Hotel transactions increase as trading improves
The value of European hotels sales increased by 9% last year, but is still a long way behind the high of 2006, according to the annual European Hotel Transactions report from consultants HVS London.
Total European hotel transaction volume rose to £6b in 2011, up from £5.5b the previous year, indicating that investment activity is improving, despite the continuing difficulty for operators in securing funding. In 2006 hotel sales in Europe reached a peak of £17b.
The UK was the most active hotel investment market in 2011, with a total transaction volume of around £2.3b. Other key markets were France (£1.1b), Germany (£693m) and Spain (£510m).
Charles Human, managing director of HVS Hodges Ward Elliott, the hotel brokerage and investment banking division of HVS, said that 2011 had seen a growth in both trading performance and hotel values across Europe. "Despite this, bank debt remains scarce, making it hard for investors to secure financing outside major gateway cities," he explained.
During 2011, there were 116 hotel transactions (of more than £6.3m per property), involving 264 hotels and more than 43,200 rooms.
The largest transactions included the sale of the Ritz-Carlton Moscow for £348m on the single asset side and Blackstone's acquisition of the Mint Hotels portfolio for £600m on the portfolio side. However, the average price per room declined by 27% to £161,000 as a result of fewer high-end assets changing hands in 2011 compared with 2010.
An improvement in leisure and corporate business for European hotels during 2011 has helped making hotel transactions a more attractive investment. There were also a number of distressed assets which came to came to the market, including the 28-strong portfolio of Von Essen hotels, as well as a number of properties being disposed by many listed hotel companies.
"In 2012 we are likely to see a marginal increase in the number of distressed sales but, with debt so hard to find, it will be some time before we see transaction volumes return to pre-credit crunch levels," added Human.
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Cliveden tops the price tag on Von Essen hotels >>
By Janet Harmer
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