Investment in the hotel sector is set to peak in 2015, according to law firm Berwin Leighton Paisner (BLP).
Its European Hotel Market Survey, launched today at Berlin's annual International Hotel Investment Forum, found that hotels continued to outperform traditional commercial property investments, but that investment was close to the top of the cycle.
"There are too many existential threats out there to be sure how long the good times will last," said BLP partner Nick Skea-Strachan.
"Vladimir Putin is causing havoc, there is ISIS and terrorism, there is the Euro and the election. None of it is particularly catastrophic, but it could be. And the hotel industry is particularly susceptible."
BLP canvassed the views of 300 hotel industry professionals for its report. Over half (55%) of respondents thought that Western Europe would benefit from the majority of investment due to the stable geopolitical environment.
It could all deflate when interest rates rise again somewhere in the future," BLP partner Karen Friebe told The Caterer. "Athough at the moment the American's want somewhere to put their money and the Chinese are desperate to expand."
She added that banks remained the top debt providers, followed by debt funds. "Our survey reveals a strong and optimistic feeling around the hotel industry this year with investors being advised to capitalise on the current boom. It seems that the levels of activity and increased availability of debt and equity in the industry will be sustainable for at least the next 12 months.
Ten key finding of the European Hotel Market Survey 2015
1. 70% believed that hotels would continue to outperform "traditional" commercial property investments.
2. 80% said hotels were becoming more of a valued asset class for investors, but were still perceived by many as risky.
3. Almost two thirds (62%) thought more hotels are taking on the franchising model for growth.
4. Hotels continue to face new distribution channels, causing a greater loss of control over room rates
5. 89% foresaw increased competition from the residential market with short term lets.
6. 91% of hotel professionals plan on increased spending into social media to help improve communications with clients.
7. There will be an increase in spending on technology within hotels (better Wi-Fi and in-room entertainment).
8. The past year has seen private equity displace other equity investors in the hotel sector
9. High net worth individuals are also heavily investing in trophy assets with markets such as London and Paris viewed as safe havens for investors.
10. Employee turnover rates are still higher than in the rest of the private sector.