UK hotel transaction market accelerates in first six months of 2013

28 August 2013 by
UK hotel transaction market accelerates in first six months of 2013

Hotel transactions across the UK in the first half of 2013 were up by nearly four times, compared to the last six months of 2012, according to business advisory firm Deloitte.

Portfolio transactions outside London made up around 65% of the total value of sales with acquisitions which included the Principal Hayley group of 23 hotels to Starwood Capital for around £360m, the portfolio of 42-Marriott-operated hotels by the Abu Dhabi Investment Authority for a reported £640m, and the Malmaison and HdV brands by KSL Capital Partners for £180m.

London dominated single asset transactions, most notably the leasehold sale of the InterContinental Park Lane by IHG to Qatari Constellation Hotels for £300m and the subsequent freehold acquisition from the Crown Estate for £100m. Meanwhile, a 60% stake in the newly opened ME Hotel was purchased by hedge fund Tyrus Capital in January for £120m.

In the regions, the single asset transactions were primarily driven by distressed sale, with the 148-bedroom Marriott Victoria & Albert in Manchester being bought by Westmont Hospitality for an undisclosed price.

Maryam Mohajer, senior manager in the travel, hospitality and leisure advisory team at Deloitte said: "As signs of an economic recovery became stronger, the pace of hotel deals gathered momentum and we saw a number of major portfolio deals completed in the first half of 2013. Compared with the same period last year, total transaction volume nearly doubled."

Looking forward to the prospects for the market in the second half of 2013, Mohajer added: "The first half of 2013 saw a significant shift; with portfolio transactions and the renewed interest of international investors in the regional UK. We continue to see strong interest and further disposals are possible, with De Vere Venues and Menzies currently being actively marketed."

"Overall, we expect to end the year with further portfolio transaction activity and the potential for a post 2006/07 high. Whilst pricing disparity between buyers and sellers still exists, it appears that the gap has substantially narrowed.

"On the financing front, banks seem to be more active and alternative sources of funding, such as insurance companies, hedge funds and sovereign wealth funds, have continued to show a strong appetite for the sector. The latter have also been induced by several successful re-financings."

Hotel transactions slow during second half of 2012 >>

UK most attractive market for hotel investment with £2b spent so far in 2013 >>

Positive signs of recovery in UK hotel transactions >>

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