A new report, released by hotel consultancy HVS, reveals hotel investment activity in Europe was around £2.8bn in the first eight months of the year - a drop of 16 per cent on the same period a year ago.
However the UK continues to lead the way with the majority (46 per cent) of the investment volume across the continent coming from this country.
Whereas last year 59 transactions took place across Europe, in this period 46 hotels were sold.
Slowdown
The report, released to coincide with this week's Hotel Investment Conference Europe in London, shows difficult trading, a lack of available debt and economic uncertainty have brought investment levels right down this year.
"Trading has been difficult in recent months for many European markets, even Paris and London have experienced a slowdown," Tim Smith, director of HVS London, said.
Smith argued investors should expect the market to be depressed for some time to come.
"Until debt becomes more readily available and trading significantly improves, it is difficult to estimate when the hotel investment market will improve but we hope to see transaction figures rising during 2013," he said.
London
Repeating statements already made this year by Jones Lang LaSalle and Deloitte, the figures released by HVS confirm single asset transactions and sales of hotel development sites are helping London beat its European rivals in the investment market.
During the period 12 hotels changed hands in London including The Cavendish which was sold for just under £160m to serviced residence owner-operator Ascott.
As well as single sales a number of hotel development sites have also been sold in London, including the InterContinental Westminster, Hilton Bankside and the Odeon Site in Leicester Square which has been acquired by Radisson Blu Edwardian.