Total European hotel transaction volume reached the highest annual level ever recorded last year – with €27.1 billion-worth of deals being struck, according to the annual European Hotel Transactions report.

The largest amount of capital was poured into the UK with some €5.3 billion (£4.4 billion) – 23 per cent of total volumes.

This was, however, a 15 per cent decrease on the previous year.

German destinations booked the second most investment volumes at just over €4 billion (18 per cent of total volumes), up six per cent on 2018 levels.

In terms of room count, however, Germany transacted 21 per cent of all hotel rooms and 18 per cent of all hotels while the UK came second with a fifth of all hotel rooms and 22 per cent of the total number of hotels.

“Record low interest rates amongst various European countries and continuing yield compression in key markets have helped to drive large investment volumes compared to previous years,” commented report co-author Shaffer Patrick, analyst, HVS Hodges Ward Elliott.

“Asian investors have deployed 84 per cent more capital in 2019 than in 2018, with a dominating presence from Chinese, Singaporean and South Korean investment firms and sovereign wealth funds.

“These factors, combined with the comparative affordability due to a weakening of the euro and sterling on account of Brexit have made Europe an even more sought-after hotel investment market,” he added.

With a total of 844 hotels and some 132,000 rooms changing hands, 318 hotels were single asset transactions and 526 hotels were sold as part of portfolio deals.

Single asset transactions saw a surge of 26 per cent in terms of volume versus 2018, whereas portfolio volumes grew more than twice as much in comparison to the previous year, recording an increase in spending of 67 per cent in 2019.

Average price per room for single asset transactions grew by four per cent to €218,000.

Some of the biggest single asset deals of the year included the sale of DoubleTree by Hilton Amsterdam Central Station to AXA for €425 million and the sale of the Bauer Hotel in Venice to Blue Skye Investment for €400 million.

London remained the leading European hotel transaction market with a total volume of around €2.2 billion (£1.8 billion) in 2019, ahead of Amsterdam at €1.1 billion.

Vienna saw a substantial investment increase of 641 per cent to €709 million on the previous year, following relatively little activity in 2018.

However, the report expresses doubt that this level of transactions will be achieved in 2020.

“New supply and the UK’s divorce from the European Union will influence transaction volume this year,” commented report co-author Nicolas Auer, associate, HVS Hodges Ward Elliott.

“Other factors such as staffing pressures, inflation risks, trade wars, coronavirus-related travel bans or cancellations and concerns that a global economic slowdown might also trigger hesitation in some investors’ minds.”

More Information

The report was published this week by HVS and its brokerage and investment services division HVS Hodges Ward Elliott.

Written by Nicolas Auer, Mattia Cavenati and Shaffer Patrick, a full copy can be seen here.