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UK hotel investment hit nine-year high of £8.1b in 2015

11 January 2016 by
UK hotel investment hit nine-year high of £8.1b in 2015

UK hotel investment reached £8.1b in 2015, just missing 2006's all-time high of £8.3b, according to international real estate advisors Savills, who said that 2016 was also set to be a strong year.

The figure fell just short of the £8.5b that Savills predicted in October for 2015, but was 31.6% higher than the investment for the previous year of 2014.

Transaction volumes in London doubled to £3.6b in 2015 compared to 2014, largely thanks to deals such as the £1.37b sale of the Maybourne portfolio, which included iconic London site Claridge's.

Conversely, the regional hotel market accounted for 55.6% of transaction volumes, which Savills described as "strong", although it was down on the 71% seen in 2014. Notable regional transactions in 2015 included the sale of the Hilton Newcastle Gateshead for around £37m and the sale of the Cambridge City Hotel for £61.5m.

Overall, the market was dominated by portfolio transactions, accounting for 59.3% of volumes in 2015, up from an also significant 52.9% in 2014. Key examples of these included Lone Star Funds' acquisition of a portfolio of 22 Mercure-branded hotels as part of its £1b acquisition from Moorfield, and Fraser Hospitality's £363m purchase of the Malmaison portfolio.

Robert Stapleton, hotels director at Savills, commented that the firm expected London to continue with its strong growth, albeit at a slower rate, and also see an increased transaction volume from overseas investors. He added that the regional markets would continue to improve.

He said: "We expect 2016 to be another strong year for investment into the UK hotel market. We are still experiencing growth in demand for regional assets from investors seeking higher return profiles."

Savills predicts UK hotel investment set to reach £8.5b in 2015 >>

UK hotel investment reaches eight-year high at £6.1b >>Looking for a job? See all the current hotel vacancies available with The Caterer Jobs >>

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