stockholm at €600m and Berlin at €540m also topped the transaction activity league, followed by Madrid (€465m) and Paris (€414m).

Single asset sales amounted to 65% of all transactions with over half being in the UK and Spain, and reached a total volume just 15% shy of 2019 levels. The average sales price per room for single asset sales reached their highest ever level recorded at €260,000, driven by covid-aid related inflation and the sheer weight of capital waiting to be deployed.

“Transaction activity has rebounded much quicker than expected, due to cash-flush investors realising that a ‘wait-and-see’ strategy may no longer be viable if they want to capitalise on the fast-recovering European hotel market,” commented report co-author Shaffer Patrick, an associate with HVS Hodges Ward Elliott.

Portfolio deals accounted for 35% of European transactions during 2021, double the level of the previous year, but still over 50% down on 2019 suggesting there is further recovery to come. The UK and Spain also dominated portfolio transactions, although sales prices per room tended to be flat compared with the previous year apart from those in Sweden, Portugal, Spain and Germany. In the UK the average sales price per room for portfolio deals was significantly lower than in 2020.

Looking forward, the annual HVS Transaction report expects single-asset transaction activity to remain strong this year as investors hunt for opportunities now that pandemic restrictions have largely subsided.

“A timely end to the war in the Ukraine, reductions in loan delinquency and changing lender sentiment should mean increased portfolio activity as we move into 2023/24,” commented report co-author Matthias Hecht, an associate with HVS Hodges Ward Elliott.

“Investors that have stayed out of the buying process looking for quick deals or discounts will be disappointed as distressed sales become scarcer. In addition, prices are likely to be driven upwards as top-line hotel revenues improve aided by the business and conference markets returning in full force.”

A copy of the 2021 European Hotel Transactions report by Shaffer Patrick and Matthias Hecht can be downloaded here https://www.hvs.com/article/9336/2021-european-hotel-transactions/