The report, published yesterday, said that despite ‘sluggish’ economic recovery in Europe last year, investor confidence improved, driving a 17 per cent increase in transaction volumes to $13.2bn.
The UK led the region, with a 36 per cent share of total EMEA investment volumes, worth $4.7billion. The majority of this investment came from the US and the Middle East.
“Both trading and sentiment picked up in the UK, supported by three large portfolio deals in the first quarter,” said the report.
“These transactions added to market confidence, with three key global investors underwriting the UK market: the Abu Dhabi Investment Authority (ADIA), Starwood Capital and KSL Capital Partners, as well as Mount Kellett through their refinancing of Jurys Inn.”
Looking to 2014, the report forecast that hotel investment volume across the EMEA region will increase by a further 20 per cent to $16bn.
It said investment would be bolstered by improved debt conditions across Europe, with domestic UK banks such as RBS, Lloyds and Barclays and overseas banks such as the Bank of China, United Overseas Bank, and a number of Middle Eastern banks more willing to lend to the hotel sector.
Jonathan Hubbard, Jones Lang LaSalle’s Hotels & Hospitality Group’s chief executive for Northern Europe, said: “The familiarity and maturity of the UK will provide good opportunities for investors in 2014 and will drive more value.
“As a result of this, we will see competition heating up and investors that miss out on the prime core market opportunities will start to focus on the secondary markets in those countries where they will tap broader opportunities and better returns.
“It’s a very positive picture for the EMEA region and particularly for London and the UK.”.
More positive result
The report forecast a 4 per cent increase in RevPAR this year for London hotels, which suffered from additional supply and the ‘post-Olympic hangover’ in 2013.
However, it warned that while this should provide a more positive result for the industry, an additional 6,000 rooms are set to enter the London market in 2014 – 60 per cent of which are in the budget sector – which will “continue to challenge trading performance”.
Regional hotels are also expected to see some growth next year, although the report pointed out that profits will remain challenging, with costs rising faster than revenue for many.
“While consumer purse strings remain tight, continuing to look for the best deals and discounts, it will be increasingly difficult for hoteliers to drive rates,” it said.
However, it added “the speed of GDP growth should underpin business confidence and drive rate growth through a shift in room segmentation.”
Strong growth
Stewart Campbell has also predicted growth for the UK hospitality sector in 2014.
Campbell, who is managing director of independent hotel management company, Redefine|BDL Hotels, said the industry enjoyed “sustained recovery” throughout the last year, with positive feelings about the wider economy and growing commercial markets pointing to a “strong year ahead” for UK hotels.
“While for the last year or two consumer habits have slowly but surely crept in the right direction, 2014 will see things accelerate,” he said.
“Last year we welcomed a stark reduction on the discounted rates popular during the staycation trend of 2012 and coupled with increasing confidence in the corporate market, we’re now seeing a noticeable shift away from travellers focusing purely on price.
“It’s clear the tide is shifting and it looks like further growth is on the horizon."
Campbell also forecast a 4 per cent rise in RevPAR for London hotels, with 8 per cent growth for regional hotels.