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UK hotel investment hits nine-year high at £8bn

By Sophie Witts , 11-Jan-2016
Last updated on 11-Jan-2016 at 16:47 GMT2016-01-11T16:47:05Z

UK hotel investment hits nine-year high at £8bn

UK hotel investment hit a nine year high in 2015 following a series of high profile deals.

Total transaction volumes reached £8.1bn, the highest level since the £8.3bn record in 2006. 

Real Estate firm Savills said the figure was up 31.6 per cent on the £6.1bn recorded in 2014.

It follows a year of major hotel transactions including Lone Star Fund’s acquisition of the 31-strong Jury’s Inn chain for £680m and Fraser Hospitality’s purchase of the Hotel du Vin and Malmaison  chains for around £363m.

Portfolio transactions continued to dominate the UK hotel market for the second consecutive year, accounting for 59.3 per cent of sales in 2015 and 52.9 per cent in 2014. 

Transaction volumes in London doubled from £1.8bn in 2014 to £3.6bn in 2015 in the wake of high profile sales including the £1.37bn sale of a share in the Maybourne portfolio - which includes Claridge’s. 

The capital's other significant deals included the £345m sale of the Holiday Inn, Kensington and the £270m sale of the Bulgari Hotel, Knightsbridge.

The regional hotel market accounted for 55.6 per cent of transaction volumes in 2015 - down on its 71 per cent share in 2014. 

Notable regional transactions included the £37m sale of the Hilton Newcastle Gateshead and the £61.5m sale of the Cambridge City Hotel.

Robert Stapleton, hotels director at Savills, said: “With the operating landscape in the UK’s regional markets continuing to improve and such a significant amount of equity looking to deploy into the sector, 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.  We equally expect London to continue to show impressive capital growth, albeit at a slower rate, as well as increased transaction volume as overseas investors in particular seek capital preservation opportunities to shield money from the volatile equities market.”