London top in Europe for hotel investment

Just over half of the survey’s respondents ranked London ahead of Paris, Barcelona and Amsterdam. This was despite the fact that 52 per cent of respondents also considered the UK capital to be ‘overvalued’, although 45 per cent thought its value was fair.

Outside of London, the survey’s respondents cited Scottish cities as the next most attractive for investment in the UK, with Edinburgh and Aberdeen coming out on top.

Other English cities also performed well; 33 per cent of respondents found Manchester an attractive opportunity and 19 per cent favoured Bath.

Global head of hospitality at Deloitte Nick van Marken said: “There is significant appetite for hotels in Europe and the UK in particular.  In recent months, US private equity buyers have taken advantage of low interest rates and a strong uptick in sentiment.

 “The regions have benefited from a series of high-profile international events and the return of corporate and meetings demand, resulting in double-digit RevPAR growth. This strong upturn in rate is very promising, albeit a return to pre-crisis profitability levels is yet to be seen.”

Investment in 2015​

International investors are predicted to take the lead in European hotel investment throughout 2015, particularly those from the USA, China and the Middle East.

Traditional bank debt will be the main choice for financing investment because of continued low interest rates, but alternative lenders will also be active.

In Deloitte’s survey, 33 per cent of respondents marked upscale hotels as the preferred product segment, but midscale hotels (with 25 per cent of the vote) and budget hotels (with 22 per cent of the vote) also attracted a deal of interest.

“After the trough of 2009, a number of deals were done in the UK in particular, and some of these may well come back to the market,” explained van Marken.

“Despite the fact that a good number of portfolios and single assets have been completed, there are still opportunities to be had.”