Hotel transactions on the up as foreign investment rises
That’s according to business advisory firm Deloitte, which in its latest report concludes that there has been a ‘resurgence’ of the UK hotel transactional market over the past 12 months.
Hotel sales activity across the country totalled around £0.8bn in the second half of 2013 – 66 per cent higher than that reported in H2 2012 (c.£0.5bn).
Nick van Marken, Deloitte’s global head of hospitality, said: “The spotlight has returned to hotels, underpinned by a clear market recovery and improved macro-economics.
“The many portfolio deals that closed in H1 laid a fantastic base and the Hilton IPO at the end of the year underpinned the increasingly positive market sentiment.”
Big deals
The first half of 2013 was dominated by portfolio deals: -
- Private investment firm Starwood Capital Group expanded its reach into the European hotel market after buying the 23-strong hotel, conference and training venue operator Principal Hayley.
- Abu Dhabi Investment Authority acquired 42 Marriott hotels across the UK controlled by the Royal Bank of Scotland for £640m.
- KSL Capital Partners, the US company which bought The Belfry last year, acquired Malmaison and Hotel du Vin owner the Malmaison Group for an estimated £180m.
The second half of the year saw a shift back towards single-asset deals, which represented 65 per cent of transaction volume. The only notable portfolio deal in the latter part of 2013 was the acquisition of 12 properties from the Menzies Hotels portfolio by international property and investment firm The Topland Group for more than the initial £80m asking price.
In terms of single-asset deals, London continued to dominate – driven by what Deolitte refers to as ‘an almost insatiable appetite for hotel real estate’.
Distressed sales
Notable transactions included the £90m debt disposal of the Radisson Blu Portman to London & Regional (which will secure them controlling interest) and the £88m deal between private equity firm Carlyle Group and Shiva Hotels for the re-development of Millennium Bridge House as a hotel.
Activity outside of the capital continued to be predominantly driven by distressed sales and included two disposals in York for a total of £24m (Park Inn and Ibis) as well as the acquisition of the Novotel Cardiff for £12m by the Greater Manchester Pension Fund.
Looking at the prospects for the hotel transactional market in 2014, van Marken added: “We expect to see the completion of a number of deals early this year; including that of De Vere Venues.
“Sovereign wealth funds, specialised investment groups and private equity will remain the dominant buyers in 2014, and we expect the continued influx of foreign capital.”
