Hotel transactions fall, will 2013 be the year of the portfolio deal?

By Luke Nicholls

- Last updated on GMT

Related tags: Investment, Hotel

The UK’s hotel market saw the most transaction activity in the whole of Europe last year
The UK’s hotel market saw the most transaction activity in the whole of Europe last year
The number of UK hotel transactions dropped by 12 per cent in 2012, but there is good news on the horizon according to one industry expert who claims 2013 could be ‘the year of the portfolio deal’.

Chris Day, international managing director of specialist property advisor Christie & Co, believes recent events in the UK lend weight to the argument that major portfolio hotel deals will be brought to the fore this year.

Speaking at the International Hotel Investment Forum (IHIF) in Berlin yesterday, Day said: “With Starwood Capital’s acquisition of Principal Hayley for a reported price of £360m, rumours that De Vere Venues and Malmaison/Hotel du Vin about to sell, and the fallout from the Irish Bank Resolution Corporation (IBRC), the UK is certainly a driver for an increased and improved transactional environment

“As more portfolio deals are completed, it will bring further confidence to the marketplace, in turn leading to yet more deals.”

European Hotel Transactions

“There are tentative signs of banks returning to debt lending to the hotel sector. However, the bigger the deal, the more likely the banks will lend. It remains difficult to persuade banks to lend on deals ranging from £5m-£75m.”

To tie in with IHIF Berlin, hotel consultancy service HVS London this week released its 2012 European Hotel Transactions report which found that the UK’s hotel market saw the most transaction activity during 2012, with a total volume of €1.4bn accounting for 38 per cent of hotel volume in Europe.

Portfolio investment did indeed dominate these transactions, with notable deals including the acquisition of six hotels from investment vehicle aAim by Principal Hayley for £200m

Distressed sales

HVS London’s managing director Charles Human said: “Surprisingly only 12 per cent of the total transaction volume could be described as distressed selling.

“The main sellers of 2012 were real estate investors, hotel operators and high-net-worth individuals, which together made up 62 per cent of transaction volume. Government, banks and receiver company divestments accounted for 16 per cent of transactions.

“Although a long way off the flood of distressed sales that has been hoped for by many for several years, there has been an increase recently in the volume of hotels coming to market, particularly out of insolvency. Buyer interest is expected to continue to focus on the main northern and western European markets, notably the UK, Germany and France.”

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