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London continues to dominate UK hotel transaction market

By Peter Ruddick , 23-Aug-2012
Last updated on 23-Aug-2012 at 11:10 GMT

The value of activity in the UK hotel transaction market doubled in the first half of the year while London continues to dominate deals, according to new figures from Deloitte.

The business advisory firm revealed hotel transaction activity totalled around £1bn in the first six months of the year; more than double the figure for the same period in 2011.

Individual hotels

Nick van Marken, global head of advisory, travel, hospitality and leisure at Deloitte said the jump was a continuation of a trend which began in the latter half of last year and was driven by 'single asset transaction' or sales of individual hotels.

"Single asset transactions dominate and London remains the focus for most investors. The lack of readily accessible debt financing remains an on-going constraint and has made it difficult to close on large portfolio deals in particular," he said.

Less than a third of the deal activity in the period was as a result of the sale of groups or portfolios of venues compared with 70 per cent a year ago.

The analysis backs up a similar study released by global real estate services firm Jones Lang LaSalle in April which reported the UK was leading the hotel investment market in Europe but more 'creative transactions' were prevalent with less cash deals being finalised.

London

Unsurprisingly the capital remains the focus of the hotel transaction market with the city accounting for around 55 per cent of total investment value in the first six months of the year.

The notable sale of the Hoxton Hotel to Ennismore Capital  for an undisclosed sum in order for the boutique investment firm to drive brand growth was one of the headline deals which helped cement London's position as the hotel transaction capital.

Meanwhile in the regions activity was dominated by high-net-worth individuals and property groups making purchases. 

Activity Doubles: Some of the significant deals leading the growth in UK hotel transaction activity include: 

Turning to the future, van Marken predicted the difficulty to obtain financing would continue to dominate UK hotel transaction activity with sellers favouring cash buyers or those not totally reliant on bank financing.

"We may see more portfolio deals coming to market and certainly several possible transactions are being mooted. This said, difficulties in accessing debt funding and the continued disparity between buyer and seller in terms of price expectation mean disposal processes are likely to continue to be longer and more difficult to complete," he concluded.

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